Authentic Demand: Why We Love It In Our Studio
What, Why, and How To Find It
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“Authentic Demand” is the most important, most frequently discussed concept in the Atlanta Ventures Studio.
We bring it up with almost any founder at the idea stage.
We talk about it constantly when we are starting new companies.
“Where is the authentic demand??”
Today, I’m breaking down (overexplaining???) Authentic Demand.
What the heck is it? How do you find it? How do you know if you have it?
All wildly successful startups have found Authentic Demand.
Authentic Demand is when the market pulls you.
It’s when you are building something people want, you’re solving a hair-on-fire problem, the boulder rolls down the hill.
With Authentic Demand, you don’t need to execute perfectly. The business grows anyway.
Authentic Demand is when there are multiple winners in your space because the market is on fire.
Great founders can grind it out. They can get customers through their sheer force of will, sales skills, and relationships. They might even be able to hustle to a decent outcome.
But they will not build a large, high growth business without Authentic Demand.
A billion dollar company requires something beyond a great founder.
It’s the right timing, market, and solution.
From the founders that have experienced the non-Authentic Demand grind and then find a business with the Authentic Demand fly wheel — they say things like:
“I’m having so much fun!”
“This is the growth I was hoping for.”
“It is hard but feels easy.”
“It felt fast from the beginning.”
“I knew we were onto something almost right away.”
“These are interesting problems to work on.”
P.S. These are the same founders. Yes, you need a great founder. But a great founder in the wrong market will never build something big!
It’s the million billion dollar question!
And we definitely don’t have all the answers.
But here are some things that guide us as we start new companies or help founders in the early stages:
Use The Mom Test for customer discovery. Don’t pitch your idea, but rather, look for the most painful, expensive problems that someone is experiencing. Ask lots of questions of lots of people.
Look for small but growing markets. What will be a big market in 3-5 years? Picking the right market is more than half the battle.
Explore multiple markets and ideas. Don’t pick the first idea that seems promising. Spend time in the idea phase to see what “pulls” the most.
Testing. Lots and lots of testing. See what people will spend time on, pay for, share with their friends. Trust what they do, not what they say. 😉
Stay open. The first iteration is rarely the “winning” idea. Get started, put something into the world, and continue to learn and listen to customers. (Like, really, actually listen. Don’t just hear what you want!)
Financial constraints are helpful. It forces better listening, more testing, and scrappy and creative solutions. Too much money can actually blunt Authentic Demand signals. Fancy marketing, well-trained sales people, and a robust product can result in some revenue. But is it really Authentic Demand? Hard to tell.
You cannot research your way into Authentic Demand. It’s important to understand the market, competitive landscape, and industry, but it’s the conversations, experiments, and action that really lead the way.
7 Ways To Test Authentic Demand (With Real Examples)
4 Things We’ve Learned in the Atlanta Ventures Studio
4 Ways To Test Your Tech Idea (With Real Examples!)
5 Resources With Great Ideas On Getting Started
Build-A-Tech-Company Starter Pack
Here’s more from Atlanta Ventures folks about Authentic Demand.
Like I said, we talk about it a lot! 😂
The Hunt for Authentic Demand (David Cummings)
Authentic Demand’s Role in Startup Success (David Cummings)
Finding Authentic Demand (Jon Birdsong)
Finding Authentic Demand (A.T. Gimbel)
0 to 10 Unaffiliated Customers as 1st Major Milestone (David Cummings)
What Is Product Market Fit? (A.T. Gimbel)
Why You Should Start With Things That Don’t Scale (A.T. Gimbel)
3 Big Ideas When Launching Your MVP (Hubert Liu)
Stay tuned for more on Authentic Demand with real life examples, things that seem positive but are not, and promising early signs of traction!
How did you know you had Authentic Demand? What’s your guiding principal for finding a great business idea??
You made the hard decision to shut things down. What next?
Read MoreYou made the hard decision to shut things down.
It’s a rollercoaster of emotions.
But as an ambitious, optimistic person — I know you are because you started a company! — you naturally want to take action and move forward.
I’ve talked to many founders before, during, and after this transition, including ones who launched fantastic companies on the second go-round.
Here’s 6 things to help you get through it and get ready for (hopefully🤞) the next startup.
Closing a chapter, even when it’s the right thing, is hard.
You put your heart and soul into something and it didn’t work out how you hoped.
Take time to process that, explore your feelings, and come to terms with the experience.
If you skip this step, you run the risk of a “rebound” company or life decision.
I say mourn, not wallow. Don’t pretend it was nothing, but don’t let yourself sink into despair.
First of all, you did something brave and hard and risky. That’s amazing and most people will never do that.
Also, that first company is setting you up for whatever’s next. The lessons learned will be carried forward into something even better.
If you’re having a hard time, here are some things to focus on:
Exercise
Sleep
Healthy food
Human connection
Outdoors
Helping others
Therapy/coaching
BEING A BADASS WHO IS RESILIENT AND HAS MORE GREAT THINGS AHEAD!
What do marathon runners and founders have in common?
They have one of two visceral reactions when crossing the finish line:
I’m never doing that again
I’m definitely doing that again
Sometimes it can take a bit of time to decompress, but I rarely hear someone in the middle.
It’s a no or a hell yes.
You catch the founder bug — or you are glad you tried but happy to be done.
If you caught the founder bug, congratulations! Keep reading.
If you didn’t catch the founder bug, congratulations! Keep reading. (A few things won’t apply, but most will.)
What a lucky day for all blog readers!
Real talk.
How are your finances?
I know founders who poured their savings into their company, didn’t take a paycheck, have a family, or all of the above.
Sometimes, you just need a steady stream of income for a while:
Rebuild the savings account
Pay off debt
Enjoy some financial stability, health insurance, and overpriced coffee drinks
If you know you want to found again but need a “regular” job, what role or company would help you develop skills for your next company?
