Building The Startup Team To Get Funded

How to Establish a Core Startup Team?

One of the earliest obstacles that founders have in managing a startup team is dealing with how to get things off the ground without sufficient funding or the right people.

During an eLuminate Mastermind Session on Getting Funded, Hatch.co CEO and co-founder Anastasia Leng was interviewed by eLuminate founder, Sharon Brown, about the struggles she had to go through at Hatch with building a startup team.

 

Starting With What You Have

For Leng, she and co-founder Ryan Heyward had just left Google to pursue the Hatch business concept and that they were very passionate about. She moved from London and he moved from Tokyo so they could work together in New York. To get the website running, they had to hire a developer, since neither of them were coders.

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Fortunately, one of Leng’s friends from London came calling, offering his services. Leng, of course, was hesitant about it, quickly telling him, “look, I can’t pay you” but the guy insisted saying he believed in their business idea and that he’ll work for free until the business gets proper funding.  So, they decided to get him onboard as part of their startup team.

Leng looks back on the experience with a hearty laugh saying the three of them worked “on a couch” as they were building the company.

Bringing New People In

As their online marketplace started to grow, they eventually had to begin hiring additional people which, according to Leng, was “really hard.”

She felt the first 10 to 20 people they hired should perfectly fit in the kind of culture they were hoping to establish. Bringing new people onboard, she says, is crucial because it means picking the people that would “help you build your business and solve your problems.” In short, the startup team has to be just right.

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Getting Rid of Those That Do Not Fit

Leng also pointed out that sometimes it is best to fire people immediately instead of keeping them in the company too long. She shared how they were quick to get rid of people that they felt did not fit in their culture.  Acting quickly prevented further problems.

During the hiring process, the co-founders also had a specific set of traits they looked for when they interviewed candidates. For example, they asked situational questions that would really get the applicants thinking. Those who thrived when their answers were challenged were hired, but those who were a bit defensive were eliminated from consideration. Leng wanted to see potential and brilliance.

She sums up her startup hiring strategy by saying, “I don’t care whose idea it is as long as it’s the best idea for the company.”

 

How Is Product Success Defined and Measured?

By Sharon Brown

Success for new product features can be defined in a number of ways.  However, the answer depends on the metrics that are important to the organization, and how the product aligns with the business objective.

Key measures that I have used on various projects to determine product success are all defined during the product development planning process.  These include, but are not limited to:

  • Quality
  • Financial
  • Technical
  • Stakeholder
  • Compliance
  • Performance

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It is imperative to define what I call the key Product Acceptance Criteria (PAC) to get everyone on the product team on the same page about the specific metrics that will be used to define success.

For example, a new system may include throughput as an important criterion, and the ability to process 80,000 statements per hour may be required to meet a certain SLA (service level agreement).

Please share your comments and ask questions below, and I’ll look to write a followup post if there’s enough interest.

Rising Chargeback Fraud Impacting Startups

With digital sales reaching an all-time high, retail startups are cautioned to beware of rising chargeback fraud, and advises taking proactive measures to prevent losses.

Retailers must not only be experts at creating revenue opportunities, but they’re facing greater challenges in retaining customers, since many online competitors have leveraged customer service policies as a way to entice buyers.

As online and traditional card payments are on the rise, dispute mitigation and risk management firms warn that the growing proportion of online sales may be accompanied by an unexpected rise in related fraud losses due to increased chargeback activity.

Study: True Cost of Fraud

According to the LexisNexis True Cost of Fraud Study, large eCommerce merchants lost an average of 1.39% of revenue to fraud in 2015—a substantial increase over the 0.85% average fraud loss in 2014, and more than 2.5 times higher than the 2013 estimate of 0.53% average fraud loss.*

While those percentages may seem relatively small, they can translate to tens of millions in losses for large eCommerce merchants; and with the percentage of fraud loss steadily rising each year, the trend suggests that fraud will continue to account for growing financial losses.

“Managing fraud in the online channel is far more challenging than in brick-and-mortar stores, particularly since EMV cards were introduced to thwart point-of-sale credit card fraud,” explained Monica Eaton-Cardone, co-founder and Chief Operating Officer of risk management firm Chargebacks911.

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Do Customer-Friendly policies Lead To More Fraud?

“It’s the age of consumer entitlement, and there’s no going back,”Eaton-Cardone stated. “This means that retailers must not only be experts at creating revenue opportunities, but they’re facing greater challenges in retaining customers, since many online competitors have leveraged customer service policies as a way to entice buyers.”  Startups must be mindful of the potential negative impacts of such relaxed policies.  Even more established online retailers need to heed the risk of liberal customer-friendly policies.

For example, retail brands such as Zappos allow customers to return items within 365 days of purchase for a full refund, while Amazon is now facing competition from Walmart in the online environment it created. Eaton-Cardone likens the current situation to the one-upmanship of gas station wars; 24-hour delivery was followed by Saturday and Sunday service, and today consumers can receive orders at their doorstep within the hour.

“Unfortunately, the evolution of consumer behavior has changed the customer service climate for good,” she explained.  Consumers will often resort to chargebacks for a refund if they’re unsatisfied with an online retailer’s customer service.

chargeback

Fraudulent Chargebacks

Some customers have gone on to file fraudulent chargebacks as a way to obtain goods for free. In fact, Chargebacks911 has found that half of those who get away with a fraudulent chargeback will file another within 60 days, thereby multiplying each chargeback loss by a factor of 1.5.

