Startups often rely on investors not just for funding, but also for their operational expertise. This expertise, gained from their previous roles as COOs, CFOs, or other operational positions, can be invaluable for identifying and addressing inefficiencies, and for facilitating rapid growth within a company. However, effectively leveraging this knowledge requires a clear understanding of how to navigate the relationship with investors and how to make the most of their operational insights.
Key Takeaway
Startups can benefit significantly from investors’ operational expertise by being open to constructive feedback and by clearly defining the roles of advisers and operators within the organization.
Putting Ego Aside for Constructive Feedback
One crucial aspect of benefiting from investors’ operational expertise is being open to receiving constructive feedback. Founders should set aside their egos and focus on the ultimate goal of the company’s success. Constructive criticism from investors can help in identifying and addressing inefficiencies and scalability concerns, ultimately contributing to the company’s growth.
For instance, at Egnyte, the CEO and chief growth officer initially evaluated success based on quarterly revenue attainment. However, an investor’s request to delve deeper into the sales performance led to the discovery that only a few sales representatives were driving the majority of the sales, indicating a potential scalability issue. By embracing the feedback and restructuring the sales team, Egnyte was able to address this inefficiency and improve overall sales performance.
Drawing Clear Boundaries Between Advisers and Operators
It is also essential for startups to delineate between advisers and operators when engaging with investors. This distinction can help in clarifying responsibilities and avoiding confusion in decision-making and strategy development. By recognizing the expertise that investors bring to the table and effectively integrating their operational knowledge, startups can gain a competitive edge and accelerate their growth trajectory.