Founders are often strategic about this.
They get enterprise sales jobs, explore new industries, or work for amazing leaders — with a plan to take those learnings into the next business!
What are the things you wanted to do in the middle of startup chaos but couldn’t?
Do those now!
They don’t have to be wild and crazy. It might be as simple as:
Read a book
Meet a friend for brunch
Volunteer at your child’s school/team
Mid-day nap
Visit your parents
Anniversary trip
Anything else you wanted to do when “I have more time”
These are a gift to yourself and your loved ones and will help you recharge!
Get it in now…before you start your second company 😉
The post-mortem, good and bad, is key!
What went well?
What didn’t work?
What do you want to do differently next time?
How will you ensure you do it differently? What is going to change?
When were you having the most fun?
What are areas of weakness? How can you improve or mitigate those?
Most founders have already obsessed and agonized over what went wrong.
Here’s how to make it productive and action-oriented:
Write it down. Putting it into words forces clarity.
Set goals for the next business. e.g. I will do at least 100 conversations before building anything. If I don’t have $100k in revenue within a year, I’ll find a different idea. Put these in a calendar reminder for the future!
Look in the mirror. If it’s all your evil co-founder’s fault, you haven’t done the work. An evil co-founder was chosen and enabled by you in some way. Understand your patterns so you don’t repeat them.
Get an outside opinion. Talk to trusted advisors and ask about their takeaways for the business and your performance as a founder.
Last but definitely not least…
Start laying the breadcrumbs for your next endeavor:
Build relationships with people you like and respect
Find interesting topics and dig in
Run tests, research markets, try out new technologies
Do things that are fun, energizing, and fulfilling
I had a founder use the phrase, “Follow the stepping stones.”
She wasn’t forcing an idea or a process but rather naturally moving to the next question, meeting, or topic.
You never know who you will meet, what will spark an idea, or where the next business will come from!
If you’ve gone through this process, what helped you? What do you recommend to other founders?
P.S. If you’re exploring and want inspiration, A.T. Gimbel wrote a great post about markets in need of disruption and we’re always brainstorming ideas and markets in our Venture Studio!
How do you get important people to your events? Here's the step-by-step strategies.
Read MoreHow do you get people to your events?
Host it and they will come…is not gonna do it.
I’ve planned and attended hundreds of events — good, bad, and ugly.
Whether you’re hosting an event for prospects (most common), customers, or key stakeholders, the key to getting anyone to attend is having important, highly successful people there!
Get the bigwigs, everyone else will follow!
How do you get those busy, important folks there? Why are people attending events? What other strategies do you need?
Here’s the overview on the must-have components to get important people to your event!
If you host an event — especially if it’s a general, open to the public one — selling and job hunting are the primary motivations of attendees!
For smaller, invite-only events, it’s more nuanced — but almost always part of the motivation in some way.
Don’t fight it. Use it to your advantage!
The majority of attendees will be people who sell to your target attendee.
This is true of any event, large or small. People are busy. They make time for events with ROI!
Examples:
Venture Atlanta: Founders go to meet investors, investors go to meet founders. Win-win!
Dreamforce: Sales people attend to sell their products. Sales people are also users (and buyers) of Salesforce!
When we’d host Pardot user groups, we’d have two main buckets of attendees: new users and experienced users.
The experienced users were genuine Pardot superfans.
But often, you’d find they were also looking for a new job.
Makes total sense!
Meet other companies who use the same platform.
Talk to the company itself to see if they have customers who are hiring.
It was a win for us (great attendees) and a win for them (job hunting) and a long term win for everyone (more happy Pardot users at more companies).
The key to a great event is having successful, important people there. But they are busy.
Here’s 4 ways to make sure that key prospect or local legend is in attendance!
Want to get someone awesome and extremely busy to your event? Ask them to do a fireside chat or be on a panel.
Whether it’s for the PR, helping others, talking about themselves, or all of the above, you’re much more likely to get a yes for that than just a regular invite!
Panels and fireside chats are especially effective because:
no one has to prepare a presentation
you can have multiple people on stage, including the interviewer
Want to get a busy person to your event?
Give them a tiny plastic trophy and a round of applause!
Seriously though, this is why awards events or including a “lifetime achievement honoree” as part of an event are so effective.
Even the busiest person can usually squeeze in a thank you to their parents and “too many people to mention”!
One time, someone asked me to be a co-host for an event. Anticipating a sponsorship request, I cautiously asked for more details.
All I had to do was re-share a social post and attend!
So, no work or money from me but I got “credit” and a public shoutout?
THIS is event ninja skills.
The event organizers had a stable of co-hosts - everyone sharing to their networks with guaranteed attendance. Knowing the co-hosts will be there increases attendance and is a “hook” for regular attendees.
Here’s some other examples:
You know who attends PTA meetings? Members of the PTA (and their friends they roped into it 😉).
Who buys tickets and tables at fundraising events? The board members of the non-profit!
Want a great turnout at a customer event? Have a Customer Advisory Board. They feel ownership and responsibility to attend, especially when you send them a 1:1 request. (You can also make attendance required for your CAB - ha!)
I know many women founders who will always make time for lunch with other up-and-coming women founders. They genuinely want to help and pay it forward.
When I attended Main Street Demo Day, they had a brilliant variation of this:
They invited 10 people to be panelists over two different sessions. (Strategy #1)
Each panelist had a table where attendees could join for a smaller group discussion and Q&A. Attendees rotate after 15 minutes.
It was personal, efficient, high impact, and fun! (e.g. 15 min with each person = 10 hrs, but small groups = 30 min total)
This is the same reason that experienced founders will meet with less experienced founders over lunch. Small groups are efficient but personal, plus everyone needs to eat!
If you ask someone to be a speaker, but your event is in a dingy basement 3 hours away, that’s probably a no.
Ask a busy person to speak at a swanky restaurant that’s close to their house? Sure!