To overcome these challenges, the risk management company advises all eCommerce merchants to provide the level of service which consumers have come to demand:

● Alternative customer support options, since today’s digital consumers may resort to chargebacks if email or online chat are not available.

● Rapid delivery options, for consumers who demand immediate gratification.

● Traceable shipments, so customers can track their packages and merchants have proof of delivery.

Effective risk mitigation and chargeback management are essential to prevent card-not-present (CNP) fraud, and have evolved to include retention analysis and policy review. To stay ahead of the increases in fraudulent claims, some startups may soon need to introduce additional policy changes to address online fraud.

 

* LexisNexis. 2015 LexisNexis True Cost of Fraud Study; September 2015. lexisnexis.com/risk/insights/true-cost-fraud.aspx

Paying Yourself: Founder Compensation

eLuminate Entrepreneur Mastermind Session hosted by eLuminate founder and CEO, Sharon Brown. Entrepreneurs discuss founder compensation and the decisions they made about the timetable to pay themselves.

Investor Funding – Getting the Wallets Out Of Investors Pockets

Entrepreneur Mastermind Session: Getting the Wallets Out Of Investor’s Pockets

 
Event registration link: ow.ly/scNxx
Join this in-depth eLuminate Mastermind Session that will focus on the rigorous aspects of investor funding for entrepreneurs.
 
If you are an entrepreneur with an early/late stage startup and you don’t know the answers to these questions, you need to register for this event today:
 
1. What’s the anatomy of a good pitch deck?
2. How to find Angels?
3. When you should and should not seek Angel / VC investment?
4. Mistakes entrepreneurs make when seeking funding / negotiating with investors?
5. What do investors expect after you get funded? 
 
Mastermind Keynote from Jeanne Sullivan, StarVest Partners
Presentation from Elizabeth Crowell, Angel Investor
 
Agenda:
1:00-2pm  Elizabeth Cromell           Insider View on Angel & Angel Networks
2:15-3:30   Sharon Brown              Entrepreneur Roundtable on Staying Funded
3:30-4:00   —                               Give-Get Networking Session
4:00-5:30   Jeanne Sullivan           Getting The Wallets Out Of Investor’s Pockets
5:30-6:00   —                               Q&A
6:00-7:00   —                               Networking Reception
 
 
Location:
Hippodrome
1120 6th Ave (43 & 44th St) 
4th Floor, New York, NY 10036
Event registration link: ow.ly/scNxx

 

eluminate_speaker_STARVEST_Jeanne_2Jeanne M. Sullivan
Co-Founder and General Partner
StarVest Partners

Jeanne M. Sullivan has been investing in and growing tech companies for many years. She is a founding General Partner of StarVest Partners. Jeanne has over 23 years of venture capital experience and has spent 30 years in the technology sector encompassing both extensive operating and investing experience with technology companies. Ms. Sullivan has extensive experience creating “go to market” plans for early and expansion stage companies. Her expertise also includes strategy, a keen understanding of the technology landscape and industry trends. Prior to her venture experience, Jeanne gained her operating experience with AT&T and Bell Labs while serving in product and industry marketing roles.

Ms. Sullivan is a sought-after industry speaker on the subject of “how to get the wallets out of investors’ pocket.” Jeanne serves on the board of the New York Venture Capital Association and serves as a member of the Astia Global Board of Trustees, an organization that empowers women entrepreneurs. Forbes recently cited Sullivan as “one of the women VCs changing the world – grooming the next generation of female entrepreneurs.”

 

123_linked in_elizabethcrowellElizabeth Crowell
Angel Investor & Entrepreneur

Elizabeth is the co-owner of Sterling Place, a multichannel retail company that sells eclectic antiques, fine home decor and specialty gifts. Built on her passion for finding and giving the perfect gift, the business has gained a well-known reputation for its tantalizing merchandising and white glove customer service. Profitable from year two, the business has steadily grown, with three store locations in Brooklyn, as well as a website. The business has been profiled by the NY Times and Elizabeth has been a repeat guest expert on Martha Stewart Living Radio.

Elizabeth’s own positive experience as an entrepreneur has inspired her to assist others to achieve their dream of business ownership. Most recently, Elizabeth is de-mystifying how to finance and fund businesses by writing a Funding 101 series for the award-winning magazine, TheNextWomen.com. Elizabeth is able to draw on her experience from both sides of the table as she is not only an entrepreneur but also an investor. Elizabeth was selected as one of 10 in the inaugural class of Pipeline Fellows, a program designed to train women to be angel investors in women-led social ventures. She is in the process of building out her own angel portfolio, with investments made in such diverse companies as an organic ice cream maker, a non-profit technology provider, and a SaaS marketing campaign optimizer. Most recently, Elizabeth has taken on the role of Market Lead for Astia Angels NYC, a new angel investment group focused on investing in women-led high-growth ventures.

Elizabeth is a member of several boards including the Atlantic Avenue BID, where she spent five years as the Founding Chair and the Leadership Advisory Board of the Girls Scouts of Greater NYC. She also serves on the Advisory Board of a Philantech, a private company.

Elizabeth graduated cum laude from Smith College in 1993, is an active fundraiser for the college. Married with two wonderful school-age children, Elizabeth is blessed with an incredibly supportive husband.

Event Sponsors & Partners

 

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