The Year 2 Problem (or oh crap, I caught the car)

You raised $500,000 from a group of local angels or VCs,  you hired 5 or 10 new employees, found some cool space, brought your idea and prototype to the market and basically are thinking that you just might be the next Zuckerberg.

You have 50 companies using your enterprise product or 250+ consumers signed up to use your free web app.  And you add a small handful every month.

The product is stable and you have some ideas on what’s next.  In fact, there is a big road map outlined on the white board in your conference room.  You are really, really smart.  That money told you so.

You are on your way!

Welcome to year 2.  You have no idea what the heck you are doing, do ya?

What do you do – where do you turn?  The blogsphere can’t seem to help now. Your small cadre of fellow entrepreneurs are supportive but…the accelerator program you were lucky enough to participate in is long in your rear view mirror.

Year 2 is about execution, not vision. If Year 1 is about hope, Year 2 is about creating some level of customer momentum.  Growing a customer base 10% a year at this stage is almost laughable.  Even 10% a month on tiny numbers is cause for concern.

Year 2 separates the proverbial men from the boys.

Should you double-down on your ad spend?   Fire all the developers?  Do a deal with a sales lead outfit?  Have you ever sold anything besides those potholders you made in camp or those magazine subscriptions for your school (where Mom or Dad stood behind you, coaching you through the whole thing that one time).

Case study after case study show that leaders require different skill sets at different stages of a companies growth.  Most entrepreneurs are “product” guys.  Great for Year 1 – bad for Year 2.

My thought?  You had better start thinking about this in Year 1 and acquiring those skills as Year 2 emerges.  Happy selling.

Speaker, investor, mentor, startup founder. One of 3 or 4 Co-Founders of MapQuest (sold to AOL for $1.2B). Managing Director of $25M Venture Fund in late 90's. CEO, COO or President of various companies ranging from $200k to $20M in size. One of two Managing Directors of The Startup Factory (35 investments across 7 cohorts), founder and MC of the Big Top Reverse Job Fair and national writer and speaker waxing poetic around startups and startup communities. Currently EIR @ Techstars with Brad Feld ~ Startup Communities, to help community leaders around the world grow their startup community.

3 comments On The Year 2 Problem (or oh crap, I caught the car)

  • Chris:

    Just want to let you know I enjoy your commentaries. Keep at it. –Hank

  • wait, a tech article that values salesmanship? well written, us sales people have to stick together, keep up the good work!

  • Not only does this tout salesmanship, but it digs at a deeper thought – in order to survive you have to create profit. Shocking 🙂 Everybody can sell something once. The second time around the conversations are always around “what value have you brought me lately.” Nice article, Chris. Glad to see the refreshing point of view!

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