Great companies create value by solving problems. Their customers get sufficient value from their solution to be willing to pay for it. Founders often have a strong conviction about the value of the problem they’re solving because they’ve lived it or researched it extensively. They feel quite sure that customers await them on the other side of a solution. This may be less obvious to others. Often, it’s challenging for early founders to convince investors of it when customers don’t yet exist.

Sometimes early founders feel caught in a chicken-and-egg situation. They can’t build or complete their solution without funding. And they can’t demonstrate that a market exists for it—they think—unless it’s in use by paying customers.

Founders should be aware that there are other ways to prove there’s a market for a solution. At the end of the day, what you’re trying to demonstrate is that people are experiencing a problem that they will pay to solve. You can do a prospective-customer discovery call and include investors. They will hear directly from the (future) customer about the problem and how painful it is for them. Hopefully the customer will say they’re looking for a paid solution or that they’ll pay for your solution when it’s completed. Another possibility is having a potential customer send an email saying the same sorts of things. A simple oral or written communication like this can go a long way toward validating what the founder believes.

If you can’t get customers to validate a need with their wallets, consider trying to get them to do it with their voices (or fingertips).

I caught up with a founder who’d gone through a rough patch. He’d been working hard to get his company off the ground, like most early founders do. He hit a wall. After talking it over, one of his big realizations was that working from home had negatively affected his mental state, contributing to his feeling burned out.

As I’ve worked from home, I’ve noticed the effects of not getting changes of scene that signal my brain to enter and later leave work mode. I stay in work mode and end up working longer hours. I haven’t experienced the burnout that this founder did, but I understand what he described.

Upon reflection, this founder realized that working in the office energizes him. He enjoys the change of scene and draws energy from working alongside others. He has now begun to spend more time working in the office and is feeling better emotionally.

Being self-aware is important for founders. Understand your strengths and weaknesses. Know what you need to be the best version of yourself. And know where your breaking point is (we all have one). I’m glad this founder was able to identify what he needs to thrive!

People don’t like hearing no. Myself included. We have a desired outcome in mind, and when things don’t go that way, it doesn’t feel great. Early-stage founders probably hear no much more than the average person. Investors, customers, potential hires—they’ll say no way more often than they’ll say yes. Founders should be aware that a no isn’t always a bad outcome.

Things at early-stage companies are constantly changing. But trying to figure out what changes to make is hard. You have imperfect information at best and limited resources. Your runway is only so long. You have to figure things out before it ends. This is where those noes can be helpful. Make a point of trying to understand why the answer is no. You’ll uncover insights that will inform the changes you need to make to start hearing yes.

Maybe potential customers are saying no because your product is missing a critical feature. Maybe investors are saying no because they don’t understand how you’ll use the money. Maybe potential hires are saying no because your hiring process is too slow. Now you know what to work on. The sea of things you could work on has shrunk to a manageable list or even a single change.

If you’re an early founder or considering becoming one, remember that no isn’t the end of the world. No is a lemon that you can make lemonade from if you uncover the why behind the no.

Demonstrating traction is important for any company, and especially an early-stage one. A lot of founders communicate it through standard metrics like revenue, number of customers, number of users, etc. Those are fine, but they aren’t the only indicators of traction. If you’re still trying to find product–market fit, giving people insight into your journey can be a great way to show that your company is gaining traction.

If you don’t have product–market fit, you’re no doubt talking to customers often to better understand their problem and what they need in a solution. Ideally, what you learn leads to changes in your product or service. Customers react to those changes positively or negatively. If you’re getting closer to what customers want (and will pay for), that’s traction. It’s not as easy to get across as, say, revenue—because it’s not quantifiable—but it’s still great traction.

If you’re an early founder and someone asks about your traction, consider sharing what you’ve learned during your journey toward product–market fit. Your customer and revenue numbers may not be going up yet, but what you’re learning could signal that you’re on to something big!

I spoke with an entrepreneur in Europe this week. She’s solving an interesting problem that her background makes her highly qualified to tackle. We talked about her journey to date, including her previous fundraising. Her experience was similar to that of other founders: raising capital from investors in Europe took a lot of time and energy, which slowed progress on her product. Toward the end of our chat, she expressed interest in learning more about US venture capital funds.

The pandemic has forced investors to ditch the face-to-face meeting requirement. It’s pretty much all video calls these days. I’ve seen how this is allowing founders to easily connect with investors in other states. Investors are now interested in writing checks into states and regions they used to ignore because of geographic distance. Boundaries have fallen and more investors are looking to invest nationwide.

My chat with this founder got me thinking. Will we see a surge in international investing as well? What does that mean for founders and investors? Making international investments is more complex (or so I assume). I’m not sure what direction this will go, but I’m excited by the potential and plan to pay more attention to this.