Here are 5 factors that can improve attendance but:
None of these are enough on their own!!!!
You need to layer together as many of these strategies as possible.
For example, when you combine networking, with great learning content, at a hot new restaurant, with well-known attendees, you’ll get a great turnout and worthwhile event!
People love to learn.
There’s different formats that work: peer-to-peer sharing, your company presenting best practices or insider info, a customer case study, advice from a panel, inspiring and educational content from your keynote speaker.
Note: You can get people to attend once with a great workshop title or premise. But you gotta deliver or they won’t come back.
All those high-profile folks who are hosting, getting awards, or on the panel? They are a big draw.
If the event is billed for C-level executives, you can expect folks who are:
newly promoted to a C-level title who want to meet new peers
folks with VP titles who aspire to C-level
PLUS: C-level execs who are selling or networking, of course 😉
At the most basic human level, we are all excited to be part of and/or meet more of the “cool kids.”
I’ll just tell you right now — if you invite me to a work meeting at a spa, I’m rearranging my week. 😂
Lauren Goodell, sales genius, did an event for C-level executives at a dry bar (get your hair blow dried) with 100% attendance.
Golf invites and the Porsche Driving Experience are go-to events for a reason.
Busy, successful people say yes to cool things!
When the invite said first-come-first-serve on our Founders Cup gift bags, I had multi-millionaire founders arrive right at 3p so they didn’t miss out!
(And I’m not judging because I am a SUCKER for free stuff. “Why, yes, I DO need 12 more pairs of sunglasses,” I say at every swag display. 😎)
Host your event at the hot new restaurant or club (why I host everything at The Perlant or Intown Golf Club #sorrynotsorry) and you’ll get higher attendance because everyone wants to “check out” the cool spot.
I love running so it’s an easy yes for me to attend Founder Funder Jogs!
Tapping into a secondary affinity for your event is another great way to drive attendance and engagement.
Examples:
College alumni
Religion
Race/ethnicity
Gender
Sports
Industry
Career or job title
Location
Lifestyle or age range (Moms, Under 40, GenX)
Usually it’s a larger category (business) with a sub-category (moms).
The more targeted the niche, the more natural the connection among attendees (e.g. Founder Moms Living in Decatur, UGA Lawyers Who Love Baseball).
Tradeoff: more targeted = smaller pool of potential attendees.
Timing, location, and parking all matter. Reduce friction!
If it's too hard, people will say
“Traffic is bad, I’ll never make it on time, sorry!”
“Sorry, couldn’t find a parking spot!”
What you want them to say is:
“Oh, it's quick to swing by!”
There's a reason the Founders Cup is 2-5p on Friday:
No rush hour traffic to get there
Rarely conflicts with work meetings (because Friday afternoon 😆)
Make it home for dinner
No special childcare
The easier you can make the event logistics, the more likely you’ll get a good turnout!
Want to host a great event?
You gotta know WIIFM (What’s In It For Me).
The human psychology WHY of someone’s attendance.
And it’s never (only) because they like your startup.
What’s been your best event and why was it great? Any other key drivers to add? What advice do you have for event planning??
Need help thinking through how to get attendees at your next event? Shoot me a note - I love this stuff!
2 back-of-the-napkin calculations to make before you raise!
Read MoreHere I am on my soapbox about why you should not anchor on valuations reported in tech news. 😜
That’s from Main Street Fund Demo Day where I was reminded of two very helpful, back-of-the-napkin fundraising formulas, thanks to the talented founders and thoughtful questions!
Simple.
Obvious (once you know them).
With math that even my 8 year old can do.
These are not hard-and-fast rules but they are a helpful starting place to think about valuations and future growth.
Here are 2 “cheat codes” every founder should know before they raise capital!
Quick review on valuations before we start.
Valuations are driven by:
Revenue, traction
Growth rate
Company stage
Industry
What the public markets are doing
How competitive the deal is (multiple interested parties bidding up the price)
Market comps (what happened with other companies like yours)
The story you tell/what investors believe about the upside
A firm’s unique thesis (e.g. Tiger Global circa 2021 offered high valuations as a sales point, PE firms are typically price sensitive while strategics are less so)
Specific terms of a deal (e.g. higher valuation but more downside protection for investors)
And a bunch of other stuff
Here’s a deep dive if you want more!
You may hear that it’s more art than science. There’s a lot of different factors that vary in importance depending on the firm and the deal.
So that’s what’s happening at a high level. Some factors are within your control, some are not.
Now, the simple venture math that investors know — and you should too!
Implied valuation: The amount you raise signals your valuation, whether you say it aloud or not.
If you’re a first-time fundraiser, you may not understand this:
That the amount you are raising is a key signal to investors.
The baseline is 20% dilution. Put another way — a company valuation of 5x the amount being raised.
Investors expect their investment to result in 10-25% ownership after the round, depending on the deal. So there is negotiation and it’s not set in stone. But it is identifying a valuation range.
It’s similar to identifying a job title in the interview process. There’s still a salary range and negotiation. But “CMO” signals something different than “Marketing Manager.”
Let’s look at some numbers…
Example: Startup Raising $250k
10% dilution = investor will own 10% = 10 * <amt raised> = $2.5M valuation
20% dilution = 5 * 250k = $1.25M valuation
25% dilution = 4 * 250k = $1M valuation
Example: Startup Raising $1M
10% dilution = investor will own 10% = 10 * <amt raised> = $10M valuation
20% dilution = 5 * $1M = $5M valuation
25% dilution = 4* $1M = $4M valuation
It’s important to understand what you’re signaling to investors!
Yes, there’s still a range of valuations and everyone will negotiate.
But you can’t raise $100k at a $20M valuation. Or $5M at a $6M valuation.
(I mean, you can. I’m sure someone has done it. But we’re talking norms here.)
Once a valuation is agreed upon, you can take more or less money to impact dilution (possibly — some firms have a minimum investment).
