Investing in a startup company involves a lot of risks but understanding those risks and having strategies on how you can derisk issues make it a lot more appealing. Andrew Bluestein and Ashley Hartman, Managing Partner and Senior Principal, respectively, at Bluestein Ventures, talk about being involved in guiding and teaching seed stage companies as investors. They explain the importance of being able to build your brand and ultimately getting to product market fit. They believe achieving this puts your company in a position that can scale. Learn why you need to align your ideas with your investors and why each strategy is unique for every company. Also, understand the value of being able to say no, and utilizing your resources efficiently at the beginning.

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Listen to the podcast here

Core Functions Of A Seed Stage Startup Company With Ashley Hartman And Andrew Bluestein

This is going to be another rapid-fire interesting episode. We’re going to be talking a lot about strategy in a more nimble “let’s make it happen” mindset. Being joined by two people who are also investors in this space, I’m certain that there will be that overlay in the conversation. Before we get started, I want to give both Andrew and Ashley an opportunity to introduce themselves. It’s great to be joined by them. Ashley and I have had the privilege for whatever reason of getting paired together in numerous events post-COVID as panelists on pitch events. It hatched the thought about doing this episode. When she and Andrew agreed to do it, I was thrilled. I’ll start with you, Ashley, and then let Andrew introduce himself and a bit more about what you guys do.

I’m Ashley Hartman. I’m a Senior Principal at Bluestein Ventures. We relaunched our brand. We are an early-stage family-backed venture capital fund that invests in food across the industry. We do four key areas. We invest in high growth consumer brands, next-gen commerce, value-add digital technology that powers the industry such as restaurant technology, logistics technology, and then proprietary food deck. I am involved hand-in-hand with Andrew on all aspects of what we do from sourcing, screening, due diligence, working with our portfolio companies, and then building our own strategy and internal processes.

Andrew, you’re up.

When you spend time building a brand strategy, you better come out of it with a good story to tell and have it down. It’s a good testament to our brand work. I’m a Managing Partner of Bluestein Ventures, formerly Bluestein & Associates. We started this several years ago with my family, most actively with my dad, as well as the backing of my mom and the rest of our family. Previous to this, I spent my career in consulting, working at a firm called The Monitor Group, which was acquired by Deloitte to be their strategy practice. I did that seven years pre and post getting my MBA at Kellogg. When we started Bluestein, my dad had 30-plus years in consulting, working at some large firms, as well as some private equity experience.

As trained consultants, we both felt like there was an opportunity to apply what we know and what we are good at, which is helping business leaders solve problems and try to unlock opportunities, but do that at the early stage level. 2014 was a great time for the innovation ecosystem that was developing. That’s only accelerated since then. Over these past years, I’ve done over 30 investments and are trying to apply how we think we can be helpful to companies and help them think about what they can do around their strategies and their execution to be successful.

We’re going to dive into strategy. Before we do, one thing that I appreciate, Ashley, and I have done this quite a bit, but Andrew, Cooper, and others, is that you guys always take the time to speak with brands. Even those that you know fairly soon after you have that conversation or in the middle of the conversation that may not be a fit for your portfolio at this time. You always make time to offer constructive feedback, advice, connections, and so forth. I’ll take a moment to say thank you as a shepherd of the industry for doing that because that’s not always the way it works. When you’re a founder, you’re doing this and this is your life passion, you’re out raising money, which is scary as hell, you hear so many noes. It’s nice even when you have to hear a no, “Here are some things we can suggest that might help you,” or “Here are some people that we can connect you to.” Thanks for that.

For us, it’s about building the community. The early-stage takes a village. We can be helpful and we know how hard it is.

I found it interesting and I was thinking about it leading up to this, you guys decided strategically to do a rebrand, to reshape your brand strategy. I thought it would be interesting to get some perspective as to the why behind that and the process that went into it. I’ll let either of you jump in with something.

When we started this, Bluestein & Associates was a name my dad was using for his business doing consulting in his post-consulting career. We latched onto that and said, “Let’s use that.” In the beginning, we purposely are going out, speaking significantly about who we are, and what we were doing. We didn’t want to invest. We weren’t yet ready to invest in building our brand in the community because we were still in some ways figuring out what we were doing. We wanted our actions to build our brand because who we are and what we do was going to be the best thing to get some credibility.

