The following post was originally posted on Brunchwork.
Seasoned entrepreneur and investor Alex Iskold recently spoke at brunchwork. If you are involved in the startup scene, especially in New York, you probably already know Alex from his position as a Managing Director of Techstars, the leading accelerator. Before Techstars, he founded and sold two startups: Information Laboratory, which was acquired by IBM in 2003, and GetGlue, which was acquired in 2013.
Now an investor in over 40 different companies, Alex shares his advice for early stage founders:
1. Know your market.
Entrepreneurs should be well equipped with expertise in their industry. In fact, founder/market fit is one of the main criteria that companies need to be selected by Techstars.
“Don’t start companies in the spaces that you don’t know anything about. Your parents are willing to pay for you to learn in college. Investors aren’t willing to pay for you to learn something you don’t know.”
If you don’t have the necessary expertise and are still itching to create your own business, attach yourself to other early stage companies, learn from them and gain the experience needed.
2. Think about revenue early on.
The mistake that many early startups make is that they are wrapped up in the problem and their solution. However, they don’t have the numbers to support them as a viable, revenue-generating business. These numbers are paramount to investors.
“The definition of business is revenue that can support itself. The best dollars are not venture capital dollars. They are customer dollars.”
3. Be strategic about what metrics and KPIs you track.
Big data allows businesses to keep track of practically everything, but that doesn’t mean that they should. In fact, Alex said, “When you have too many metrics, it is as good as having zero metrics.” Entrepreneurs need to focus on and understand “which numbers drive [their] business and why.”
“There are no universal KPIs, but there is a universal system of applying KPIs to every single business.”
At Techstars weekly KPI meetup, companies are organized into groups depending on their business model.
4. Start pitches with a hook.
A common mistake founders make when pitching is they begin by talking about the problem they are solving.
“People want numbers, data, some sort of facts to latch onto.”
Entrepreneurs can grab investor attention by first highlighting their expertise in the space, their number of paying customers, or their existing investors. When companies lead with the problem, “people tune out and that is because, unless they know that you have some sort of traction or you are qualified, it’s just abstract words,” Alex said.
As the Managing Director of Techstars NYC, Alex Iskold has helped dozens of young entrepreneurs and businesses develop their strategy, build their brand, and receive the funding they need to realize their potential. He is also an avid blogger, so if you want to learn more valuable insights about starting a business, check out his blog here.