Beyond Capital – Addressing the Human Resource Gap

Access to Capital has always been at the heart of focus for startup founders. There is tons of good (or bad) advice out there, venture funds keep popping up and the business angel ecosystem is growing at a healthy rate. So, the demand of founders for this critical resource is increasingly addressed.

Surprisingly, for the other key resource that any startup needs to grow, there is very little happening within the investor’s community.  Some larger funds offer functional advice on recruiting, many try to leverage their personal network here and there to fill critical positions. But, all in all, these approaches are opportunistic at best.

All this would not matter if startup can get what they need on the market. But if you talk to founders, from London to Berlin, from Estonia to Ljubljana, the message is the same: recruiting is broken.

But what is it exactly that our founders cannot solve via traditional search companies or their own recruiting activities?

1. The big, unsolved challenge: IT recruiting.

Everybody across Europe talks about the same problem and nobody has a good answer. Affordable, skilled coders are rare everywhere (especially in European startup hubs like London or Berlin) and for everyone, but for digital startups in particular, access to these resources basically dictates the speed at which they can move, iterate and scale. It defines the horsepower of their engine room. Solving this puzzle would provide an amazing competitive edge to our portfolio.

2. Avoiding “quick & cheap” solutions.

Recruiting is an old business with very established business models. Unfortunately, they do not fit for early stage startups. So far, the only answers are performance based offers which often result in a low effort, low hanging fruit approach by service providers. But top quality startups need top quality service. This is another puzzle to solve.

3. Employer branding for a network.

Startups are a funny thing. While each of them has no brand power whatsoever and joining them is perceived as a big risk, together they create significant talent pull these days. This is where a portfolio approach towards employer branding (i.e. putting Speedinvest in front) can be very powerful. At the same time, successful recruiting has always been driven by personal networks. So what if we are able to leverage the personal networks and brands of all our 50+ companies? Crucial for doing this is the adoption of a clear set of rules that build a trusted, long-term relationship between our founders. A joint lead investor has the power to implement and execute such a rule set.

With Speedinvest Heroes, our new unit solely dedicated to this topic, we plan to tackle these challenges. If we succeed, we will have built a powerful competitive weapon for the founders we support and for us as a fund.

Heroes has a few very distinctive advantages:

  • In our core region, we are a natural magnet for talents
  • As startup insiders, we can hit the ground running
  • We have reshaped the business model to be in sync with early stage startups

The result will be faster and cost-effective hiring of top people for our founders. And if this works, maybe other funds will take notice.

Reinventing venture, one piece of the puzzle at a time.

www.speedinvest-heroes.com

The Wrong Answer

I’ve come to realize that to understand how an early stage B2B Enterprise startup thinks about it sales process there really is a very simple question that provide a key insight: “Can you send me your sales deck?” (or white paper, blogs or whatever).

If the answer is along the lines of “we don’t do sales decks” then that is very telling. (Personally, I’d always start with the sales deck, how else would you know what to build? But that aside) But it is the wrong answer. Why?

Well, for starters it suggests you have not considered how to scale your sales process beyond yourself. I get it – there’s really only you and your cofounder that are selling, and you’ve been working on this for years and so has your co-founder. In fact you started during your PhD and you both know the tech inside-out. You do not have a sales team, let alone a distributed one, so why bother. Still, you should think about how to enable others to “sell”, maybe partners, friends, relations, your network, etc – but also within your customers.

It also means you may not have figured out your customer’s journey and buying process. I understand – you’re super focused on understanding your customer’s requirements, you sell to the C-suite and require face-to-face meetings with the decision makers, to build trust, undsoweiter. But if your customer will spend more than X/year with you, the buying process will extend beyond the meetings you have with them. It will include internal decision making, vendor selection, stakeholder alignment (IT, Legal, Procurement, Marketing, Sales?), budgeting, etc. Your buyer or champion will need something (potentially more than 1 thing) that they can pass on internally to convince the rest of the organization – upwards and downwards. Landing a POC, for example, without this process having taken place means you have razorthin levels support within your customer and the risk of landing in a fringe use case, being “confined” in a corner of the organization (Innovation Department anyone?) and being a keystroke away from losing what felt like a sure shot.

Obviously the case here is pretty specific to a B2B business selling to “Enterprise” but the principle extends beyond this. If you’re selling B2B on a more transactional basis, a key thing to focus on is how customers “drive themselves” trough the funnel with minimal high-touch efforts, and providing the right content at the right time is key. Similar for B2C.

If you are a B2B startup – we’d love to talk. And now you know at least one question you can expect, and the answer I’d be looking for…

The Founder’s Logbook

A logbook (a ship’s logs or simply log) is a record of important events in the management, operation, and navigation of a ship. It is essential to traditional navigation, and must be filled in at least daily.

Wikipedia

Now here’s a thought: Captains keep logbooks. For scientific experiments, detailed logbooks with outcomes are kept. It seems like records of important events are needed in situations where uncertainty has a role and you want to reach a goal, but don’t know really how to get there. This should sound familiar to startup founders.

Why don’t founders keep logbooks? Not a personal journal (although this may also be a good idea), but a record of their organisations? It seems like navigation is easier than running an early-stage company:  there is a clear and tested methodology for navigating by instruments. Learning is facilitated by well documented training material and procedures (and particularly because you have clear, historical reference of what happened, not just anecdotal evidence.  Thank you logbook!). It provides a level of reflection and provides routine.

Are you keeping a logbook? You probably should.   The question now is what do you track within a startup?  KPIs?  Roadmap?  Summary meeting notes and daily interactions?  Evolution of company culture?  Hiring?

Going from point A to point B in a boat is (relatively) straightforward, but perhaps there is some hidden best practice in the volumes of growth data that startups generate.  We would love to hear from founders who have had success in keeping startup logs, and have ideas about key metrics.