What Startup Businesses And Wall Street Have in Common
This guest post was contributed by Adam Quinton, CEO and Founder of Lucas Point Ventures.
During a conversation with my friend and former colleague Roseanna DeMaria, we discussed how relevant our former careers on Wall Street seem to be in the startup world. Roseanna is an expert in organizational design and transformation, a top leadership guru, and a passionate educator.
Startup Businesses: identifying the value proposition
While true of any business, but especially for startups and on Wall Street, a strong value proposition is critical for success. As Roseanna noted, it exists on multiple levels:
a) The value created by the business model itself
b) The value delivered by the talent running the business and
c) How the culture/business DNA fosters a mindset around value creation
These three are usually inextricably linked and driven by business’ leadership — in a startup context that almost always means the founders. They determine how the business as well as the people in it perform. Value creation takes no prisoners; least of all in a highly resource-constrained startup. Get it wrong and your startup is, excuse the pun, a nonstarter.
Startups And Wall Street: similar imperatives
In comparing our work with early stage companies in the B2B space against our previous Wall Street experiences, we concluded that many of the imperatives that drove us during our careers on Wall Street seem to translate very well to the startup context.
Roseanna coined the term: “Wall Street-Ready Startup” to refer to a startup that has a clear understanding of value creation and with it an exceptional level of competitive drive and focus, combined with a sheer will to win that elevates its chance of success in what is a game with very long odds.
So what makes startup businesses “Wall Street Ready”?
We identified three characteristics:
1. Have a sense of urgency
Startups have no time for bullshit, professional or personal. Those that succeed just get things done by bulldozing or weaving around constraints to drive the business forward. It means setting tough targets and deadlines and holding everyone accountable to them, not least the founders. For all its faults, so gravely exposed in the financial crisis, an intense sense of urgency has always been a hallmark of Wall Street.
In my case, lived intensely as a sell side analyst, you were only as good as your last idea and you had to move like crazy to create and deliver the next one quickly in an environment where information was widely available and the number of other smart and hard-working folks trying to do the same thing was a constant source of pressure. One startup that captures this spirit is Hire An Esquire.
2. Put customers as priorities #1,#2, and #3
Ultimately customers are all that matter. In a B2B/enterprise context validation (and survival) is much more a function of getting entities often much larger than yours to pay hard cash for something that they have been persuaded adds value to their business. Which means you listen like crazy, respond, iterate, and treat the ones you have signed contracts with like gold. As the saying goes, startups fail for one reason … they run out of money.
So you have to drive as hard as you can to get money coming in to offset the inevitable early stage burn and de-risk the uncertainties of fund raising! The rise of the trading and proprietary risk taking culture at many Wall Street firms laid many of them low and devastated the economy. Still in my view many parts of the business, especially in the more commission-based equities arena (including research) and the financial advisory corporate finance side, adhered and likely still do adhere to the mantra, and do so obsessively, that the client always comes first.
Wall Street Ready startups think the same way however, to an even greater extent than Wall Street, they need to focus on the clients that matter. Resources are so limited and opportunities often so many. That means being very clinical in a) qualifying and prioritizing clients that are most likely to convert b) moving on from non responsive leads and c) saying “no” to prospects outside your target zone.
All of these require defined and repeatable processes, something that few startups work out until after they really need them. NopSec is a good example of a business that consciously looked to “build to scale, before it scales” thanks to the foresight of co-founder and CEO Lisa Xu.
3. Be the Wizard/ess of Oz
In the B2C space an attractive website or a well-designed app can give you instant credibility with millions. Not so in B2B. Startups selling to enterprise clients have to look and act like (much) bigger companies. You are selling, initially very much person to person, into a high level at established and often risk averse enterprises. You have to convince them that you can deliver, will support what you deliver and have a vision for your product that is compelling and aligns with their vision for their own business. And fundamentally at a personal level they must trust you.
That means you need to look and act the part — both in person and online: in your personal professional profile (LinkedIn) and your corporate one (your website and other marketing materials). It means seeking out opportunities not just to attend conferences but to speak or join panels — to look like a player not another observer. My pick for top startup Wizardess is Kathryn Minshew co-founder and CEO of The Muse.
Adam Quinton is Founder and CEO of Lucas Point Ventures. He is an active investor in and advisor to 13 early-stage companies. Adam is a founding Astia Angel and Chair of the Astia East Coast Advisory Board as well as an Adjunct Professor at Columbia University. You can read more of Adam’s commentary on startup and investing issues at Analyst to Angel.
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