You can also say you have a range of what you are raising (e.g. $1-2M) This gets a little tricky because investors want to know how you are going to use the money and you have to have multiple financial models. But basically, you just grow faster.
The other reason most founders put the amount they are raising but not a specific valuation (even though it is implied) is Negotiation 101! Never throw out the first number. 😉
You don’t want to anchor too hard or scare someone off by saying a number too early. There’s still a range of valuations (4x-10x) within that raise amount.
2x Valuation: Each future round ideally doubles the last, so you need to plan for the next one before you close this one.
When a company is raising a funding round and wants to understand the implications of future fundraising and dilution, here is the simple math:
What is your ideal valuation next round?
Double the valuation from this round!
Example:
This round = $5M valuation
Next round = $10M valuation
Next next round = $20M valuation
Why does that matter?!?!
Your valuation this round leads to implied revenue and growth numbers for future rounds.
Work backwards to understand your growth targets:
Next round = 2x this round’s valuation
What does growth rate and revenue need to look like get that valuation?
Can I hit those growth and revenue numbers?
Can I get there with the current funding?
✅ If YES → proceed to world domination!
❌ If NO → revisit your financial model and overall growth plan.
Do you need more capital now?
Is your valuation too high?
Do you need more efficiencies or better growth/leverage somewhere?
Example (high valuation + downstream effects):
This round = $50M valuation → omg, yay. I’m amazing
Next round = $100M valuation → ok, gonna need $1-10M revenue to get this valuation…uh oh, took longer than we thought. Only 250k revenue 😬
Next next round = $200M valuation → Need $10-20M in revenue. Gulp. 🥴
This isn’t the end of the world! You don’t have to 2x valuation. But it’s a good point of reference to understand what the best companies are doing and long term implications.
It’s tempting to get the highest valuation possible. Less dilution, big market signal, fun reward for a founder’s effort.
But there’s downstream effects.
The bar for growth is very, very high.
No wiggle room for unexpected growing pains, hiring missteps, or economic speed bumps.
You may have trouble raising or receive a less favorable valuation in the future even though the company is doing good (but not great).
It’s always a balancing act!
Negotiate the best deal possible while still setting yourself up for future success.
There’s no perfect valuation — higher or lower has tradeoffs — and the future is unknown.
The economy could be booming, there could be a pandemic, or we could have both at the same time! (Random example.)
Every fundraising deal will have its own unique circumstances and there’s exceptions to every rule.
These formulas are not set in stone (have I given enough disclaimers??) but it’s helpful to have a high-level framework to know how investors may be thinking about deals and valuations. No spreadsheet required!
Any favorite valuation frameworks or tips? What surprised you most about fundraising?
(P.S. If you’re thinking about fundraising or want more info on valuation, feel free to shoot me a note or join our Office Hours this month!)
I see thousands of pitch decks a year.
Some are incredible. Some are…not as incredible.
(Cough, resources to help, cough.)
Some are almost incredible but they have surprising red flags!
Every investor is different and pitch deck preferences can vary wildly depending on industry, company stage, and personality.
So I can’t speak for everyone but here are 3 things I consider pitch deck red flags that you may not expect!
Not deal breakers but something to dig into further…or just fix them now ‘cause you know I’m including #PROTIPS!
Let’s turn those red flags green and get to raising! 💚💚💚
“I would have made this blog shorter but I didn’t have time.” - me, every week.
Also, Mark Twain.
Also, sometimes, founders.
Telling a concise story takes time and clarity.
The tighter you can tell the story, the better.
If you need lots of words to explain who you are and what you do, it’s a red flag that:
you’re trying to be all things to all people
you don’t really know who you are as a company
you’re not good at storytelling (aka sales, #1 job of a founder)
Also, I literally mean “words.”
Can you use pictures, graphs, key stats to convey the same idea? How skimmable is your deck?
Investors don’t know how to read are moving quickly. Make it as easy as possible to get the main point!
#PROTIP
Use your 4 word elevator pitch to anchor your deck. Put it on the opening slide. Here’s tips on how to find your very short company description.
I’ve said it before, I’ll say it again:
If you don’t list your revenue early and often…I THINK YOU DON’T HAVE ANY!!
Put your revenue front and center, please and thank you!
It’s possible to raise without revenue or customers, but 9 out of 10 times you’re better off getting some early customers (lots of scrappy ways to do this!).
Then you can raise money more quickly with better terms.
Even raising a pre-seed round (which can be pre-revenue), most founders will have compelling data.
#PROTIP
Have your revenue, customer logos, or hockey stick ARR graph at the beginning to grab the attention of your audience!
Include (short) customer quotes, a snapshot of your many 5-star reviews, or a quick ROI metric from a real customer (screenshot from an email or dashboard!) as social proof of your value and legitimacy.
Let your customers tell your story for you.
Don’t forget to mention your business model. Investors care about random things like how you make money! 🤑
Here’s what I think happens — founders want to establish credibility and/or want their company to seem “legit.”
Or maybe someone tells them, “How do you know what you’re doing? You don’t have experience in XYZ. Bring on people who can do XYZ.”
(I get SO annoyed at this advice!!!)
Enter the slide with 20 pictures of people with big titles.
^^ EEEEEK! That’s either a time drain, money drain, or both!
A few people who are awesome? Great. Approved!
But more than 3 or 4, is like, what is going on here???
I know that you have many smart, wonderful people on speed dial. They love you and want you to succeed. No need to include them all!
Also weird:
Having too many employees for your company size/revenue. Having a bigger team is not necessarily better. Investors just see higher burn and low output (revenue) per dollar spent. (This changes if you’re Series A or higher. Org charts and team are part of due diligence.)
Having too many senior/exec types. They are expensive and not great at scrappy startup work. That you recruited 1 senior exec to join you is a good sign. But 3-4 when you’re <$1M ARR…red flag!