Over time though, now that we’re doing it for years, you start to realize that not everyone knows all the good stuff we’re doing. As much as I don’t want to be spending a ton of our time and effort building our brand and marketing ourselves, as we invest in consumer businesses, we know that marketing has an impact. As an investor, building our brand has an opportunity to leave an impression with startups that we’re trying to talk to, which impacts our deal flow, impacts other investors that we talk to, talks to other people in the industry. We thought it was important that we are putting forth our best story. That was the effort.

As part of that was saying, “This name we had, Bluestein & Associates, does it fit? Does it convey that we were a family-backed fund?” Sometimes people question, “Are you a venture capital fund? Are you a family office?” We want to make clear that our primary focus is on investing in startups. We are a venture capital fund. We may not have the same LP base as others, but we are doing the same thing as a venture capital fund, and we wanted that to be conveyed in our name. Also, we wanted to say, “A name is just a starting point. A brand is much more than that.” This was an opportunity for us to reflect and say who are we, what do we do, who we want to be, and how we want to help others.” All that jived in trying to put forth our new vision for Bluestein Ventures.

As you went through this, I get it because we went through the same thing when we moved from The Intertwine Group to TIG, which as recovering consultants, we tend to name ourselves with brands. That ethos around something that sounds consulting. The Intertwine Group and Bluestein & Associates, those types of things are very much along those lines. As you went through this process, as you thought strategically about it, and you thought about it maybe with the mindset of some of your portfolio companies go through every day with trying to build their brands, are there any takeaways, any a-has or recognition, “This shit is actually hard?”

We came from a defined strategy and that helped us execute on our brand easier than if we were inventing it from the beginning. We operated internally according to a core strategy that we teach to all of our entrepreneurs and our portfolio companies. That was able to easily then translate into the brand. It comes from a defined strategy. I’d love to know if that happened with Intertwine Group and TIG as well.

It was very much that way for us. First of all, it started with a bit of empathy look outward in what we were doing and what we were serving. It did start with the way we were looking strategically at our business, and the way we were showing up in the market, and adjusting to meet that. It wasn’t that we adjusted our behavior after we adjusted our brand. We adjusted our brand to our behavior and our strategy. That’s a perfect segue into the topic for this. It’s the strategy and the strategic framework that you guys work with your portfolio brands and others. Maybe let’s spend a couple of minutes at a very high-level, walking people through that a bit and then inviting questions as it relates to it. I’ll let either one of you start with that overview.

We presented this framework at a number of accelerators and incubators in the past. The starting point at the highest level is, what is one of the core functions of a seed-stage startup? To us, there’s a goal of that stage and that is to get to product-market fit. We think that that is the holy grail of a seed-stage company. When you can get there, you have built yourself in a position and an opportunity to build a company that can scale. There’s a lot more that goes into building that company and setting the foundation for scale, but it’s important as an entrepreneur that you have a vision in mind to say, “How do I get to product-market fit?”

We talk about terms like product-market fit all the time and I’m completely guilty of that, but we don’t ever operationally define what the hell is product-market fit. If that’s the holy grail, how do you know that you’re drinking from the right cup? How would you operationally define product-market fit?

You can Google and read up. There are lots of good people who talk about product-market fit. We always start these sessions and say, “How do you define product-market fit?” Everyone’s got a different thing. We have a fairly robust definition because the words ‘product-market fit’ are a little bit misleading as saying like, “I’ve got a market and a product.” Is that one customer? How do you define that? To us, there are three components. First is that there’s an attractive market opportunity that you are going after. You’ve defined what that market is, who the customers are in there, and what your value proposition is for serving that. You carved out a great market opportunity, which in some ways we translate into saying like, “You’ve got a vision for the future.”

The second component is deciding. Can you capture that market opportunity? Have you demonstrated a growth engine that is able to acquire and retain customers? That requires having a great product and it means having great sales and marketing, and also doing this all in a way that has good unit economics. Making money is a key component here. You don’t truly have a product-market fit unless you know how to do it profitably. That second piece, we call it the playbook. The third is now you know how to do this, are you building an organization that can do that? Do you have the team, the resources, the capabilities to play out that playbook? We call that the engine.

