Startup Founder Lessons
What I say when I'm asked what I learned from being a CRE tech startup founder
I met with a first-time CRE tech startup founder last week, and he asked me, “What advice would you give me based on your experience?” This is not the first time I’ve been asked this. In fact, I’ve been asked this more times than I can remember. But I realized I’d never written it down and as a result, my answers probably changed over time. So here you go. Here are five (of the many) lessons I learned from my startup as of today.
Consult Early, But Know When to Stop (If SaaS)
We bootstrapped my startup. So instead of raising money from friends and family or a bunch of angels/VCs, we opted to raise money via consulting projects. This had the benefit of 1) getting us some big name logos super quickly and 2) helping us validate the software product we were already building.
But there’s a trap: if you never stop consulting, you’re not really a SaaS company — you’re a services firm with a side project. Consulting is great for cash flow, but at some point, you have to shift focus. Either you keep it a lifestyle business with enough SaaS revenue to break even and slowly grow it, or you decide to raise money to scale up and gain market share quickly. Because if your roadmap is constantly dictated by individual client requests, you’re not building a scalable product.
If you want to build a SaaS company, you have to transition from bespoke implementations to a repeatable, standardized software offering. And you have to do it quickly or you become known in the market as a consultant. We consulted the whole two and half years I was there, and by the end of it, we were getting pretty consistent referrals for consulting jobs. More consulting referrals than for our software. Not ideal since we were aiming to grow SaaS.
Put Founder Agreements & Strategy in Writing
Our focus on consulting is ultimately what led to my exit; I wanted us to do 100% software and raise money, but my cofounder wanted to keep it a lifestyle business and focus on consulting. I thought we had agreed to raise money and switch to SaaS at some point, and he thought I was open to the lifestyle business path. This miscommunication around strategy led to him buying me out.
Not only did we not have a full strategy in writing, we also didn’t have a framework for splitting up the business. That meant we had to negotiate the sale of my shares when emotions were high. No bueno.
Think of it like a prenup. No one starts a company expecting it to end, just like no one gets married expecting a divorce. But it’s SO important to have that fire extinguisher in case of a fire, even if you never use it. Clear agreements in writing — on equity, decision-making, roles, and an exit strategy both for the business and founders — removes ambiguity and protects both founders if things go south.
Sell to Friends
Too many people who are new to sales (including me at first!) think to themselves: I don’t want to mix business and personal relationships or I don’t want to take advantage of them or What if something goes wrong and I lose their friendship? That’s more important to me.
But then a good friend and colleague forced me to rethink my stance by asking me a litany of questions:
Why wouldn’t you want to work with your friends? Don’t you like spending time with them? You’d get to spend even more time if you’re working together.
Don’t you believe that what you’re building has value and improves your customers’ lives? Wouldn’t you want that for your friends?
If you can’t be friends after a silly disagreement over a feature or price increase, are you really THAT good of friends?
All of our early consulting customers were friends from our network. They knew us and trusted that we would go the extra mile for them. As a huge bonus, they also spent extra time to give us valuable feedback, genuinely wanted us to succeed, and were more forgiving when we made mistakes. Friends want to support you — so don’t be afraid to pitch them.
Go Narrow then Deep
In retrospect, my startup’s software did too many things. We were a data integration platform and offered to integrate with every property-level platform and all datasets from financial reporting to operations to marketing and traffic to valuations to you-name-it. We served proptech firms and property managers and operators and owners and more. We learned a TON this way, and I wouldn’t trade my learnings for anything. But I also wouldn’t repeat that decision, as I now view it as a mistake for our firm.
We should have narrowed our niche by focusing on a specific problem for a specific set of customers within their data integrations. PRODA is a great example of this in CRE tech. They literally just focus on rent roll data. Go narrow and then go deep. Like the classic example of Amazon.
When Amazon started, it didn’t try to sell everything to everyone. It focused entirely on books. Why? Because books had a massive selection but didn’t require warehousing (publishers handled fulfillment). By going narrow first, Amazon was able to dominate a specific vertical, build out infrastructure, and then expand into other categories.
For startups, the temptation to go broad is real — especially when customers say, “We’d buy if you just did this one more thing.” 9 times out of 10, they are just avoiding saying no to you by giving you an excuse. PSA to all founders: don’t fall into that trap! By staying focused on one problem, one use case, or one market initially, you can gain traction, iterate effectively, and position yourself as the go-to solution.
Do Marketing That Doesn’t Scale
Most startups dream of a viral growth strategy. BUT you don’t always have time to spend on marketing. In fact, most founders I meet say they don’t have time for it. The problem with that statement is that most buyers today expect you to be good at marketing.
So what do you do? Here are some ideas.
Make funky videos for social that show your company’s personality (yes, I wrote funky not funny!). These can be low budget. I don’t know about you, but most of my favorite videos on LinkedIn are just silly selfies with loads of personality.
Go out of your way to personally connect with customers and prospects — DMs, handwritten notes, or mailing them unique swag. One of my colleagues who was former CRO of a now Series B proptech startup said that spending a small sum of money on fun, unusual swag for a very targeted prospect list gave them more customers than any other marketing strategy he tried.
Get on Reddit and become a resource to your potential customers and consultants. I still get leads for my old startup from comments I wrote 2 years ago now. (And yes, I still point them to my cofounder. We split but I still want him to do well.)
On that note, we had several clients come to us through consultants. Befriend consultants! Find them through your network, on LinkedIn, whatever.
Last but not least, create high quality, relevant, and gated content that will drive relevant leads to your site. I cannot emphasize this enough. My cofounder had somewhere in the thousands of prospects from whitepapers he’d written over the last decade. And I already have over 300 (!!) from the handful of whitepapers I wrote and published just over a year ago. Insane, right?!
Startups don’t need a perfect marketing funnel. They just need traction. And traction comes from unusual, unscalable, yet super-effective strategies.
Good luck! Let me know which of these strategies worked for you, or which ones you’d add to the list.
I appreciate reader feedback, so if you enjoyed today’s piece, let me know with a like or comment at the bottom of this page!
Jen’s Reading Corner
If you haven’t listened to the Y Combinator podcast, How to Start a Startup, and you liked this post… stop everything! Download it now! My favorite episodes are:
12 - Aaron Levie, Building for the Enterprise
19 - Sales and Marketing, How to Talk to Investors
04 - Adora Cheung - Building Product, Talking to Users, and Growing
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Great article! Lots of good advice!
Very helpful points here!