I'm on a partial vacation this week. I'm spending a lot of time playing and hanging out with the family. I'm also reading and doing a bit of work.
I get asked frequently by startup tech company operators and consultants alike about how I engage with founders. I've written in the past on this blog about my selling framework, but I also have a method to how I prepare and make my recommendations to client and now portfolio founders.
I call it the Prototype.
The work prior to my delivery of the Prototype includes: an interview with the Founder/CEO and 3-5 additional interviews with key people on the team. I also set up a Data Room where I request a number of items. I synthesize all the information I receive plus the research I do on my own.
The answers to these questions, the assets, and the research help me understand a few key items:
- Customer Success: Do we have product market fit? Can we check the box on customer success where we are seeing 90% customer retention and exceeding 100% revenue retention? Somtimes this is obvious. Sometimes it's not.
- Unit Economics: Because growth doesn't happen propotionately, I look to understand where across the customer segmentation and where across the demand generation channels are we seeing real signal? What do the unit economics in these segment pair tell us? Where can I find a green light?
- Growth and Moat: Are we ready to expand the target market? What do we need to codify into systems?
In most cases the only silver lining is one segment pair within #2 is green. In the rare case where you can check the box on #1 (typically the Founder truly cares about their customer and their strategy and actions follow) and you have a clear customer segment in #2 that is lit up green, it's time to invest heavily into your Customer Success team (hint: be proactive with expanding revenue) and invest with conviction, commitment, and focus to drive awareness to that segment.
But my recommendations in the Prototype are just that. They aren't the final answer, yet. This is an important point to make. Most consultants approach delivery of any set of recommendations as the truth.
What I do in my read out calls where I walk through this Prototype is share the recommendations, explain the rationale, create discussion questions, and then at the end ask the founder to sit with the information for 24-48 hours.
It's about a shared vision and it's about partnership.
My goals are my clients goals.
The Prototype has yet to fail me on an engagement.
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