You have all three of those pieces together. You’ve got a great market opportunity. You’ve got a great plan on how you’re going to do it and how you can capture that profitably and scale-wise. You’re building an amazing team and organization to do that. If you’re demonstrating those capabilities, we believe you’re now achieving product-market fit. When you go to raise your series-A capital, that’s the easy part because investors want to invest in that, then it comes to growing it.

Of those three that you described as you meet with lots of earlier seed-stage founders and brands, which of the three is the weakest?

It depends. Often there are weak points across the chain and it reinforces how important it is to think through all three components. I usually find though at the seed-stage that there are some weak points around the playbook. Most entrepreneurs think about, “I had this great market opportunity. I’ve got the right value proposition. I have a skilled team and I’m building this team.” Don’t translate that into a unique way to go to the market and scale their sales and marketing. Often, I find that I will hear in a lot of pitches and a lot of strategies, “We’re just going to copy what X company did.” Name your company, RX Bar, whatever. We’re going to go to the CrossFit gym, without aligning it to where you’re playing in the market and then what your organization is capable of doing. It is that middle point of, how do you create it? Every strategy needs to be unique to your business. You can’t just take your strategy for someone else and import it over to your business, and how does everything integrate together is important. Those integration points are very important. Often those integration points fall down most frequently in the playbook area.

That’s an interesting observation. I talk a lot about the fact that the strategy for founders is like a Rubik’s Cube. There are a million different combinations you have to solve for yours, not anybody else’s. Also, I find it interesting that a lot of people confused that playbook with the distribution. Getting on the shelf or getting into distribution is just the battle. It’s ultimately getting into the hands of the consumers and separating them from their cash.

I always say it’s easier to get on the shelf than off the shelf. Convince me how you’re going to get off the shelf, and that’s understanding all components of what one refers to is like the marketing funnel. Distribution is the top of the funnel. How do you get consumers to the bottom and then retention to flow through to the top? I love the Rubik’s Cube analogy. I’d also point out that strategy is a living and breathing organism. It’s not just set it and forget it. This is all about testing, learning, and understanding what works and what doesn’t work. You’re not going to know everything at all points. It’s about, “Let’s try X. Measure it, did it work? Let’s scale that.” Creating your playbook is an iterative process.

We talk a lot about this concept of it being a growth hypothesis. What we focus on as well is build a growth hypothesis that’s testable and measurable, and then take it out into the market in design-controlled experiments where if those assumptions are wrong, they don’t leave a lasting mark. They weren’t an existential threat to your business, but they’re great ways to drive real learnings that make a difference.

With those three buckets, if we define them and the thing, I would add on is the toughest thing. I would give a slightly different answer. The challenge with all this is it’s all intertwined. What’s missing is it could be any of it. The reality is that the market opportunity is a reflection of your playbook and your playbook is a reflection of your team. They all can go in different ways. One of our brands is a sustainable paper goods package company. They sent out an investor update. We look at the latest numbers and see that some good things are happening on the customer front. Now let’s dig into the numbers and say, “Where are the opportunities?” When you start doing that, you start thinking, what else does this business need to truly scale?

You started with, we’re going to come out with one product. This is the brand, this is the channel, and then all of a sudden you learn and you look at it and you say, “We also need to add this and we need to think about that.” As Ashley said, it keeps going because I think of this as you’re coming up with the secret formula. Everyone always says like, “Everyone knows what the market opportunities are.” The more we do this, we realize everyone’s talking about the same things, but how do you create that secret formula?

When we start digging into the strategy with our companies, we hit on those three key points. What’s the vision for what you’re trying to do? What’s the playbook and how we’re going to go at it? How are we building a team? The reality is that when we’re investing in a company there are some pieces that are figured out, but there are a lot of questions. One of the positive and most important things of doing a discussion around this is identifying what don’t you know, or what do you need to figure out? That is what’s going to guide a lot of what you need to do to focus to try to figure out and get the product-market fit.

