Startups have no shortage of priorities, tasks, and fires to put out within the first few years. However, eventually they will need to acquire customers or users, which can be both costly and time-consuming.
This week at Innovate! And Celebrate we heard from Melody McCloskey, CEO and Cofounder of StyleSeat, on how their team scaled, raised funds, and has made a huge impact on two particular industries.
StyleSeat is an online platform that connects beauty and wellness professionals with clients. To date, they've raised $39.9 million across four rounds and made their first acquisition earlier this year. Over the years, StyleSeat found much of its success primarily through organic growth, but that is much easier said than done. According to McCloskey, these are the attributes your startup and employees need in order to grow.
Set Clear Expectations
Up front, Melody McCloskey and her cofounder planned to give up weekends, drain their savings, risk relationships, and ultimately give up several years of their lives. More importantly, the two made sure each would contribute at the same level of effort, a point McCloskey emphasized all startups desperately need to do. “You need share the same passion and pain,” said McCloskey.
Beyond giving up time, McCloskey decided to pursue capital funding in an effort to grow more rapidly. She stated that the exchange for company control they would give up was worth the scaling fuel.
Fundraising: Expect to Be Bad at It
Pro: You grow faster. Con: You grow faster.
Along with fundraising, not only do you move faster but you also have less control and flexibility, and you no longer control the timeline. For those who have yet to experience the process, Melody McCloskey labels it as formal and something you should expect to be bad at, at least initially. There is no trick to getting funding, McCloskey says: You just need to force yourself to get better quickly.
Time and fundraising don’t mix. The stars must align, and if you play your cards too soon, you lose control of your hand. According to McCloskey, time is also the biggest deal killer. “Don’t give the full pitch unless you are officially raising. There is no time pressure, no pressure from other investors, and they have all the power. It makes the deal difficult.”
She goes on to say that when it’s time to raise funds, don’t hold back: Line up as many meetings as possible. Even if a company is doing incredibly well, you want to pack the round in. There is a natural momentum that grows as the meetings happen. Eventually startup founders will need to move away from capital and into architects. Founders will do less, and tell more… coach more and upgrading of their systems.
Plan Your Next 100 Miles, Know Your Next 100 Feet
Before seeking funds, before coming up with a mascot, or social media account, Melody McCloskey says that you need to plan out the life of your company. Founders should outline major milestones so that they know their next steps, but understand that everything will change. To make this happen founders will need to create a clear path for their team, with room left over for decision making.
There are a million places to start when it comes to building a strategy and plan for a startup and the team, so McCloskey suggests working on your mission and values first. Focus on the why, not the what. Once a mission is in place, it’s time to create clarity and context. Develop a vision early on and OKRs. This will allow the team to work autonomously, refining the mission and vision as progress is made. Lastly, there is always a need for great leaders and mentors. These come in the form of advisors, internal team members, and even advocates within their community, customers, and users.
Creating something from scratch will be the best and worst professional experience a founder ever gain. Melody McCloskey's advice? “Have fun.”