#PROTIP
Craft a personal elevator pitch for you and your top advisors, investors, or employees. What are the key highlights? How can you explain who they are in as few words as possible?
Company or school logos work well here! A picture is worth a thousand words.
Have you heard of other red flags? What surprised you about raising or pitching? Any other #protips?!?
What if your next exit could be 50% bigger, 2 years faster, and (mostly) tax-free?
Read MoreWhat if your next exit could be 50% bigger, 2 years faster, and (mostly) tax-free?
Ummmm, yes please!
ICYMI (you probably didn’t tho), the One Big Beautiful Bill (OBBB) Act dropped over the summer with some great updates for startups!
Yes, you still have to build an awesome company but many of these provisions:
Help you increase cash flow
Offer more financial upside at an exit
You’re already working hard!
Work smart too!
And don’t worry — this is not a boring tax explainer. This is the real talk on what actually matters for startups, distilled beautifully by Meredith Kowal at Aprio (huge thanks to her for laying out the main points 🙌).
I attached their one page summary below that has fewer jokes but has been reviewed by very professional and smart people.
Hopefully this goes without saying but I’m just a gal with a startup blog.
ALWAYS talk to a real tax professional (ahem, Meredith, ahem) before overhauling your financial strategy.
Fun Fact: Infinite Giving published a great read on OBBB for non-profits last week! Great minds think alike. 😉
The crown jewel: Qualified Small Business Stock (QSBS).
Exclusion cap jumped from $10M to $15M.
Holding period shortened to a tiered 3/4/5 years.
Translation?
Founders, employees, and investors can see faster, larger tax-free exits.
Equity comp is (even) more attractive.
You could have a great liquidity event in 3 or 4 years, you don’t have to wait for that magic 5-year mark anymore.
Have you ever amortized domestic R&D costs? Yeah, me neither. But finance and tax folks remember the pain!
Now, thanks to OBBB:
You can immediately expense R&D again.
Even better: you can apply it retroactively to prior years.
Translation?
MORE cash flow and more fuel for things like hiring and building!
Two big wins here:
100% bonus depreciation is back — and permanent.
Section 179 limit increased to $2.5M with a higher phase-out threshold.
Translation?
Buy software, hardware, or equipment your startup needs and expense it immediately.
No slow drip of deductions.
The only thing predicable at a startup is…your tax policy? Correct!
The Qualified Business Income (QBI) deduction — up to 20% — is now permanent.
Interest expense rules are more favorable, which means debt financing is cheaper and more flexible.
Translation?
Forecasting and planning is a little smoother. Your CFO sleeps better.
Carried interest rules? Untouched. If you have VC investors, their business still works the same way. (I’d read this as good news. No one wants stressed investors, changing up their financial models.)
Excess business loss limitations? Expanded and made permanent. That means founders can’t lean as hard on early-stage losses to offset non-business income. (Not ideal but now we know and will come out in the wash with your big exit! 😉)
Lots of good stuff for startups.
Use ChatGPT for anything you don’t understand! I learned a lot in writing this article and ChatGPT was way more helpful than the IRS docs. #sorrynotsorry 😬😂🥴
Talk to a tax professional.
Say thank you to Meredith Kowal the next time you see her for inspiring this helpful post!
Key Provisions of the One Big Beautiful Bill Act: What Tech Startups Should Know
(And more info on the Aprio website.)
Has anyone already changed strategy because of OBBB? Which one of these updates are you most excited about?
Should you persevere or wind it down? Here's how to know.
Read MoreYou know that resilience is a key quality of a successful founder.
You’ve heard the stories of perseverance.
Is the big breakthrough just around the corner?
Or are you the last one to realize what is obvious to everyone else: it’s time to find a different path.
It’s hard because:
Your determination and ability to ignore the doubters is what got you here!
Startups have high highs and low lows. It might be a dip not a downward slope.
You’ve heard the stories about billion dollar companies being 1 day away from defaulting on payroll or taking 3 years to find authentic demand. What if that’s you??
All great founders start multiple companies. They don’t all work out. Shutting something down is hard but it can also be the start of the next big thing.
(It’s why we love working with second-time founders in our Studio — regardless of the outcome of previous companies!)
If you’re wondering if it’s time to pivot, find a soft landing, or wind things down, here are 6 considerations to guide you.
It’s good. But is it great?
You are awesome. (As are all founders and O’Daily readers. 😉)
Time is limited.
Could you be doing something bigger and better with more authentic demand and more potential to be a billion dollar business?
It’s hard no matter what. Make it worth it.
Talk to founders who are doing really well. Talk to later-stage founders who built something big.
Ask them:
what it felt like early on
when they knew
what the growth rate was
what challenges they had
how it compared to other businesses they started
At Pardot, our marketing manager did implementations for a year because we were onboarding customers so fast.
We were promoting people every 6-12 months.
We had upset customers that didn’t quit because the product was too helpful.
Everyone on the sales team hit quota multiple quarters.
That’s what it feels like when things are working.
When was the last time you asked a fellow startup founder, investor, or mentor this question:
“If you were me, what would you do?”
It might be that no one will proactively tell you, but they are thinking it and waiting for you to ask.
(P.S. If you want an objective perspective from someone who has seen a lot of companies at different stages and traction levels, feel free to reach out. I’m always happy to ask a bunch of questions and give honest, kind feedback.)
Have you tried multiple times to bring on sales people?
Founder-led sales are key early on and it can take a misfire or two before you hit your sales stride.
But if the product can only be sold with founder magic, it’s time to ask why.
(See the Pardot sales example above!)
Another watch out: growth that’s steady but not accelerating. You should be bringing on customers at an increased rate over time!
Do they get mad when things are broken?
Are they referring other customers to you?
Do they email you to rave about your product or relentlessly share feedback?
If your customers like you but don’t love you, that’s concerning.
What’s most likely is that a few customers love you.
