Lucinda Duncalfe’s 5 Essential Lessons for Potential Startup CEOs
This is the first in a series of blog posts about the Philly Startup Leaders Bootcamp. Session No. 1 featured Lucinda Duncalfe, president and CEO of Monetate.
Last Thursday, the second annual PSL Bootcamp kicked off at Benjamin’s Desk with a packed audience of students, professionals, career changers and aspiring entrepreneurs. The program provides startup wisdom straight from local veteran founders themselves. In her session kicking off the bootcamp, Duncalfe provided an overview of “what’s this whole startup thing about?”
1. What a startup is (and what it isn’t.)
Duncalfe discussed a hot-button issue in the startup world: highlighting the difference between cash-flow businesses and startups. Many today aim for the explosive growth that defines startups, because of its “sexy” veneer. In certain sectors, Duncalfe noted, explosive growth is uncalled for, or the market just may not support it, in which case venture money is an impediment. Cash-flow businesses, or “lifestyle business” are a good alternative and sometimes even preferable since the founders can get real income right away. In contrast, potential founders of true startups must look five-to-seven years ahead for a possible return on the investment.
The takeaway: Determine whether you are building a cash-flow or lifestyle business prior to raising capital.
2. A product without a market is useless.
“A great team. You may have the best product idea in the world, but if you don’t have a team, you don’t have anything,” said Duncalfe.
A market for the product is crucial. If you don’t have a market that wants your product, you have nothing. And the two are not separable. The process is an iterative dialogue between the team, the market and product — so the key is to get out of your head, and get out of the building and talk to customers.
The takeaway: The only way to build a product the market wants is by talking to your customers as you design and build the product.
3. Funding’s biggest dos and don’ts.
Duncalfe places little importance on raising capital, even though she’s done it 13 times. She recommended several ways entrepreneurs could get cash (find paying customers, partner suppliers, grant or loan programs, personal credit cards, angel investors) before pitching venture capitalists. Venture money is not cheap, and with the 10x returns a VC expects, a founder better know they’re going to be big.
The takeaway: Know your market and your play before you aim for funding — and hold out as long as possible before taking the money.
4. The Founder’s Role
Sell the dream. “You’re going to be spending your whole time convincing somebody that your dream is worth investing their money in,” said Duncalfe. This goes for your customers, investors and even team members.
The Takeaway: If you don’t believe in your dream, don’t expect others to.
5. Building a Startup?
“It’s not sexy, it’s hard. Really hard. And most of the stories in the media don’t come close to the reality of building a startup,” she said.
Aside from all the work, Duncalfe noted, there’s at least as much luck as skill involved in starting a company. So the one thing all successful founders absolutely share in common is a persistence that borders on, if not crosses into, delusion in the eyes of most.
The Takeaway: Stay persistent, this won’t be sexy.
So are you in? Here’s a quick gut check.
Are you willing to…
1. Put that plane ticket to see that client on your credit card?
2. Live well below your means?
3. Get kicked out of your apartment for being behind on rent?
4. Strain or lose your relationships with friends and significant others?
If you aren’t, you ought to get out now. If you are you may have what it takes to create a startup.
Shoshanna Israel is a member of the PSLU Team.