#90- What makes early stage founders tick?
A perspective helping founders understand what is important
I met Ishan serendipitously online. He is the co-founder of GrowthSpree which is the first marketing partner for early-stage B2B SaaS companies and helps them increase their MRR and ARR. It caters to 50+ B2B SaaS companies like Toplyne, Rocketlane, Gumlet, Hasura, etc.
A couple of Zoom calls later, we met in person and chatted for half a day! Partnering with them was a no-brainer so Malpani Ventures counts them as a preferred partner. Since then, we’ve asked them for views on early-stage B2B SaaS companies we evaluate, and have referred some amazing companies - one of which is his biggest case study!
Ishan asked me a thought-provoking question recently.
What do you look for in very early-stage B2B SaaS founders?
There is no straightforward or right answer here. But I tried to provide a perspective which helps people understand how investors think.
The holy trinity of early-stage founder evaluation
Building startups is difficult. Early-stage startups are more difficult. For founders, it’s all about reducing friction. How?
Great founders tick most of these boxes:
Lived the problem to understand it deeply
Has a network of people experiencing similar problems
Can validate the solution built with people who experience the problem
Living the problem
It is difficult to build a solution for a problem you do not understand well. The people who understand the problem, have lived through the difficulty, have experienced piecemeal solutions, and have tried a bunch of tools are best placed to build solutions for the problem.
Kapil sold tech products but was unimpressed by the available tech stack for SDRs. The tools available were either half-baked or expensive or did not speak to each other well. He is building Clodura to solve this problem by incorporating data, outreach, and insights for SDRs into a single, affordable tool which is now used by over 2500 customers across the world.
Having a network
Startup Twitter tells you to create a landing page, run a few ads and get sign-ups before building a tool. These sign-ups can form a waitlist whom you can interview, get feedback, bounce ideas off, and build a solution which they may use.
But you know what is better? Having friends, peers, co-workers, and bosses who all lived the problem founders experienced. Founders can talk to them before taking the plunge knowing they can expect support, honest feedback, and the chance to validate the hypothesis when the time comes.
Chetan started a recruitment business in India after selling enterprise products in US & UK for 2 decades. When he thought about Callify, he tapped into his existing network of talent acquisition teams in Fortune 500 companies to understand the pain points and get real feedback. Without this honest feedback, he wouldn’t have been able to create a tool so seamlessly automated & well-integrated with its customers’ recruitment stacks. Today Callify helps Amazon, Genpact, Accenture, Capgemini, EY and many more recruit seamlessly in India, the USA, and the Philippines.
Validating the solution
Just talking and collecting feedback from prospects also does not cut it. Why? Because even well-wishers can cause harm.
The job isn’t done when you talk to customers who agree the problem exists. That’s the starting point. Andres said, “Find a problem the customer is willing to pay to go away.” And I couldn’t agree more. Founders need to validate whether customers are willing to pay for the solution to make the problem go away.
Siddhant & Vibhav experienced the problem of video piracy while studying at IIT-Delhi. One thing led to another and the duo created a secure video hosting platform to eliminate video piracy, and Vdocipher was born. But that was just the beginning. They validated their ability to sell the tool by working with a CA Prep Community, and a UK-based educator. It is now a multi-million dollar business working with over 2500 educators in LatAm, South East Asia, India, and the Middle East.
Founders who deeply understand the problem, have a network to provide support and feedback and can validate their solution with paying customers have a higher chance of success. Real-life examples, such as Clodura, Callify, and Vdocipher, demonstrate the importance of these elements in building successful startups.