Being truly obsessed with your startup?

It's like dating someone you're really into. You think about them all the time, dream about them, and stalk their social media.

But, you know, in a productive way!

Be Truly Obsessed 

• Why Read:

  • Understand the critical concept of Founder-Future Fit, which can significantly impact your startup's success by aligning your authentic passion with your venture's future vision.

• Featuring:

  • Mike Maples, Jr (@m2jr) , Founding Partner at FLOODGATE

• Link: 

  • “Founder-Future Fit”

Key Concepts and Tactics:

• Understanding the Importance of Founder-Future Fit:

  • Point: Founder-Future Fit is a critical characteristic for breakthrough startups, referring to how authentically a team aligns with the future they aim to create.

  • "Founder-Future Fit means a founder or startup team aligns more authentically with a radically different future than anyone else. This alignment brings great advantages."

  • "Greatness rests not just on general traits like ambition, curiosity, adaptability, and a relentless focus on users. It hinges equally on how authentically a team aligns with the future they aim to create."

• Recognizing the Advantages of Authenticity:

  • Point: Authentic passion for future technologies enables founders to discover insights ahead of the curve and attract early believers.

  • "Authentic and practical passion for future technologies enables founders to discover insights ahead of the curve and grasp vital details overlooked by others. This greatly contributes to uncovering ideas with groundbreaking potential."

  • "This authenticity also draws in early customers, investors, and believers. Which gives the startup the edge over its competitors in achieving product-market fit first."

• Learning from Justin Kan's Contrasting Experiences:

  • Point: Justin Kan's success with Justin.tv/Twitch and failure with Atrium illustrate the importance of Founder-Future Fit.

  • "When Justin Kan co-founded Justintv, the idea of livestreaming one's life 24/7 seemed absurd. Yet, Kan epitomized the future he pursued. He embraced being an influencer before the term existed, driven by intrinsic motivation."

  • "Justin Kan attributed much of Atrium's downfall to his own lack of zeal for legal tech. Reflecting on it in our interview, Justin confessed to being driven by extrinsic motives."

• Recognizing Different Founder-Future Fit Requirements:

  • Point: Different opportunities require different types of Founder-Future Fit, sometimes favoring inexperience and other times requiring seasoned expertise.

  • "At times, a team lacking in experience is better suited for the future. They see new possibilities with a beginner's mind, unclouded by past experiences. In other cases, seasoned expertise and a proven track record is important to build customer trust."

  • "Take the founders of Applied Intuition. They create very complex software for autonomous and electric vehicles. When you deliver this type of software, you're talking to the CEOs of the major car companies. When they look at you across the table, they need to believe that you are the most qualified person in the world to solve their problem… it shouldn't come as a surprise that Applied's founders, Qasar Younis and Peter Ludwig, were raised in Michigan and worked at Google on its maps initiative along with Waymo."

• Prioritizing Founder-Future Fit Over Initial Product Concept:

  • Point: As a seed investor, Founder-Future Fit often outweighs the current product's correctness in predicting potential for breakthrough.

  • "As a seed investor, it's a humbling lesson I've seen repeatedly: founder-future fit often outweighs the current product's correctness in predicting the potential for a breakthrough. Founders can navigate the product to something else. But it's tough for them to overcome a lack of authenticity if it never existed in the first place."

• Aligning Opportunities with Your Authentic Self:

  • Point: Choose opportunities that allow you to be your best self and align with your intrinsic motivations.

  • "Being a great founder means choosing opportunities that let you be your best self."

  • "Founder-future fit is about asking which future aligns most authentically with who you are, what motivates you, what you know, and who you know."

• Be Truly Obsessed:

  • Point: Authentic passion for your domain is crucial for persevering through challenges and achieving greatness.

  • "If you're not chasing something you're truly obsessed with, you'll give up while a more passionate founder will press on. Often, that is what separates failure from greatness."

  • "In the end, being a great founder is largely about authenticity. You must believe you are the one to see the right product to build before anyone else. You need to be the best at inspiring early believers to follow you, and not other alternatives. You need to love the domain you are building in."

Beef-up Working Capital Before Your Acquisition

Why Read: 

• Understand how working capital impacts M&A deals, especially for tech companies. It provides crucial insights into negotiations that can significantly affect final deal values.

Featuring:

• CJ Gustafson (@cjgustafson222), Advisor at Maxio

• Link:

• “Negotiating the Working Capital Peg”

Key Concepts and Tactics:

• Understanding Working Capital in M&A:

  • Point: Recognize that working capital is essential for a business to operate post-acquisition and is a key negotiation point.

  • "Managing working capital levels is like gassing up the bus for a field trip. In order to get a certain amount of production out of your business, you need to inject a certain amount of fuel so the bus can go where you forecasted."

• Cash-Free, Debt-Free Basis:

  • Point: Be aware that most deals close on a cash-free, debt-free basis, affecting working capital negotiations.

  • "Most deals close on a cash free, debt free basis. That means the seller gets to keep all the remaining cash on the balance sheet after paying off any existing debts."

• Defining 'Normal' Working Capital:

  • Point: Understand that determining 'normal' working capital is subjective and a key point of negotiation.

  • "Buyers look at acquiring a business like acquiring a constant stream of cash flow, accompanied by the assets required to generate said cash flow, and supported by a normal level of working capital. The all-important (and subjective) word here is 'normal'."

• Working Capital's Impact on Deal Value:

  • Point: Recognize that working capital adjustments can significantly affect the final deal value.

  • "So it's subjective. And therefore it becomes a hot point of negotiation, which can swing a deal 1% to 2%. That's real value."

• Theoretical Intent vs. Practical Impact:

  • Point: Understand that while working capital is not intended to drive transaction value, it effectively can.

  • "While it's not intended to be a driver of value in the transaction, it effectively can be. But the theoretical intent is not."

• Technology Company Specifics:

  • Point: Be aware that working capital negotiations for tech companies may differ from those selling physical products.

  • "While he works at companies that sell 'real things' and have 'real profits' (LOL) I'm going to talk about this point of negotiation specifically from the lens of software companies."

Subscribe to Tactician

Tactics and strategies for building tech startups from industry-leading Founders, Operators and Investors.

No spam. Unsubscribe anytime.