Red herrings. Not the prospectus and not the fish. For the uninformed, we’re talking about something that misleads or distracts from a relevant or important issue. You find red herrings in early stage companies all the time and they can sometimes kill your company. What should you focus on and what should you not focus on? It is probably one of the most important thoughts going through a founders mind at any given time. To apply and relate it to start up companies, you go down a path that you think matters a lot to your success. You don’t realize that it is a distraction and as a result it pulls you away from the main issues and problems of the day. We thought it would be fun to put pen to paper and lay out some of the red herrings in early stage companies that tend to trip everyone up.
Red Herring #1: Public Relations Everything. We focus a lot within our Acceleration Team efforts on providing marketing support to our portfolio companies. Public Relations (PR) almost always comes up as a discussion point. “How can I land that great Techcrunch article?” or “We have this great thing and I want to promote it in Forbes!” is almost always the narrative that we hear. We talk about this as one of the biggest red herrings in the early stage ecosystem. The distraction is you spend a lot of time with reporters trying to gin up a story. You just don’t matter that much to them. Impressive PR does not happen without impressive results. Focusing instead on owned media, building your online presence, customer wins, and other major marketing tactics will ultimately lead to a PR narrative that matters to the world. You’ll get the story, just don’t focus on it.
Red Herring #2: Investing In Marketing Before You Know Your ICP. You read a lot of blog posts about how you should be investing in marketing and building your channels like content marketing. You start to spin up a bunch of these channels yourself while trying to hire a killer demand generation personality. Ultimately, you get into a situation where you are basically pouring gasoline on a fire that isn’t even lit yet. Founders need to do the one on one work to understand their Ideal Customer Profile (ICP) before you entrust this to a marketer and in most cases even spin up marketing yourself. The amount of time wasted here can be enormous and we do from time to time see companies who spent too much time on this only to run into a brick wall overspending and not understanding the customer needs.
Red Herring #3: Only Bringing In Domain Experts. From a hiring standpoint, there is a temptation early on to focus on hiring only domain experts into your company. We see this a lot in vertical SaaS as founders want to hire individuals who come out of the industry they are going to be selling into. Notwithstanding the fact that this is like finding a needle in a haystack there needs to be a balance in any early stage company. You can get a lot out of generalists that have the horsepower, smarts, and success to really roll up their sleeves and do well within your company setting.
Red herrings in early stage companies come at you all the time. They can really kill your time as a founder. Watch out for them in 2019 and make sure you spend time on the things that matter most to building a successful company.
If you liked “Common Red Herrings In Early Stage Companies” and want to read more content from the Bowery Capital Team, check out other relevant posts from the Bowery Capital Blog.