Enough to give you hope but not enough to accelerate the fly wheel.
You need most customers to love you.
That’s how you know you’re a must-have, 10x better product that people want!
We worked with a founder who tried several businesses before landing on a great idea with authentic demand.
His comment:
“This feels completely different. The boulder is rolling downhill.”
The previous ideas had been months of selling, testing, delivering, iterating — over and over without meaningful customer enthusiasm or momentum. It was a slog.
It was pushing the boulder up a hill instead of chasing it down a hill.
At the beginning every founder is pushing a boulder uphill. That’s the search for authentic demand.
When you find a hair-on-fire problem or unique insight, the boulder crests the hill.
Then you’ve got a rolling boulder. It’s easy, exciting, and fast!
Trying to control a boulder downhill is still really hard with it’s own challenges. It can go off the rails, you’re trying to keep up, it has a life of its own.
But it’s a different hard than pushing a boulder slowly, slowly up a hill.
It’s hard to build a startup.
It’s harder to shut one down.
The best founders I know have as many failures as successes.
What they do really well?
They know when to move on.
They can see the big picture without ego.
They have courage, self-awareness, and a willingness to learn.
They want to spend their time on a downhill boulder…and will keep going until they find one!
For more advice on this hard topic, check out Time To Pivot Your Startup, Or Time To Move On? from fellow Atlanta Ventures partner A.T. Gimbel.
How did you know it wasn’t working? What is a subtle sign that founders often miss? Any advice for a founder thinking about whether to continue or change course?
25+ strategies and specific recommendations for getting it done at work and home.
Read MoreWhen you’re in the startup trenches, it’s easy to forget there’s life outside of your business.
Here’s a reminder:
People have families!
ALSO:
When you support them as parents, you feel better inside, they do better work, and the human race continues!
You know when is a good time to publish a post on being a working parent?
Right after a holiday weekend 😉
Welcome back, Moms and Dads!
Let’s start at the beginning of working parenthood.
Help your company help you → 5 Free & Low-Cost Ways That Startups Can (& Should!) Support New Parents
Get ready to be out on leave (including spreadsheet templates!!) → Having a Baby? 4 Startup-Friendly Steps To Prep For Your Leave
Key reminders for leaders and parents → 6 Considerations For Startup Parental Leave (That Doesn’t Suck)
I can’t speak for dads (never been one), but I don’t know many people more ruthlessly efficient than working moms!
Here are things that the happiest, most effective working parents (and humans) do regularly.
Get clear on your priorities. You can’t do it all. Know what’s important and do that. High revenue, high impact items first.
Learn about the decision tree so you can delegate effectively and don’t be a bottleneck! You don’t need to do it all. Use the resources and people available.
The task you are dreading might be an exciting learning opportunity for someone else.
This includes your own 😂
Pulling all-nighters or 7a Zoom meetings may not be possible anymore.
Manage “up” extremely well, including saying no to your boss. (Also works on investors 😉)
Most people don’t need things instantaneously, they want to know when to expect them and have them delivered on time.
No time for fluff meetings. Make sure it’s important and audit regularly. Bundle similar activities together. A no-meeting day can be a life saver in getting stuff done. Here’s all the tips!
Regularly saying no (examples and more examples of how to do this politely) is key to prioritizing and having time for the priorities. Saying no is the hardest thing for me. But practice makes perfect and I do it anyway! 😂
Be aware of how you might be getting in your own way or procrastinating. No time for self-sabotage!
Have the A-Team around you including interns, contractors, executive coaches, or anyone else that can help you survive crush it.
Having great people around you makes it more fun and lightens your load! By “lighten your load” I mean that you only do your job instead of your job and everyone else’s 😂
The other part of the working parent equation is the non-work side!
How to manage allll the other things so that you can be present and happy at work.
It’s things like:
Sleeping
Eating
Social connection
Getting outside
Movement
Hobbies (lol. you can have 1, maybe 2. Pick wisely.)
Here’s ideas on how to make it work. I’ve done all/most of these so I can vouch!
Especially daily routines. Updos instead of blow outs. A closet full of black jumpsuits (real life). Taking a break from social media. Eating the same breakfast. Anything to reduce cognitive load for things that don’t matter to you!
I run with friends → social connection, outdoor time, movement, hobbies in 45 minutes. ✅✅✅
Lunch outside with the team → social connection, eating, outdoor time, enjoyable work ✅✅✅
Stroller playdate with a bestie.
Walk your kids to school.
Meal prep party with friends (or family).
Team yoga retreat.
Networking over breakfast.
My husband and I did a morning run date as part of daycare drop off. Run child to school in jog stroller, talk about life on the way home. Exercise, weekly date, childcare, doing daycare drop off anyway ✅✅✅
You get the idea. How can you combine favorite or important things?
Is a morning workout a pipe dream right now? Have you eaten canned soup 4 days in a row?
It gets easier.
Do what you can!
Little things add up AND progress is empowering.
Incorporating small daily habits is key for busy founders with or without kids!
Here’s 6 examples of tiny healthy habits which don’t even include a walking treadmill for meetings, using a fitness tracker for steps or sleep, or easy lunches and healthy fast food options!
Here are some quick, healthy homemade snacks in 3 minutes or less.
Household (Laundry, Meal Prep, Gifts, Errands): Accomplished App
Meals: Thistle, Radiant Health Kitchen, Livin
Groceries: Instacart, Amazon (only $10/mo for Whole Foods delivery!)
Handyperson/Fix-it: Dandy
Giveaways: Loop Stuff
Calling Your Parents: Happy Talks
Clothes: Fashivly
Financial: Habits (we invested), StashWealth
Cleaning, Lawncare, Fitness, anything else you can think of!
If you’re worried about cost, run the numbers or get creative.
You may find that grocery delivery decreases impulse purchases, a meal service offsets restaurant spend, or your company can cover or help with some items.