Gregory has a question here, “In terms of companies’ playbooks, do investors have a platform to aggregate the best playbooks, combine them to make a bible, and share them with their portfolio companies? Oftentimes, we hear playbooks in terms of what a company is doing about the compiling, gain knowledge, and sharing the resource to help companies thinking about their go-to-market strategy.”

That’s an idea that sounds great in principle, but every company in every situation is a bit unique, the market opportunity and the channel. You can learn from what others are doing. I’ll tell you something that I find about entrepreneurs, which I love. They don’t always like to just read a book and say, “I’m going to do what that person does.” Oftentimes, they like to learn by doing. When we approach our conversation with our entrepreneurs, we can’t say, “Do this because this person did it.” That usually doesn’t get someone to do it. It’s more helping someone understand, then do a realization with their business to say, “Ask them the questions, ask them to think about them, ask them to analyze the data.” Maybe over time, if we do this enough, we’ll help create our own bible. What do you think, Ashley?

We have examples we always pull from and share, and we’ve done these enough times to understand what’s working and what’s not working. It is so unique to that company that it’s hard to say, “Now go do this.” It’s an example of this is why this worked for this specific company, but it doesn’t work for your company. It is a way to think about how you integrate that strategy. For example, one of our portfolio companies is Vibe Organic. Their go-to-market when they first started was a very focused Southern California region. They went through coffee shops and the product works through coffee shops because they could go on a distribution truck that was already going to a coffee shop that was refrigerated. All they had to do was put the product in a bowl at the register.

It was very complimentary to the coffee shop because it wasn’t competing with any other products in the store. It worked for Vibe and that was a way they could build the brand. When they went into the store, consumers already were aware of the brand and it flew off the shelf, but that doesn’t work. I can’t say, “Now go do that. Name your bar or your snack product,” because it’s not integrated. Vibe built the entire organization to be able to execute on that. He needed a different team. He needed a different go-to-market. He had a different target consumer in the beginning. It evolved over time and now he’s growing and scaling like every other consumer brand. It was the right playbook for him. It wasn’t necessarily the right playbook that you could share with another brand.

There are definitely shared learnings and best practices. I think Andrew and Ashley would be far too kind. I’ll be blunt. When there have been “playbooks” out there that are shared, we see disastrous outcomes. One that’s been in existence for a long time is what is affectionately now called the Spray and Pray strategy. You grow your distribution, you get on the shelf, you do those kinds of things. I personally believe and it sounds like both Andrew and Ashley are in agreement here, that it’s far too nuanced. If you’re building an innovative and disruptive product, it’s a disservice to not build an equally innovative and disruptive go-to-market approach. You need to solve the puzzle and think about, where are you going to drive discovery? If you look at it like a continuum, consumers shop and interact up and down a continuum. There are a million different waypoints that they stop and that lend to potential discovery, trial, lifestyle fit, and all of those things. That’s where they work, live, shop, play, socialize, all those kinds of things.

As a brand, a founder, a team and a strategist, you have to decide which of those waypoints you can best execute against to drive discovery and trial and begin to build traction with your brand. That’s different for any brand or any product. To not do it is a miss. I know in your case you are doing it. Best practices can certainly be shared in key learnings, but I would be somewhat wary of taking too much from those and using them because what works for one doesn’t always work for another.

A great entrepreneur is going to surround themselves with great advisors, great investors, and great people who have had those experiences in their heads. Through the conversation with what they share with them and how they can get advice, be able to uncover what worked in other situations that you can then apply to your business. As an entrepreneur, that’s one of the things that we talk about. We see entrepreneurs that have a long list of advisor pages, but do they use their advisors? When you are building and putting people around you, leverage them. It’s a skill as an entrepreneur to figure out how do you get those learnings, when is the right time, and how do you do that? It’s out there but as an entrepreneur, you need to figure out how do you attain the right knowledge and then apply it to your business.

Another question is, why is teaching strategy so important to Bluestein Ventures?

