One thing that stands out is the closeness of the relationship between the Episode 1 investment team and the portfolio companies. Beyond a deep and defining mutual respect, there is also the stuff at the core of all good relationships – actually liking each other. This is evident at the CEO dinner. The idea is that 2+ members of the Episode 1 team and 20ish portfolio company CEOs come together for a session of networking, relationship building and startup troubleshooting. The advantage is that the startups are at different stages of growth, working on different priorities and therefore facing either different problems or (stage determined) variants of the same problems. In this intimate setting, the entrepreneurs are able to talk through their personal experiences of handling different issues, sharing their mistakes and failures candidly.
I won’t rehash the actual conversations (we live in the GDPR age after all), but will offer brief perspectives on the issues at the forefront of our entrepreneurs’ minds.
Product management: A product manager defines the ‘why’, ‘what’ and ‘when’ of a product that is built. For one of the CEO’s, the definition of ‘product’ extends beyond customer-facing products, to a range of key outputs for the company; for example, defining and implementing internal processes. The important thing, though, is that there is someone responsible for setting strategic direction including product roadmap and ideation, and – crucially – prioritising, because if there’s one thing that’s scarce in early-stage, fast-growing startups, it is resource. This becomes even more important as a startup scales and enters into the market entry / PMF stage, as the necessity to prioritise and deliver value (and understand what value is) also scales. I would argue, though, that startups need to embed the ‘why’, ‘what’ and ‘when’ thinking into the very earliest stages of solution development, building a habit of rigorous validation into their product development process. At the beginning, this might be owned by one of the founders, and as the company expands, the function can be broken down into the relevant departments.
Goal setting and OKRs: The wisdom underlying KPIs, OKRs and other measurement metrics is what gets measured gets managed. It’s hard to argue against that. The discomfort I feel with measurement metrics in early stage startups is that they can be completely meaningless. In the grey period before a company achieves PMF, measurement metrics can drive tunnel vision or lock-in to a particular strategy (which might be the entirely wrong strategy), or OKRs are chosen in a cavalier way to satisfy VCs and advisors, without clear goals and direction for the company underpinning them (because they’re still figuring that out, right).
This isn’t to bash OKRs. I think they’re great when done well, when they are clear enough to give clarity on what success looks like for the company, but broad enough to give tactical and operational flexibility. They are also great when done at the right time. In my view, companies don’t need OKRs before they achieve PMF. They need a management structure that enables them to pull forward in small sprints using the kind of nested cadences that OKRs do (high level strategic cadence, shorter term tactical cadences and regular weekly or fortnightly operational cadence), but with the realism and flexibility to understand that those early sprints should be heavily lined up with testing out critical assumptions and making necessary pivots.
What does this look like in practice? I don’t know yet. This might be a topic for a future blog.