A motivated college or high school student can probably handle everything on this list! (You know how much I love interns for this very reason.)
#1 reason for working parent meltdowns? Co-parent miscommunication.
That’s not an official stat but I bet I’m right.😉
Make a list of weekly to-dos and add DRIs, get clear on the priorities, have a weekly sync.
Time to apply all those work skills at home!
Seriously though:
Patrick Lencioni’s The 3 Big Questions for a Frantic Family
Job board (for kids - but why not adults too? 😂)
Regular discussion and calibration on who is doing what and is it working for everyone. (Moms, you need to speak up if you’re doing too much! Because I know you are, and the only way to change that is to bring it up!)
Last but not least…the most important and annoying parts of a happy life as a working parent:
appreciating this special chaos and your sweet children
being patient with yourself and life
it’s never perfect, always changing, and that’s part of the ride!
If you’re a working parent, what has worked for you? What tools, strategies, advice worked?? What is the hardest part right now?
Should you raise capital for your startup? Here's 5 traps to watch out for!
Read MoreShould you raise capital for your startup?
It can be an amazing way to accelerate growth, bring on valuable partners, and increase your chances of building a transformational business.
It can also be easily misunderstood or an ego trap.
Founders think they need to fundraise because “everyone else is” or “that’s how it’s done in tech.”
But if you fundraise for the wrong reason, the raise itself will be time-consuming and frustrating, and it will rarely generate the long term positive outcome you were hoping!
Here are a few phrases or reasons to watch out for!
If you hear yourself (or a founder friend) saying these, take time to reflect on your motivations and goals.
And of course, the O’Daily is nothing if not practical and action-oriented. We’ve included some alternate strategies or ways to think it through instead!
If all your competitors jumped off a cliff, would you do it??
Seriously though, when the news cycle is reporting that a company similar to yours raised big bucks, it’s hard not to feel like you’ve missed the memo or are falling behind.
Two reminders:
1) Tech news rarely reports the full story.
2) High tide lifts all boats. Aka that competitor is going to invest heavily in marketing for your industry and that will help you also! (Remember: in big markets, there are multiple winners!)
And a story:
This happened to one of our studio companies. Two competitors raised BIG rounds. The studio company raised a much smaller round and stayed focus on serving customers. Fast forward 3 years, those two competitors are shut down or in turmoil. Studio company is winning big deals with hockey stick growth.
It can be hard to take the ego out of it but do what is right for your company!
What To Do Instead:
Analyze your company, product, financial position, and goals. What, if any, is the right amount to raise? Do what’s right for you, regardless of what the other bozos companies in your industry are doing. In a big market with lots of winners, you need to be around long enough to win!
If the founder can’t sell the product, no one can.
And if you can’t close a deal on a shoestring budget, more money won’t help you.
Funding can help fuel sales and marketing.
Adding fuel to the fire is a great reason to raise.
But you need to have something that is already working.
Note: if a customer says that your lack of funding is why they won’t buy your product, they probably weren’t going to buy anyway! As a startup, you can move faster, give better service, and grow with your customers.
What To Do Instead:
Re-read The Mom Test to make sure you’re building something people want. Analyze your sales process. Improve your sales skills. Look at your pipeline — where are people falling out?
It’s important to pay people. It’s important for you to make money.
But this is like nails on a chalkboard for an investor.
Investors want to fuel growth, not pay salaries.
I recognize that scaling companies involves lots of hiring which involves paying salaries — but paying salaries is not the reason for raising.
Also, some of this is an optics and messaging thing. Remember what investors care about!
It’s reasonable to raise a little bit of money so you can go full time on a business with strong early signs. Something you’ve been working on, have a few paying customers, strong authentic demand, and it could grow into a big ass business.
(FYI — $60-100k salary is a normal range for a founder’s salary of an early stage company, depending on their life stage and number of dependents.)
What To Do Instead:
If your business doesn’t have very compelling early signals (yet) or a path to a venture scale outcome, focus on paid customer discovery options, including bringing on paying clients to fund the business!
Raising money can make your company more valuable.
When you can turn $1 of capital into $2 (or more) of growth, raising and investing money into the business adds a ton of value!
Technically, raising money often increases your company’s valuation and you will have more money in the bank (for a while).
But a higher valuation or more money spent does not always translate into a better financial outcome for you or your team.
The valuations change as the economy and stock market fluctuates. The underlying business may have major issues. Or the high capital investment may hurt your chance of getting acquired.
I know companies that are underwater (raised more money than they are worth) or that quietly went to zero, after making headlines as a “success” for many years.
I’m sure you can think of examples too (scroll for tech documentaries on your fave streaming service 😉).
What To Do Instead:
Seek out the “real” stories of founder exits to understand the pros and cons of different paths. Find the quiet successes. People who make a crap ton of money don’t always talk about it 😉
Raising money is a tool, not the goal.
It’s seductive to think that when you raise, you have made it. All those successful founders raised money and now you will raise and be successful too!
Raising money can definitely accelerate growth and solve certain challenges.
But it also creates new ones: bigger growth targets, key hires to make, better and faster product delivery, more cooks in the kitchen.
Yes, these are “good,” high-class problems that founders are hoping to have one day!
But raising money is not the finish line, it’s just the beginning.
See it and understand it for what it is!
What To Do Instead:
Focus on success metrics other than amount of money raised…
Value created for customers
Meaningful work and financial impact for employees
Meaningful work and financial impact for yourself
Meaning and impact created for your community
Enjoyment and pride in the journey
It’s easy to make “amount of money raised” the benchmark.
It’s public. It’s in the news. It’s easy to compare against.
It’s like looking at the price of someone’s house.
It gives you a number but doesn’t tell you the full story.
Maybe they are wildly in debt, getting a divorce, and have a casual meth lab in the basement.
Do you want that house? 🙅♀️
Stay true to yourself.