For us, when you invest in an early-stage company, they have limited resources. By resources, I mean capital and time. If you use those resources ineffectively, it can kill your company. For us, a strategy is vitally important to make sure you’re using your resources efficiently and effectively to be able to scale. The last thing we want you to do is run out of time and resources. We like to help companies think through that to make sure that the infrastructure is set up for them to scale effectively. It’s that critical point between seed, late seed, series A, and series B, where a lot of companies fail to get that engine moving to get their company to scale. That’s why for us, working on strategy is so important because it’s vital to your business. If you don’t take that time to take a step back and think about what you’re offering and how do you get to product-market fit, you’re just going to be executing against nothing. That’s why we like to focus on it.

I wish that every company that we invested in had it all figured out and they were growing bananas. We’d just write a check, and in 3, 5, 7 years, they would send us a check back. It doesn’t work that way. Pretty much every single investment that we make at the seed-stage, we always have major questions. We made an investment in an eCommerce grocery concept. We have 2 or 3 critical questions to say, “Can this business figure this out?” When we talked to other people about that business, they said, “I’m not investing because of those 2, 3 things.” If this business doesn’t figure those things out, it’s probably not going to be as successful as we all want it to. If you look at the data and the stats, at least half a seed-stage company is going to fail as an investor. For us, it’s vital. We see it and we want to be helpful to the entrepreneur. Unfortunately, we’ve had failures in the past and some of those failures have sometimes been when an entrepreneur is not honestly assessing the business and not uncovering what needs to be figured out.

They’re always selling, “This is going great. Look at this number.” Maybe they were going to throw out some vanity metric of, “Our revenue is growing.” When you look at it, you’re losing customers or the profits are bad. An entrepreneur, particularly with your insiders, needs to be honest about this because you’re only going to figure it out if you’re talking about the right things. That’s why we think we as an investor can be helpful in that regards because if we’re not there helping, it’s possible that no one else is.

For our space in the market, when we see other investors, it takes a village to grow a company both internally and externally. When we were looking at the landscape of other investors in the market, everyone has their own unique way of helping startups. A lot of entrepreneurs get a lot of great help around sales, marketing and operations. We didn’t see a lot of help around how do you put all those pieces together and create that strong strategy. That’s why we like to insert ourselves in that space because we want to be able to be that plug for the entrepreneur to help them think through how they grow and scale their business.

Two things that you both mentioned are important to dive a little bit deeper in. The first was the answer in terms of taking that active role or participating or sharing. If you’re a founder and you have a seed-stage investor, you don’t want them to take an active role in de-risking their investment. That’s what you should be looking for. You should be looking for investors who want to lean in and bring their experience, their wealth, and not just their capital off, but their wealth of experience, knowledge, and a structure to help you and to help themselves grow the business. The more active constructively, the better. The other thing that Andrew mentioned was it’s important for founders to look at their business clinically. I would say it’s important to be passionately dispassionate. You have to be willing to examine what’s working and what’s not working. To your point about surrounding yourself with advisors, that’s an important role for the advisors you surround yourself with, to be willing to point out the things that are causes for concern or potential weaknesses or the unintended actions taken. That’s an important message.

That’s where sharing honest data comes in. What are you struggling with? I would encourage all entrepreneurs to share that with investors and advisors. Give us challenges. Don’t tell us exactly what’s going right. You’re not pitching us. Tell us what you need to figure out and tell us what questions you’re trying to answer. That’s where we can help and every investor wants to help. They want to help you succeed, you just have to tell us how.

When we go with entrepreneurs, talk through the strategy, talk about what is the strategy, and what are these key questions, then out of it is the piece that needs to tie into is your operating plan. What are the strategic initiatives that you’re working on for the next 1, 2, 3, 6 months? Who’s doing it? What are the responsibilities? The last key component is, what’s your KPI scorecard? What are the metrics that we are tracking as a business that is going to judge whether this is working or not and whether both on outputs of revenue, margin, and cash? Also, on things like you’re trying to land some big retail accounts, how are we doing it against our retail conversations? What are some of the key metrics?

Let’s talk about philosophies. Everyone in the retail space loves talking about philosophy because it’s such a key metric. Online, what’s our lifetime value to customer acquisition costs? What are the key metrics that we’re doing? That’s important to be building that and building in the foundation of a good scorecard because then you yourselves can do that. You can then also share that with your board, your investors, etc. and say, “Here’s where the business is at. This is what I’m trying to figure out.”

