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Monday night at Cross Campus, Techstars CEO, founder and managing partner David Cohen stopped by to promote the launch of its new co-venture, Disney Accelerator. Since Techstars is lending its network and accelerator structure to Disney for this 3-month program aimed at tech-enabled media and entertainment companies, Cohen primed the LA community with a long list of startup tips for those companies that may be applying (and for those that aren't). Here are 11 of Cohen's top tips of the night:
1. What are the two biggest startup killers?
“We see a lot of problems because people just don’t talk to each other as co-founders or to their investors about what their goals are. If people talk about what their plans are together, it really prevents a lot of these problems.
"Tunnel vision or belief without data can also be a huge killer. It’s the process of going and collecting data while using your gut. If you only use your gut, I believe that’s it’s generally a big startup killer because you are not the customer, as much as you think you are.”
2. As a founder, when do I replace myself?
"Most companies have three CEOs: 1) “They have a founding CEO: amazing idea, amazing passion for that idea, amazing energy to the product off the ground. 2) Growth CEO: the one who understands how to put systems in-place and understands how to get scale going. 3) And for those companies that do really well there’s the exit or IPO CEO.
So when you think about when’s the right time, when you see yourself kinda learning on the job constantly, it might make more sense to focus on the product, and the passion, and bring in someone to scale.”
3. How important is the passion behind a startup?
“The thing I look for as an investor is where does that passion come from? The source of the passion could be 1) Solving your own problem 2) Solving someone else’s problem. The whole myth of you have to be eating your own dogfood, that is a good source of passion, but it’s not the only one.”
4. How do I set my focus?
“If you are very, very good at a specific thing in a big market, then you get permission from your users to grow. If you try to do everything, you’re not going to solve all the problems, and you get known as a mediocre solution. If you think about Uber for example, hyper-incredible focus on doing one thing, super-well, for a long time. They added Uber-X, they tried some other things, those things took a long time before they did them. They were just obsessed with a product. With doing one thing and being the best at that thing, and they knew their adjacencies to grow into.”
5. How do you make sure you're the best in the market?
“The best founders I’ve met would never be satisfied with the product. They may be No. 1 in market share but they think, ‘There’s more I could do.’”
6. How do I know when it’s time to do the next market?
“When you have a repeatable scalable process, so in the case of Uber, for example, every time they launch a city they are profitable in six months. Repeatable pattern. They know how to role it out, They have a whole play book. They just keep doing it.”
7. When do I grow my company?
“I noticed a lot of the great companies I have been involved in, when they didn’t have it figured out, they stayed small. They didn’t overbuild, they didn’t overspend. They stayed small until they could figure it out. Stay small until you can’t, until you have to grow. I think the best companies really just learn how to stay alive. Don’t overspend, don’t overbuild until you have a thing, and then build infrastructure around that.”
8. Mentors: what’s the real value?
“I think that is the thing scalers do from day one; they build incredible networks. They surround themselves with people who have seen the things before, have connections, can open doors. And that’s really why accelerators work.”
9. How do you know when to pivot?
“One possible pivot is just fail. What I’ve seen, when you are just so tired and are you are pissed off at your customers, and nothing is working, and you’re out of money and you’re literally going into the stairwell and punching the wall, you’re so frustrated, that’s called having a startup. When that happens day, after day, after day, and you just don’t want to do it anymore and the passion starts to fade, it may not be a pivot it maybe we’re done.
I’ll give you a rule of thumb. When you’ve pivoted in a major way, like five or six times, there might be a bigger issue there. At that point, L.E.A.P. instead of pivot. Leave everything and punt. Forget the local maximum, just jump to something else.”
10. Should I have an exit stategy?
“I’ve never invested in a single company that has an exit strategy. I don’t think you should think about exit strategy. I think you should think about value creation. And when I see that it’s a huge turn-off for me personally. I don’t really care about that. That’s going to come if we create value and you have no idea who it’s going to be.”
11. What is the best customer acquisition strategy?
“Build an awesome product. It sounds really simple, but I mentioned product success, I think when you have a product people talk about you cannot beat that. When people look at your product and say ‘that’s magic,’ they talk about it."
