Ted Lasso: Jack wasn’t a venture capitalist and Keeley wasn’t a start-up founder
I love(d) watching Ted Lasso. He entered our lives at precisely the moment that we needed him most. I love the camaraderie, the wholesomeness that verges on corniness, and the dedicated way in which each of its most troubled characters rebuild themselves.
But, I had some major qualms with some of this season’s plotlines, and the one that irked me the most was Jack-the-VC and Keely-the-portfolio-company-entrepreneur, because venture capitalists DON’T INVEST IN PR FIRMS. They don’t invest in managed-service businesses, in general. They don’t invest in anything that only scales as humans are added to it.
Everytime “VC” passed Keely’s lips, I threw things at our television. I know it’s fiction, I know that it is as realistic as Carrie Bradshaw’s column funding her Manolo obsession, but would it have been so difficult to replace “VC” with “investor”? Making Jack a generic investor would have been totally plausible, and wouldn’t have belied such a complete ignorance of how venture capital works.
This wouldn’t irk me so much if I didn’t think that there was a general misunderstanding of how venture capital and the companies it funds are supposed to work and why speed to market, speed to test, speed to verify, and speed, in general, is so very, very important.
Here’s the deal. Venture capital returns are supposed to be huge. 10X their investment. The revenue growth is supposed to be huge. If the goal is to grow by less than 100% this year, it’s probably not venture-viable. And the timeframes in which anything is to be accomplished are short and shrinking. Why? Because as soon as the investment hits the bank account, the clock starts ticking. Start-ups generally only raise enough money to accomplish a handful of milestones, at which point, they’ll have to go out and ask for more. It’s not a wait-and-see-how-this-market-develops-game, it’s a make-this-market-develop game.
And, it’s really important for entrepreneurs to understand how this dynamic, and this pressure, should impact their go-to-market strategy. If you have 6-12 months to make something of your business, you want to do the following assessment:
Be crystal clear on what you know and what you don’t know. Think of your sales process as a series of components that all have to fit together, like a puzzle: Target audience, customer acquisition plan, product, product pitch, customer buying process, competition, sales cycle and length, etc. You want to quickly test what you don’t know and go long on what you do know, to get that puzzle to fit together as quickly as possible.
Define success and set testing parameters for all of the components you don’t know. You have to test in order to figure out what you don’t know, but you can’t test indefinitely. Agree as a team on what success looks like for your different tests, how long to run them, and what leading indicators of success are. For example: If you feel confident in your target audience, but are testing different pitches, you could set a 30 day test and define success as a 40% rate of booking a demo following an initial pitch.
Define when you’re in the discovery phase of experimentation and the scale phase. You don’t want to pour all of your money into something that’s still an experiment, or hold back on an idea that has proved viable.
Abandon non-viable ideas. Holy hell this is a tough one, especially if it’s an idea that those investors I mentioned earlier really like. I have seen this so many times, it makes me heartsick. Entrepreneurs burn time and money trying to make work an idea that investors love, but customers don’t want or need. I don’t want to speak for the venture investment community, because I’m not a part of it, but I doubt they’re super hot on any idea that doesn’t eventually sell.
I’ll finish by saying that a lot of really great, ambitious, innovative businesses don’t need venture investment. They don’t need to be ruthless in their go-to-market strategy or be part of a multi-billion dollar sector. They can do incredibly well making useful things for people that want to buy them. They can do really, really well, like Keely with her PR firm.