I want to delve a little bit deeper into those KPIs and around those key metrics. I see a lot of brands, a lot of founders wanting to do that and then go about measuring the wrong things or things that are vanity metrics. There are some basic ones and you called some of them out, but how do you find the confidence that you are measuring the things that are indicative of performance in the way that you’ve determined what optimal performance is?

You can always be evolving those scorecards. Sometimes there’s only so much data you can measure and the amount of time it may take. The core elements of it are, are you tracking whether you know something? If things are looking green across the scorecard, you know things are working? Are you tracking the things that are keeping you up at night? Entrepreneurs always have those 2 or 3 things. You go to sleep at night and you’re thinking about those. Are you tracking those? What are the biggest challenges we have? If you’re tracking the things that say, “If this thing is going good, I’m going to be telling every person I know that this is.” Are you tracking the things that are bugging you? If you’re at least covering those two bases, you’re probably getting at least 80% of the way there.

One of the things we work with our brands is OKRs. Does either of you do that?

We think of KPIs in two separate buckets. The first is your financial output. Those are core KPIs that stay with your business day in and day out, month-to-month, year-to-year. They can change a tiny bit, but that’s the core KPIs that you’re aligning the entire organization around. The second bucket of KPIs is around strategic initiatives. As you set your go-to-market strategy, you’re going to have current initiatives that you’re working on for the next 3, 6, 9 months, and how do you track those? Those can come off and on the business as different initiatives change.

That’s one point I’d say. We think of the financial KPIs, your core ones are the outputs of the business and the strategic ones are more of the inputs. How do you tell if you’re going to get to those outputs? The second thing I’d add is we think of KPIs around the key questions that you’re trying to answer, and this might be helpful to entrepreneurs to think about it this way. Core KPIs, for example, we think of the questions is, how strong is the market opportunity? You can then align KPI’s actual measurements around that. What’s your revenue, your growth, your number of accounts? The second question would be, how attractive are the unit economics? What is your gross margin, your dollar number per account, your acquisition costs, your LTV?

How strong are your sales and marketing? Are you measuring it from social media engagement, MPS, product feedback? How sustainable is your company? Do you have enough cash in the bank? On the activity focus, those are questions that you’re trying to answer that has come up when you’re going through your go-to-market strategy. What are you trying to figure out in the next three months? Can you develop a convincing brand story? Do you have the right product? Do you have the right resources around you? That might be helpful to think about it in that way because as you’re thinking about the questions, you can find those measurements that connect to those questions.

Our overlay to that is that we use this process of OKR. There’s a great book called Measure What Matters by John Doerr, who has a good TED Talk. The cool thing about OKR is that we do the same thing. You have that core set of KPIs on the outputs, but what you’re doing there is identifying, “What are the three key objectives that I need to accomplish, or my company needs to accomplish, or my brand needs to accomplish in the next 90 days that move us further down the field? How do we measure that we’re accomplishing that?” I find that to be a very nimble way to refocus effort when most entrepreneurial companies aren’t for wanting things to do. They struggle more with an abundance of things to do than the scarcity of things to do, so narrowing it down is very important.

Joanna had a cool question here, “Why did you choose Bluestein Ventures for this session about strategy?” The truth is a few things. First of all, I appreciate the level of insight, sharing, coaching, and conversation that Bluestein takes with the founders for all the calls that I’ve been on, which have been many for those who are looking for investment. Most of them don’t turn into investments by Bluestein. That’s true for any venture reality, but there’s always that feedback. I also felt like when we chatted about this, that providing a look to strategy from a perspective that is outside of the norm, outside of those of us who just teach strategy, professed strategy, or who make our living doing it that way. From an investor standpoint, people that are putting their money on the efficacy of their strategic framework, I thought would be a very unique approach. I’m glad we’re having this conversation. I would let Andrew and Ashley add anything if they want.

