Finding the balance in product development and sales efforts

Every successful startup’s heart lies in a dual focus: building a remarkable product and effectively selling it to the market. As Guy succinctly says, “100% of your focus should be on making and selling it.” Take, for example, the iconic partnership between Steve Jobs and Steve Wozniak, where their synergy in product innovation and sales acumen laid the foundation for Apple’s unprecedented success.

Grant echoes this sentiment, emphasising the need for startups to prioritise product excellence early on. He affirms that startups armed with a remarkable product, addressing a pressing problem across geographies, often find themselves ahead in the sales game. “With a great product that solves a really hard problem,” Grant advises, “you don’t have sales problems.” However, he highlights that the real challenge for startups with a great product lies in acquiring the right sales talent and capabilities to leverage this product advantage effectively. Grant’s insight sheds light on the pivotal role that sales capability plays in translating product potential into tangible business growth.

How Grant and Guy identify founders with promising potential

Having spoken to countless founders over the years, both seasoned investors pay close attention to the founder’s character—specifically their potential to grow and endure the challenges of the startup journey. Grant points out how important it is to understand the founder’s mindset early on, stating, “One of the things that we’ve always tried to do at Tidal is spend as much time with these founders early in their problem-solving product mindset of what and how they’re going to build something.” For Tidal, it’s not solely about assessing a founder’s technical skills or industry knowledge but also about predicting the founder’s evolution as they go on their journey.

Grant explains:

This is at the core of Tidal’s investment principles, primarily driven by our distinctive operator-led approach. Unlike conventional venture capital firms led by investors, being operator-led means your investors are individuals with firsthand experience as founders and builders of tech companies. Tidal is committed to working closely with founders, offering them insights and advice from practical experience rather than mere theoretical knowledge.

Being the right “asshole” leader

Drawing from four decades of frontline experience, Guy asserts his authority on a subject, saying, “I have become an expert in assholes.” He swiftly clarifies, not in the proctology sense, eliciting a chuckle from Grant. Guy distinguishes between two breeds of such leaders: the egocentric and the mission-driven. The former, he elaborates, is consumed by self-glorification, exemplified by an entourage and a penchant for ego gratification.

In contrast, the mission-driven “asshole” is driven by a singular purpose, unyielding in the pursuit of their vision. He cites Steve Jobs as a prime example of the latter, lauding his focus on creativity and productivity over self-aggrandisement. Grant concurs, emphasising the importance of tyrannical focus in realising one’s mission, a trait reminiscent of Jobs’ legendary dedication. Guy reflects on his time working with Jobs, acknowledging the fear he instilled while underscoring his genuine desire to revolutionise the computer business.

Navigating different mindsets and self-belief in leadership

The distinction between growth and fixed mindsets has profound implications for leadership. Guy believes that having a fixed mindset constrains personal advancement and leads to biases hindering company growth. He articulates, “The fixed mindset is the mindset that you believe that you cannot gain new skills, that, if you open yourself up to the vulnerability of learning new things, it may be at one level embarrassing or even worse, it’ll mark you as a failure.”

This mindset often permeates hiring practices, leading founders to favour candidates who mirror their own attributes, potentially limiting diversity and innovation within the team. Fostering a growth mindset empowers founders to embrace continual learning and adaptability. As Guy highlights, “The growth mindset, by contrast, says that you can grow, you can expand, you can learn, you can do things.”

The three common founder mistakes to avoid in early-stage startups

Mistake 1: Hiring biases and lack of diversity

Guy highlights the detrimental impact of hiring biases, particularly when founders gravitate towards hiring individuals who mirror their personas or demographics. He argues that such bias reflects a need for a growth mindset, stifling innovation and progress within the startup ecosystem. Companies that embrace diversity show they’re fostering a mission-driven culture where the focus is on potential hires being part of a solution to a problem.

