You’ve heard the phrase “Hindsight is 20/20.” But ideally it’s an adage you don’t want to apply to your business. Take some tips from Mike Zivin, cofounder of Whittl, a personal appointment booking app startup that recently raised $3.3 million in Series A funding. Here’s what he says he wishes he would have known four years ago when his company was birthed.
1. Over-hire in key areas.
While many people believe a new company should hire slowly, or at least on pace with growth, Zivin disagrees. The reason? Startups attract risk-takers who often have eccentric personalities and some of these people are not going to be a good fit. “Either they didn’t know what they were getting into–it’s not a nine-to-five job–or they don’t have the level of flexibility that you need,” he says. “So when you’re only a handful of people and somebody doesn’t work out well then that really makes a big impact on the business.”
2. Don’t raise VC funds until you figure out your business model.
Once you raise venture capital funds you will be expected to make a certain amount of progress in 12 to 18 months. If you haven’t made that progress it can be difficult to raise additional funds. “So when you take that money you really need to understand what your business model is at that time,” he says. “You can’t use that money to figure out what your business model is, because the second you take those funds that clock starts ticking and you better start making progress.”
3. Reverse-engineer the metrics you’ll need for the next round of funding.
It’s important to understand what metrics drive your business and which ones you need to lock down from the start. For example, Zivin’s team knew that in order for the business to work it needed to sign up local businesses for less than a certain dollar amount. “From day one we went in there with the mindset that we’re going to design our processes and focus on things that are going to let us hit that number,” he says. “You don’t ever want to get in a situation where you can’t raise money, because you haven’t hit certain goals.”
4. Don’t assume online marketing is more cost-effective than offline marketing.
Get out from behind the computer and engage with customers in other ways. “The temptation is to want to go ahead and spend your money on Google or Facebook or Twitter or wherever else, because it’s easy, right? You can sit behind your computer, throw money at it, press buttons, run campaigns and monitor those campaigns, and that’s really easy,” he says. “But when everyone else is doing it then what you realize is that the stuff doesn’t work as well as you thought it was going to, and it costs you twice as much money.”