Product-Market Fit

Accelerators

Accelerators are incubators on steroids.

These programs recruit scalable companies that have shown early promise. They coordinate dramatic transformation within a compact timeline.They are like early-stage investment firms, as they provide seed funding in exchange for equity. Accelerators hedge bets by connecting entrepreneurs to resources, mentors, customers, investors, and community allies.

The rise of the accelerator model is interesting. Accelerators help entrepreneurs build stronger companies, but they need money to function. How do they support the financial investments in each company? What about staff salaries, community events, and all the resources they provide? There’s usually an initial fund raised to start these programs. Some accelerators also have financial infusions from sponsoring organizations. With this financial foundation in place, accelerators then depend on the performance of the companies in their portfolio. When a portfolio company is acquired or exits, the accelerator’s equity converts to cash or ownership options in more successful businesses.

As an accelerator’s portfolio performs, its reach widens and the program prospers. This motivates program directors to pick the right companies. It also gives founders the confidence that the experience is built for them to succeed. These complementary relationships are how accelerators make a lasting impact in less time.

Extra Shot

Incubators vs. Accelerators vs. Venture Studios vs. Coworking

For entrepreneurs, so much potential makes it easy to fall in love with the idea of being an accelerator-backed company. As business owners consider applying to accelerators, it’s important to understand the terms. When startup accelerators first started in 2005, they were industry agnostic. As this collaboration-based investment strategy has evolved, industry-specific accelerators have also emerged. This means there are more accelerators than ever and not all of them will be the right fit. The educational, networked, and cultural experiences matter. Entrepreneurs must vet accelerators like they would other equity investors. Do terms of the accelerator align with the long-term goals of your company? Will the implied results outweigh an intense time commitment? Even if it’s temporary, will the team be required to relocate? How deep is the network of fellow founders who have worked through the accelerator? Do portfolio companies stay connected? If so, how does that connected landscape support your work beyond the program?

The accelerator experience can be life changing for a startup. Based on a deep understanding of each company, these action-packed programs #GiveFirst and help build on what’s working. They also quickly identify areas for improvement. This empathetic support combined with a shared mission to grow allows accelerators and their portfolio companies to be more successful as everyone collectively builds to go big.

By Ben McDougal, ago

Stealth Mode

We’re all guilty of thinking our idea is better than it is.

Stealth mode is when entrepreneurs wait to start telling their story. Staying quiet about a new project often starts with good intentions. Curiosity and a bit of mystery can generate hype, especially if you’ve been successful in the past. Too often however, people hold onto silence because they fear feedback or that what they’re building may not work in the wild.

To avoid failure, the choice to continue building in stealth mode keeps everything safely in the workshop. This may be wise if the project needs work or when the competition are known pirates, but there are few ideas that require much secrecy. With 8 billion humans on earth, your idea is probably not unique and when it comes to shipping your art, it all comes down to execution. Survey the market and research existing patents to help guide decision making, but stealth mode will soon lag toward being an excuse to procrastinate. Even if you have something big, it can be deflated without the open air of honest feedback. Stealth mode may sound nice, but silence, pride, and fear can devolve into a suffocating sinkhole.

Extra Shot

Winners are good at losing.

If you decide to build in stealth mode, give yourself firm timelines. Determine if intellectual property needs legal protection. If you need to keep certain aspects of the project under wraps, do so while still allowing the idea to breathe. Stealth mode only works when it results in a stronger story. It’s hard to know how strong your story is unless you share it.

Yes, we can only be new once, but the leverage of a startup is an ability to quickly evolve. As your team connects with the true market through strategic, creative, and generous execution, humility paired with persistence will pay off in the form of confidence. Even if something fails, it’ll be more like a pit stop on your path toward product-market fit. Be a scientist. Experiment thoughtfully, iterate often, and invite doubt knowing that if you’re wrong, it can activate a signal that guides the project toward a more sustainable future.

Be careful with the comfort of stealth mode. Those who build in too much silence can go quiet themselves.

By Ben McDougal, ago

First in Line

There’s something special about being first in line.

Being at the front of a line means you’re committed. You’ve made some form of sacrifice to ensure you’re first to experience something you care about. The unknowns of arriving in time to secure this coveted spot requires a concerted effort, but a sense of pride materializes when everything goes to plan. When was the last time you where first in a long line? My hope is that the wait was worth it!

Extra Shot

FliteBrite is bringing our beer festival app out of hibernation. Here’s the line that inspired this week’s writing.