Mistake 2: Neglecting sales efforts

Another critical mistake is the tendency for early-stage founders to neglect sales efforts, leading to running out of funds. As Guy emphasises, “sales fixes everything.” He cautions against diverting excessive resources towards superficial “strategic” initiatives at the expense of core revenue-generating activities, stating, “When you start throwing around a strategic... you’re full of it. Because you know what? We don’t want strategic shit. We want money. We want sales.” Guy’s insight underscores the necessity of prioritising tangible sales outcomes over abstract strategic pursuits, highlighting the importance of generating revenue for sustaining business growth and viability.

Mistake 3: Underestimating time and effort in feature implementation

The final mistake is when founders don’t understand the complexity and effort required to build their technology. This tendency often leads to overpromising delivery timelines and revenue potential, resulting in disappointment among stakeholders. Guy stresses the necessity of realistic planning and diligent execution to avoid the pitfalls of overcommitment and subsequent under-delivery. Guy jokes, “Whenever a CEO tells me when something will ship and how much revenue will be generated, I add one year to the shipping date and divide it by 100.” Grant adds to this, suggesting, “I would say add a year, double the cost and half the revenue.”

How to win the AI race

To Guy, AI is a transformative force poised to revolutionise the world—a sentiment aligned with Tidal’s thesis. His belief in the transformative power of AI is unwavering, as he asserts, “I think that AI is a bigger deal than mobile phones, Internet, social media, personal computing.” This conviction stems from his extensive experience in the tech industry, where he has witnessed firsthand the profound impact of technological innovations. Amidst the growing impact of AI, Guy emphasises the importance of authenticity and substance, cautioning against the superficial use of AI as a buzzword. “Show me a company that isn’t using AI,” Guy challenges.

Grant, aligning with Guy’s perspective, recognises the increasing ubiquity of AI in everyday business operations. He acknowledges, “The really interesting thing is people are just generally starting to use it in their everyday business for everyday things.” This observation underscores the growing adoption of AI across various sectors, reflecting its expanding role in driving efficiency and innovation. However, Grant emphasises the importance of substance over rhetoric, echoing Guy’s sentiment that mere lip service to AI is insufficient. “You got to look at that and figure out that just saying the words AI is not going to buy you much longer,” Grant asserts. “Show what you’re actually doing with it as a product.”

Both Guy and Grant advocate for a pragmatic approach to AI adoption—one rooted in genuine innovation and tangible impact. Their insights highlight the need for founders and businesses to move beyond buzzwords and focus on delivering real value through AI-powered solutions. As the AI landscape continues to evolve, their guidance serves as a beacon for navigating the complexities of this transformative technology.

The key to navigating different market cycles

In navigating the ever-shifting market tides, seasoned tech veterans offer invaluable insights honed through weathering multiple market cycles, including the dot-com bubble, the global financial crisis (GFC), and the recent COVID-19 pandemic.

Grant talks about the enduring nature of successful journeys amidst fluctuating market cycles. Reflecting on the prolonged timelines inherent in building successful startups, Grant emphasises the futility of fixating on market cycles:

Guy agrees that market fluctuations are insignificant compared to the laser focus founders must maintain on their companies’ goals. “I don’t care if venture capital is up or down or startups are up or down. All an entrepreneur needs to care about is your company.” His perspective underscores the importance of prioritising your own company over external market forces, regardless of prevailing conditions.

Tips for founders pitching their startups

Guy’s mantra, the 10-20-30 rule, serves as a guiding light for startup pitches. It advocates for ten slides, twenty minutes, and a minimum font size of thirty points. Yet, beyond slide counts and font sizes, Guy addresses a common pitfall among founders: the tendency to ramble instead of delivering a concise pitch.

At the heart of Guy’s advice lies a sense of urgency. Founders, he insists, are not flying lumbering Airbus 380s with endless runways at their disposal; they’re strapped into F-16s hurtling off aircraft carriers, where every second counts. In this high-stakes environment, the opening moments of a pitch are make-or-break. “So that means in the first 15 seconds, explain what the hell you do,” Guy advises. “Because until you explain what the hell you do, nobody gives a shit about your world-class technology or world-class background”.

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