Why do startups fail? Conventional wisdom would tell you it's because of lack of capital, a subpar team, or faulty product market fit.
These are all important. But in my experience, even if you have these factors in place, there's one thing that will cause your company to fall faster than a lead balloon, and that is this: Access.
Specifically, access to the decision maker that has the power to say "yes".
You can't move down the sales cycle if you don't know who the decision maker is. If you don't know her or can't find him, you are going to lose valuable time while burning scarce cash.
"Even if you have the best idea out there, gaining access to customers--retailers, telcom, government, packaged goods, whatever it is--finding and winning over the decision maker is the hardest, most important activity for a startup," Lance LeMay, managing partner at OpenAir Equity Partners, a firm that specializes in investing in startups focused in the mobile tech space. Says LeMay "Access to customers is more important than access to capital,"
A Problem with a Simple, Yet Hard-to-Execute Answer
The objective observer may say solving the "access to customers" answer is very straightforward. Simply hire or connect with someone who has worked in your startup's industry.
At a recent lean startup class, I asked some founders the percentage of time someone offered to help open a door to a key stakeholder (customer, influencer, VC) and actually followed up on their promise to assist. The answer? 1 out of 3--or 30%
In other words, 70% of the time the people they talked to--salespeople, well-meaning acquaintances or potential advisory board members--all offered hyperbolic platitudes with empty promises causing a founder to doubt their veracity.
In other words, they were full of crap.
They didn't really know the CEO of Very Important Business, Inc. And if they did, they were unwilling to actually dial them up and make an introduction to the startup.
Unfortunately it can take months to identify whether an employee, board member or well-meaning coffee date is, well, full of crap. This results in loss of money, time--things you don't have.
So how do you find the 30 percent? Or better yet, how do you grow it? Here are three strategies to try.
Rent Before You Buy
Try to get some understanding of a person's potential capability before hiring that person. If you're looking at hiring an advisory board member, consider offering equity only if certain obligations are met at the end of say, a year. If it's an employee, discuss a contractor arrangement initially, with the option to move to permanent hire if certain sales goals are met. If you're operating in a tight job market, ask for at least five references. Really probe whether your potential hire's contact list is as strong as s/he says it is.
Three Strikes and You're Out.
If a well meaning colleague insists they went to college with a person who can make your startup dreams come true, have faith that he or she will come through. Sometimes, well meaning friends and colleagues get busy and don't prioritize an introduction on the top of their already long to do list. The rule of thumb here is simple--follow up three times, in three different ways. If the response is radio silence, consider this a proverbial strike out and move on to someone else.
Pressure Test the Hustle
Let's face it, even if someone has a 1,000 LinkedIn contacts, they are still going to have to open doors and meet new folks. Put simply, they have to be able to hustle. So measure their hustle during the interview process. Ask the prospective sales or marketing person to take a test: Secure $500 for the charity of his or her choice. Ask to see the list of donors to ensure they're not mothers, uncles or grandparents. Also ask to see their pitch, email or landing page. They might scoff, but consider this: you're building a startup where success and failure is measured in days and weeks, not months or years. If someone rebuffs this assignment, consider if they're a good fit for the entrepreneurial-minded culture in the first place.
Ultimately, Authenticity is the Gateway to Access
Segura agrees that customer introductions are the lifeblood of a new company. "Access is critical to a startup's success, since results are often needed must faster than a typical company," Segura said.
But his approach is different, and maybe the most effective. "At the end of the day, access is enabled by real relationships," Segura said. "As a founder and employer, I value authentic relationships. I'd rather hire someone at the mid-level point of their career than a senior person with thousands of LinkedIn contacts but who lacks authentic relationships with decision makers."