When I think about being first through the lens of innovation, first in line is not such a desired position. Being first gives entrepreneurs a chance to take an early lead, but early leaders don’t always win in the end. The headwind is strongest when you’re in front. When your art involves creating something the world has never seen before, enthusiasm from early adopters is often met with pernicious friction. One common source of friction is the almost endless time spent educating the prevailing market. This protracted process wears on even the most resilient and exhausts resources every step of the way. Along with frictions that come with being first, without any clues from past success/failures, it’s harder to avoid potential pitfalls as well.

There’s value in a head start, but the early market leader often falls behind the innovation curve. Please, never hesitate to forge into the unknown, but remember that when you lead, others will always be chasing you. If you’re building in front, stay ahead with epistemic humility, a challenge network that invites you to be wrong by avoiding groupthink, a genuine desire to accelerate others, and bold leadership that allows intrapreneurs to stay wild. If you’re the one chasing, which is far more common, you’ll need to be innovative to find product-market fit, but it’s nice knowing there’s an existing path with fresh opportunities to champion change in an existing environment.

Alright, let’s add some sugar.

What if we don’t have to be in the line at all?

The front of any line may be a traditional way of getting ahead, but this requires time with no guarantees and you’re still relying on some else to let you in. If this activity is something you really enjoy, be conscious of how business can sometimes kill your passion, but there’s usually a way to be less of a spectator by getting more involved. One way to do this is by combining your creative skills and an entrepreneurial spirit to wedge yourself into the experience itself. This requires initiative, but volunteering, building into a side hustle, or using content creation skills can quickly become your ticket to skip the line all together.

By Ben McDougal, ago

Feedback is Data

Customer discovery paves the path to profitability.

This really is the work for entrepreneurs starting a new business. Customer discovery requires curiosity, patience, humility, hard work, thick skin, an interest in being wrong, discernment, and a willingness to adapt.

For many entrepreneurs, impartial feedback can be scary. Customer discovery puts our ideas on the hook and conversations with strangers may contradict past assumptions, but that’s the point! Interacting with the market you seek to serve allows us to learn from “no” in a way that gets us to “yes.” As you collaborate with those who criticize what you’re building, learn why naysayers disagree with your hypotheses. Be humble and make your concepts more compelling to change their minds.

Collecting such real-world data is human and intellectual capital that will attract more network and financial capital. The more you learn from others, the more you’ll recognize—and be able to meet—true demand. This can be a protracted process, which can make it feel unnecessary, but honest feedback will strengthen your value proposition and allow you to eventually go further in the right direction.

When learning from the perspective of others, remember that feedback is only data. This data should be collected, organized, and examined like a scientist. Inference is more effective with more data, so the more feedback you have, the easier it can be to make decisions.

As you translate feedback into action, you must also find your own way. Even with good intent, people who provide you feedback are doing so based on their own experiences. The experience of others is based on the past and is unlikely to harmonize with your exact situation. There are many ways to build your business, so perpetually gather as much feedback as possible and use diversified data to guide your company toward product-market fit.

Extra Shot

My community visit with 1MC Joplin was sweet, this feature article was a neat chance to celebrate Global Entrepreneurship Week, I’m gathering my own feedback by presenting Pour Over Publishing at 1 Million Cups Des Moines, and the much anticipated YDNTB audiobook is almost done!

By Ben McDougal, ago

Pain Relievers vs. Vitamins

Think about the last time you were really sick. In those moments of agony, consider how much you appreciate pain-relieving medicine made to ease the torment. Most of us don’t hesitate to buy solutions that ease our pain.

Now, think about a time when everything was going your way. You may take vitamins to support a healthy lifestyle, but if you miss a day, who cares, right? Think about your medicine cabinet. For every vitamin you routinely take, how many others sit on the shelf collecting dust?

Vitamins are good, but pain relievers are great. This is an analogy we can bring into business. As you consider your product/service, are you providing something that solves the pain of a target customer, or is it a nice-to-have that may (or may not) provide clear value?

If you’re unsure, you probably have a vitamin. If people like the idea, but hesitate to buy, you probably have a vitamin. If you always find yourself explaining why someone needs what you have, you probably have a vitamin. How can such assumptions be made? Pain relievers are easy to spot. They sell as fast as the supply can keep up with demand.

Ready to mutate a vitamin into a pain reliever? Ongoing customer discovery is the best way to keep a pulse on your company and helps entrepreneurs build toward sipping from the holy grail: product-market fit. As you ease the true pain of your target customer, stories that sell (marketing) highlight how you do so. Forget the impressive jargon. Lean into the pain.

Extra Shot

Unrelated to this week’s reflection, I love local bookstores. I always spend more than I’ll ever make in sales of my own book on their shelf, but these places are just so cozy. It’d be hard to get rich, but the wealth of owning a bookstore must be endlessly rewarding.

By Ben McDougal, ago