Catalina Daniels and James Sherman are startup company founders, angel investors, and co-authors of SMART STARTUPS: What Every Entrepreneur Needs To Know—Advice from 18 Harvard Business School Founders, on shelves today, October 10th! Which is my birthday, so feel free to leave FUTUREPROOF. A review on Apple Podcasts in my honor, and thanks in advance!
Anyhow, I really enjoyed SMART STARTUPS since it provides unconventional advice for entrepreneurs based on the experiences of 18 companies founded by Harvard Business School graduates—including unicorns like Rent The Runway, Gilt Groupe, and more.
Daniels and Sherman studied entrepreneurship together at Harvard Business School. Years later, their experiences as founders were drastically different from what they learned at HBS. There was so much they learned the hard way, that they wish they wished they had known beforehand. And as angel investors and mentors to founders, they’ve seen many promising startups fail due to unexpected pitfalls.
Below is a ChatGPT-assisted summary of the conversation.
Lessons from Startups: Gleaning Wisdom from the Journey
In the intricate world of startups, where challenges and triumphs intertwine seamlessly, it’s crucial to have guiding voices that shed light on the right path. The recent podcast featuring Catalina Daniels and James Sherman, hosted by Jeremy Goldman, dives deep into this realm, dissecting the journey of startups and founders and the invaluable lessons one can learn from them.
Building the Right Team
Every startup’s journey is unique. However, a recurring theme resonates with almost every success story – the importance of the right team. While individual brilliance can spark an idea, it is the collective efforts of a committed team that can fan it into a roaring flame. James Sherman aptly commented, “It’s the complementary strengths and shared values that really help push the needle.”
For any startup, initial stages are brimming with challenges – from financial to logistical. In such times, a team that stands united, believing in the same vision, can make all the difference. As Catalina Daniels put it, “You want a co-founder, but you don’t necessarily need one. The real question is, can the team move the business from the ideation stage to a successful business?”
Making that First Sale
Landing the first sale is a rite of passage for any startup. It signifies a real-world validation of the idea and can often pave the way for future successes. Discussing the challenges associated with the first sale, Daniels emphasized the importance of the founder’s role. “Landing your first sales is a challenge for any kind of business,” she stated. Daniels cites the example of Zumper, a real estate marketplace that faced intense competition upon its launch. By integrating creativity with resilience and launching tools that offered unique benefits for landlords, Zumper managed to build its supply side in just two years. Such a strategy can be the gamechanger for many startups. “It’s about being involved and using creativity,” Daniels elaborated.
Navigating Funding Challenges
When discussing startups, one cannot ignore the ever-important subject of funding. As Sherman rightly points out, not every business is suitable for venture capitalist (VC) funding. Some might thrive better when built organically. Using his first business, West End new media, as an example, Sherman explained that while it did not seem like a business that would skyrocket to astronomical heights, it had the potential to be profitable without external funding.
While funding can propel a startup to greater heights, over-funding can be a bane. “There is a temptation, if you have momentum in your industry…you may get money thrown at you,” warns Sherman. This over-funding can result in unnecessary pressures and a change in a startup’s strategic direction. “You have to be very careful of death from overfunding. It is a risk,” Sherman pointed out.
In this context, Sherman brought up the contrasting stories of Blue Apron and Plated. While both companies belong to the meal kit industry, their financing strategies varied significantly. Blue Apron’s aggressive funding strategy, while initially successful, encountered challenges. On the other hand, Plated’s more conservative approach allowed them to be bought for over 200 million dollars, benefiting both investors and founders.
Navigating the startup world requires a combination of resilience, strategy, and adaptability. Whether it’s about building the right team, making the first sale, or devising a funding strategy, lessons from seasoned founders like Daniels and Sherman are invaluable.
As Jeremy Goldman aptly concluded, “There’s wisdom that is broadly applicable towards creating the future, towards getting other people on board and inspiring other people to come along for the ride.” For anyone in the startup ecosystem, or even outside of it, these insights can serve as guiding lights on the road to success.