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Wednesday, January 18, 2012

Co-Founder Dynamics/Mousetrap, GTM, FinOps

Yesterday, I wrote about the magic of having 3 founders on a start up team.  Not only is it a useful number for making decisions, getting stuff done and staying coordinated, but it also gives you a chance to cover the three key bases of a startup: The Mousetrap, the GTM and FinOps.

The Hustler-Hacker dynamic has been written about effectively elsewhere.  As a shorthand, especially in quick introduction situations, it is helpful to say "Our team has two hackers and a hustler. I'm the hustler." It sets expectations about a lot of things very quickly.  An alternative phrasing (favored by Isaac Saldana, founder of SendGrid) is 'technical and non-technical.'

However, when you are actually building a team, then thinking through the three roles of Mousetrap, GTM and FinOps is critical.

Mousetrap is the person/people who build stuff.  90% of founders I meet are Mousetrap people.  They are very excited about the speed, scalability, features and functionality of their mousetrap.  Almost always when people think of innovation, they think in terms of 'mousetrap-innovation.'

GTM is the person/people who can take a Mousetrap to market.  This is the area that I think is most interesting and rare.  While there is a lot of innovation on the mousetrap, where is the innovation on the GTM? Modern examples such as ebay or priceline come to mind but what about Tupperware? Innovate the direct model was astounding for that product in its place and time.  I'd much rather in invest in GTM innovation than Mousetrap innovation.  Also, as a mentor, you should have one theme that you focus on with companies.  For me that theme is 'how do you get big fast.' So I like to ask, where is your unfair advantage on the GTM side? Do you have a founder with personal relationships that gets you 25% market share on day 1?

FinOps, or the back office, such as finance, accounting, tax, hr, facilities and legal is the most overlooked early role.  Having started as a CFO, I may have a particular affinity for this area, but nonetheless, it is much more important that it is usually given credit for by mousetrap or GTM people.  If the mousetrap founder builds it, and the GTM founder sells it, the FinOps founder pays for everything.  Getting your legal structure right (Delaware C corp), number of shares (~10M) and most importantly being the CASH FLOW OFFICER (that's what CFO stands for btw) is fundamental to your success and cannot be outsourced to a 'part-time bookkeeper.'   Whether things go poorly and you need to understand your PG's (personal liability) or things go well and you need to minimize taxes (high class problem, but still...), getting FinOpS right matters more than you think.

So what if you have a founding team of three and they are all in one dimension? The usual case is that there are 2 or three founders and they are all on the mousetrap dimension.  The immediate (and free) answer is to create an active, yet unpaid, advisory group around your core team that covers the GTM and FinOps perspectives. I have found that using your personal network you can find three GTM people to care about your business.  Host a lunch and grill them on your thinking.  If you've chosen well, they'll even pick up the tab (especially if its at The Cheesecake Factory.) As you scale your team, start to cover the other bases with experienced people who can build teams in the areas where you are short.

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