Three weeks down, ten to go. Greg Capolino of Healthy Headie put it perfectly, “I can’t believe three weeks are already gone.” CanopyBoulder was a whirlwind of activity these last three weeks. Mentor sessions, social events, industry meetings, visits to established marijuana companies, and that doesn’t include the work going into pitch decks, business plans, etc. The mark of a day at Canopy is that surprised look on everyone’s face when we all realize it’s 4pm...where do the days go?
Progress in a business accelerator isn’t always forwards and learning that lesson has been a struggle for several founders not to mention the staff and mentors. Mentor whiplash, a phrase attributed to Brad Feld, is a tough reality as founders work with a variety of mentors. What is mentor whiplash? It’s that time when you ask two mentors “is it better to sell direct to consumers or through retailers” and the response comes back “yes” from the first and “no” from the second. Sorting through these conflicting pieces of advice is an ongoing challenge. We like to come back to the idea that this isn’t about finding the right answer, it’s about finding an answer that is right enough for your business to move forward.
Founder compensation has been a key topic of discussion as teams start to build out financial models. How much should a CEO be paid? How much can I pay myself? How do I structure financial compensation? Short answer, pay yourself as little as possible to maintain a decent lifestyle while you get going. Investors don’t want to see money flowing out of the business into employee’s pockets. That being said, investors also don’t want to see key employees (like the CEO) walking away from the business or distracting themselves with work on the side. Balance these two conflicting wants by keeping salary expenses low. Use bonuses for achieving valuation/growth milestones that align the founding team’s compensation with the risk profile of the investors. There’s a lot of talk about these number over on the excellent website Ask the VC and I strongly recommend spending some time perusing those pages.
Stress is becoming evident. Founders are tense about deadlines, tasks, and goals. We spent a good deal of the last week talking about managing that stress, keeping focus, and staying positive. A trick for anyone trying to run a company: if anyone else can do a task you should have them do it. Too often we see founders trying to do everything. Build websites, write copy, negotiate contract terms, architect business models, and oh yeah, talk with investors too. One of the hallmarks of a great manager is delegating tasks that can be delegated. Focus only on doing those things that only you can do, like hiring that web designer so you don’t need to do web design, or authorizing that attorney to review a contract for you.
Speaking of doing everything...one of our founders, Yoni Ofir, of Leaf, is doing an outstanding job pulling together a team from around the world including an industrial designer in the Middle East, a designer in Europe, and electrical engineers in Boulder. Checkout the Leaf grow system and consider signing up to help by being an early adopter.
Rough orders of magnitude were another lively topic of conversation. This is the back of the envelope approach to planning and it can be hard for founders to recognize the value of estimates when they spend every day in the weeds. How do you estimate revenues be in two years? Use a rough estimate to sketch out the concepts. Once you have an estimate it’s time to back into the details. Think you can sell $2m worth of widgets? What’s the acquisition cost/customer? How many sales does each salesperson make each month? Do those numbers make sense? Too high? Too low? Don’t worry about the cost of business insurance yet, just get the big picture stuff figured out first.