This week I listened to another investor share her views on early-stage investing. At this stage, there isn’t much of a company. It’s just a few folks, an idea, and maybe a product or service. There likely aren’t customers, users, or meaningful quantitative data to inform the investment decision. She believes early-stage investment is about evaluating the following:

• Narrative – What series of events did the founders experience or observe that led them to a problem or unique insight that others don’t see?
• Story telling – How well do the founders communicate how they view the problem, how they want to solve it, and the impact their solution will have?
• Team – How strong is the team? Do they have what it takes to solve the problem? Do they have sustaining motivation and passion to weather the ups and downs of the journey to the solution?

I really like how this investor approaches evaluating early-stage investments. It’s simple and makes sense. Early-stage founders should consider these three points when they’re deciding whether to pursue a problem and when they’re pitching.

Today marks the end of my fifty-third week of working from home (mostly). Here are my takeaways from week fifty-three:

• Expect the unexpected – Life throws curveballs sometimes. That’s OK; it’s just the way life goes. This week life threw one at me, but in the end, the situation worked itself out for now. Can’t let these set me back or put me off my game.
• Process – Whenever I do something involved on a fairly regular basis, I like having a process. When I don’t, I get frustrated and feel like I’m not making the best use of my time.  
• Admin time – I spent time this week doing admin stuff that I was behind on. I even got to inbox zero. I like having a chunk of time every week for this kind of work. Decluttering makes me feel like I’m on top of things.
• Spring – The sun shone a lot this week, and I loved it. Lots of pollen in Atlanta, too, but I can deal with that when it comes with great weather.

Week fifty-three was productive and upbeat. The month and quarter started out on a good note. I hope they end on one too!

This week I had unrelated conversations with two entrepreneurs who’ve bootstrapped their companies. They now have paying customers. One of them is looking to raise venture capital, and the other recently raised it. Bootstrapped companies survive on customer cash flow. There typically isn’t a surplus of cash on hand. This means founders are often focused on how they’ll keep the lights on. The runway is usually a few months long, if that.

Both founders are now faced with the possibility of an infusion of cash and 18 to 24 months of runway to execute a long-term vision. Until now, neither has had the luxury of thinking that far ahead. Homing in on their vision hasn’t been as smooth as they’d hoped. They’re finding it difficult to shift their mindset from survival to articulating the full potential of their company and a plan to get there.

Bootstrapping versus raising capital from investors isn’t a one-size-fits-all decision. It’s specific to the entrepreneur and their situation. Founders should know that the path they pick to obtain capital will influence how they’re able to think about their business. Bootstrapping fosters a survival mindset and thinking only a few months out. Raising capital from investors allows for long-term planning and execution.

There are exceptions to every rule and founders can be wildly successful on either path, but this is something founders should consider when they choose the source of their capital.

I recently listened to a founder’s pitch to an investor that went off the rails as soon as the founder opened his mouth. The investor struggled to understand what the founder was trying to communicate. The entire meeting was painful to watch. A few hours later, the same founder pitched another investor, and the meeting went great. What was the difference? At the beginning of the second meeting, the founder sought to understand his audience by asking a few simple questions. This allowed him to deliver his pitch in the way the audience preferred. The change was small but powerful. Here are a few questions founders can ask to help understand their audience:

• Have you had a chance to review any of our materials? Founders often assume investors have reviewed their pitch deck, one-pager, product demo video, etc. But sometimes investors haven’t received the materials or haven’t had an opportunity to review them. They’re human; they miss things. Some are just busy and run out of time. Understanding what they know about your company (if anything) is important. Filling in gaps is different from starting with a blank canvas.
• Where would it be most beneficial for me to start? Some investors want to dive straight into the solution you’ve built and the business. Others want to understand the founder and their journey that led to founding a company. Beginning the conversation with what matters most to the audience greatly increases the likelihood that they’ll clearly understand what you’re trying to do.
• Would it be more helpful to stay high level or to explain the details? For technical founders who live in the weeds of their technology, this is an especially important question to ask. Some investors love the technical details, while others love the big picture. It’s important to understand this and deliver your pitch at a level that interests them. Miss the mark and the conversation could spiral downhill fast.

Understanding the audience goes a long way toward helping founders communicate effectively and gain support. The questions above will help accomplish that, but it’s by no means an exhaustive list. Plenty of other questions would also work. Regardless of what you ask, I’d limit it to two or three questions.

Large companies can be attractive targets in a startup’s customer acquisition plan. Partnership deals can allow small companies to benefit from the sales machine at big companies (at a cost, of course). They often have tons of salespeople and existing customer relationships that are hard to replicate. Landing a big company as a customer can be equally as helpful. They may sign a deal that brings with it revenue that’s significant for a startup. And using their logo can help you close other deals.

Today I spoke with a founder who had a large company as a customer, to the tune of millions in annual revenue. Then one day the middle managers at the larger company decided to end the relationship. Overnight the revenue evaporated. The founder was scrappy and able to make things work in the end, but the situation was stressful, to say the least.

Targeting large companies isn’t a bad strategy for startups. It has tons of upside. If things go really well, a large company can account for a material amount of revenue. Founders should be aware that if that happens, a single relationship can make or break the company.

If founders pursue big companies as customers or channel partners, they should keep a close eye on what percentage of revenue originates from a single relationship—and continue seeking other customers, of course, to mitigate risk.