Acknowledge social pressure and ego temptation.
Then strategically think about your business and what’s right given where you are — regardless of what anyone else is doing!
Part of being a founder is blazing your own path…even among founders!
What advice do you have for founders considering a raise? What’s a “good” reason and a “bad” reason to raise? Any other ego traps to watch out for??
You can take the COO out of the startup…
But you can’t stop her from making a reminder list and action plan to help startups stay on track to close out the year!
Here are 5 key initiatives to get ahead of as you head into the last few months of the year.
Did you just check the calendar and say, “But, Kathryn, it’s August, what are you talking about???”
Friends, we are 6 weeks away from October.
Which means it’s basically Halloween, which marks the beginning of holiday season where startup dreams go to die, because everyone has 3572 holiday parties to attend, 93 work projects to wrap up, and 56 deals to close…including you!
Here’s the complete checklist of things you’re likely to forget plus 4 action steps (5 minutes or less) to get ahead.
Happy New Year!
Decembers deals are sourced today.
If you sell to e-commerce or CPG, they will be in “blackout” (no changes to the website, no new technologies) starting in Oct.
Some businesses do a lot of tech buying at year end. Get on their radar now so you can capture some of their Use-It-Or-Lose-It budget dollars in December!
Regardless of the business, many of your buyers and decision makers will be taking time off. Plus, with the official and unofficial holidays, Q4 is 3 weeks shorter than other quarters (1 week for Thanksgiving, 2 weeks at the end of Dec).
Expect that in the deal cycle and timelines!
Start the urgency now.
Speaking of deals and pipeline, have any conferences on the cal?
(cough, Venture Atlanta, cough)
Here’s your friendly reminder that the early bird gets the best meetings and (if you have a booth) has the best display, swag, and marketing campaigns!
It takes weeks (months) to do a booth design, order swag, ship supplies, coordinate a sales strategy, set up meetings, book air travel and hotels, etc.
Hosting a conference-adjacent event? Book a location and send invites now!
For the most impact, plan your follow up strategy before you leave.
Here’s the full docket of scrappy tips and timelines!
If you’re a regular O’Daily reader, you know I give a reminder about Customer Holiday Gifts every year.
✨✨🎁🎁 HERE IS YOUR CUSTOMER GIFTS REMINDER.🎁🎁 ✨✨
As someone who has sent Amazon Digital Gift Cards to customers in January as a “New Years Thank You,” I highly recommend you plan ahead!
Saves money, stress, and makes for a MUCH better customer experience!
Let’s not forget the team!
“I really love these amazing people and want to something special for everyone,” you’ll say on December 20th, when the office is quiet because everyone is out for the holidays.
Restaurants and venues book months ahead for December, so if you’re having an off-site holiday party, jump on it.
(PSA: Hosting a holiday party at someone’s house is scrappy and fun. Hosting a holiday party at your office is lame.)
Ditto if you want to do some amazing holiday swag like custom Yetis or hoodies with everyone’s name.
You can do it in Nov but it will cost 2x more with a rush turnaround and rush shipping.
Here are 10 employee gift and celebration ideas to get you started and 5 *free* ways to show your appreciation anytime of year!
Sounds insane, but as you can see with all these other things going on, it will sneak up on you!
Here’s the typical timeline:
Halloween
Thanksgiving
Christmas/Winter Holiday Season
Frantically Close End Of Year Deals
Oh Shit What Is Our Plan And Targets For 2026
Everyone Is OOO So I’ll Just Deal With It In Jan
Team In Office On Jan 2, Asking What Are We Even Doing This Year?
I’m not saying to start planning now, but plan for planning now. Put a meeting on the calendar for early November to map out the timeline and schedule key dates.
You’ll confirm which methodology to use and incorporate key success strategies!
If you’re big enough to do an annual kickoff at an offsite location, that will need to get booked sooner than you think.
Are you freaking out?
Maybe you’re just thinking, “That’s nice, Kathryn, but I can barely survive this week, much less plan 3 months away.”
GOOD NEWS!
Here’s 4 simple strategies to stay on top of these items even if you can’t take action today.
Is this even a strategic priority?
Just because the O’Daily (or anyone else) suggests something doesn’t mean you need to do it.
Reference your Strategic One Page Plan or use this Priority Spreadsheet to see how these initiatives fit in.
Are customer referrals your #1 lead source? Customer gifts might be a GREAT idea.
Do your customers pay you $20/mo?
Don’t spend $ and time on gifts for each of them.
Take a funny team picture and send an e-card.
Yes, you need pipeline. Glad you have a VP of Sales who owns that! Check in with them on the plan and forecast.
Does your mom want to plan the holiday party? Great. Forward this email to her and let her pour that “I’m involved because I care” energy into something besides your dating life.
Odds are someone can help with some or all of these items.
Forward this blog to the right person with a note that says, can you handle <#1> and send me the plan by <date>?
(Then Snooze this for that date as a reminder to check in.)
More delegation tips and how to avoid being the bottleneck!
Add a placeholder on your calendar now.
Even better: schedule a planning meeting with the key stakeholders. Having other people there will give it 10x more accountability.
You don’t have to think about your January conference now. But you do have to think about it in Oct. Put a 2 hour spot on your calendar and don’t let someone schedule over it!
Here’s how I use Calendar Blocks to plan my day and make time for strategic projects.
If you literally can’t think about this today, Snooze this email for a day and time when you can revisit.
(One of my favorite ways to stay organized is using my inbox like a to-do list!)
Admittedly, this is the most-likely-to-be-forgotten option, but I love Gmail Snooze.
After a long day, if I can’t take action or decide on an email, I Snooze it. When it pops up again, I handle it in 30 seconds.
Okay, checklist and planning nerds, what did I forget?? What end-of-year item always catches you by surprise? What strategies do you use to stay on top of long term initiatives?
Want to stay up to date? New blogs come out weekly.