3 Things I’ve Learned in My First Year as Founder and CEO of a Startup Company

2019 was Clanz’ first year – the year in which we converted an idea into a living, breathing product – one that truly brings value to its users.

Also, 2019 was my first year working in a startup.

Until I struck out on my own and founded Clanz, I was used to walking paved, well-defined paths, developing existing products in a resource-rich corporate environment. The challenges I faced were, by and large, technological.

And then, following a personal event, I decided to switch paths, leave the safe, structured corporate world behind in exchange for an uncertain and untrodden trail. I learned what it’s like to build a product from scratch, with minimal resources and support.

This post is going to discuss some of my experiences from the past year, and what guided me through the decisions that led Clanz to where it is today. 

Before we start, let me share some numbers.

In the past 12 months, we’ve:

  • Held more than 200 hours of discussing with 43 potential customers.
  • Analyzed over 150,000 hours of recordings from live environments.
  • Won four (out of four) competitions
  • Participated in two acceleration programs in Israel, and two in North America
  • Raised a few hundred thousand USD and Turned down two term-sheets of over a million USD.
  • Signed a strategic contract with a design partner – Israel’s largest private care provider – which has already started using Clanz’ product.
  • Signed 3 contracts with customers who are waiting for deployment. 

This introduction probably makes it pretty clear that we’ve stretched the managerial, technological and interpersonal abilities of this tiny team to the very limit.

Behind each of these numbers stand a story, dilemmas, and tons of work. Far too much for a single post. 

So instead, I’m going to try and distill this past year into the three main lessons that I’ve learned.

Listen More, Talk Less.

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One of the main things that we were focused on in this past year was market validation.

We aimed to understand the “bits and the bytes” which constituted our clients; what their challenges were, what solutions they’re applying today, how their cash flow works, which regulations they were subject to, and basically anything they felt like sharing.

It’s only today, after twelve months and over two hundred hours of conversations with potential clients – that I understand just how much I didn’t understand when we first started.

The conversations were focused on them.  We took special care not to talk about our product until the very end, both because it didn’t serve the main goal of getting to know them, and to avoid inadvertently creating bias. We dedicated the last five minutes of the conversation to tell a bit about ourselves and our solution.

We were surprised to see that interested parties asked to meet again and discuss a pilot at their organization on their own accord. This was how we essentially began learning what a sales process looks like; which roles inside an organization were relevant, how long it takes, what are the right business models, and more. 

Most of our learning process was based on meaningful conversations with our clients, relying on openness and attentive listening. After we laid down the foundations, we let the clients lead the way and suggest solutions that were right for them – meaning we didn’t come with a closed, packaged, “take it or leave it” approach.

Only by doing so, our customer’s pipeline today has more projects than what our small team can handle – so we decided to hunker down and learn as much as we can from what we’re already working on before expanding to new clients. 

At this stage, we should focus on quality, not quantity. We’re still in a stage of learning and improvement and we don’t want to miss out on important lessons and valuable information that we can glean from our current undertakings.

Business partnership is like marriage

It’s most common to apply this analogy to the co-founding team, but I actually think it applies to a wider group of people. 

A business partner, as far as I’m concerned, is anyone who has a meaningful long-term relationship with the company – whether it’s the team (both founders and first employees), investors, advisors – and most importantly: clients.

Allowing any one of these into the family can have some pretty fateful consequences.

When I tried to explain to one of my mentors why I was considering turning down a seemingly promising and strategic contract for the company, I wasn’t able to accurately articulate my reasons. 

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When he finally understood what it was that I was trying to phrase, he explained it in the best – and most simple – way possible: alignment of interests

Since then, that phrase has guided me in my choice of each and every one of my business partners.

Today, whenever I find myself considering a potential partner, I first ask myself the following questions: 

Do we want the same things for Clanz? 

Do we measure success in the same way? 

Is each one of us aware of – and agrees with – the other side’s interests in this collaboration? 

If I find myself answering “no” to any of these questions, there’s a high likelihood that the relationship will end in either divorce or an unhappy marriage. 

The best tool I know of to get honest answers to these pivotal questions is a formal agreement. Contracts put everything out in the open, black on white, and there’s no choice but to deal with and address the details – the nitpicky issues that generally don’t come up in verbal commitments.

Sometimes, when we talk about things without hammering out the details, it can seem like everyone is on the same page. I’ve discovered that with a contract, disagreements always float to the surface. More than just bringing them into focus, this is also the best way to see how the two sides reach (or don’t ) compromise. 

Raising Money – Double-edged sword

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When we think about startup companies, we tend to think about fundraising as synonymous with success. (“Have you heard of X? They’ve raised 50 million dollars!”) 

The thing is, no one seems to talk about the side effects and terms that come with each investment. 

As I’ve already written, I believe that choosing the right partners is absolutely critical – and that, naturally, extends to choosing the right investors for the company. It was a difficult decision to turn down investments – concrete, written contracts – of over a million dollars – a decision that’s almost unheard of among first-time entrepreneurs in the early stages of founding a company.

The contracts we were offered caught us unprepared, without a fundraising strategy or a dynamic of a fundraising round, and we were facing a dilemma.  We felt that the money was attached to terms that might slow us down later on. We eventually decided to go with our gut feeling and turn down the offer (intuition – for a much longer post all on its own).

In another unorthodox step, instead of raising money, we decided to use our first year to address goals dealing with the team, the product, and our business development.  To do that, we raised the bare minimum we needed to move forward.

We wanted to focus on proving the need for our product, establishing its market and the technology behind it, and then finding investors that would be right for us and serve as ideal partners – the kind that would let us move forward at a high pace, and under terms that would allow the company to keep growing.

To wrap things up

This is just the beginning for Clanz and the sky’s the limit. There is much more work ahead of us and there is no time to rest. And still, it is important for us to stop every once in a while, look back and learn the lessons we can from our own way, as well as the path of those around us.

Even in a small startup that’s moving quickly and almost drowning in the daily grind, there’s nothing like a good retrospective to help us improve and then get back to futurespectives.

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