You could do the strategy. It’s a good conversation to have it both from an investor standpoint, as well as an entrepreneur standpoint. It’s the other side of the table and there’s a different lens to it, but investors in your board should play a role in your strategy. We try to apply a lot of this thinking when we’re interacting with entrepreneurs, whether it’s in a board meeting, but a lot of times we don’t necessarily have a board seat, we’ll do it outside of it. You should be engaging your investors in helping do this. A lot of times when we also lean in on this is when it gets to a capital raising round. All we’ve talked about in terms of the vision, the playbook, the team, that now needs to be conveyed into raising capital and telling the story about the business. Why this is a great business and why someone should invest in a capital?

For investors, the one benefit we have is we see this across many different companies and many different situations. We’ve been able to glean some learnings across those situations, but I would love also how entrepreneurs approach this. One of the things that we made clear is we don’t operate companies. In this equation, what matters is the entrepreneur. We put everything, all our faith, and all our effort into supporting that entrepreneur. The entrepreneur is the one that needs to take what we’re talking about and execute about it. The best entrepreneurs in between meetings get shit done, and that’s what we get excited about. That’s the people we want to work with. We just want to help direct people. Help them make sure they’re spending all their effort on the right things and be where we can be helpful. There are multiple perspectives on this conversation.

Getting shit done is an important thing. Having a good strategy is just the guard rails to make sure you’re getting the right shit because that’s the other challenge.

When it comes to entrepreneurs, the hardest thing is to say no, but that’s often the most important thing at the early stage. When are you going to say no? It’s easy to say yes to everything and before you know it you’ve executed, but you haven’t executed strategically.

Look for your noes as well as not being a squirrel chasing its next nut, which many entrepreneurs sadly, myself sometimes included, are guilty of. There’s a question here regarding your interaction with strategy. This is interesting and it could be only interesting to me. We’re talking about it as it relates to brands coming to you and looking to raise money. I’m sure having an iterative strategic process that you’re working with your portfolio brands helps guide the relationship and the interaction when the shit hits the fan or when things aren’t going well. We always talk about all the good stuff. You raise money, you have great growth and all those kinds of things. There are times in any brands where the good stuff is not what you’re seeing and it’s the tough stuff. How does having that kind of aligned and iterative approach to make a strategy together as an investor with your portfolio brands help you both navigate those tougher moments?

One of the reasons that after we invest, we spent some time working with the entrepreneurs is to get aligned with them on what the strategy is so that we can more quickly get to the heart of the issues when we talk. One of my biggest pet peeves is in a board meeting or an investor call, we spent out of 60 minutes, we take 45, 50 minutes talking about what’s happening with the business and then the last ten minutes is, “Here’s this major issue and what should we do about it?” That should have come up in the first part of the conversation. That’s the thing we should be spending an hour about.

If we’re not aligned in understanding what’s happening with your business, it makes sense. You have 45 minutes, tell me everything that’s going on. If we’re aligned, we’re ready for us to dig in. Having an understanding of what our north star is and having the conversation on what we’re trying to accomplish allows us to have conversations around what changes we need to make. With COVID, a lot of our companies have had some stress that had been put on their business, whether with their plans, with their cash, and with their growth. With every company, we need to quickly get to say, “What should we be doing?” It’s important to know what we’re trying to do because, in the game of survival, we have to keep in mind, what are we trying to survive for? Sometimes you’ve got to make tough decisions. That’s the reality of startups. As long as the entrepreneurs are going to keep going, which oftentimes they do, we want to still go back. If we can make our way through COVID, what do we want the story to be? It’s important to have that.

That’s a great encapsulation of that alignment. It makes the conversation easier and quicker. It often enables us to dig in and understand what’s going on with the numbers and with the metrics if we know what you’re trying to achieve, what you’ve been doing over the past months, and specifically what your strategic initiatives are. It enables us to maybe come up with those insights around the data that tells us something that you might not necessarily be focused on that we can diagnose and move forward that way.

Ashley, does it help that you were potentially a participant in setting up of those initiatives? There’s some joint sense of, “This is what we all believe was right.” There isn’t that kind of dichotomy or bifurcation between the two.

We don’t like to be seagull board members or seagull investors where you come in, you shit on the business and then you fly away. We do like to know what those problems are, so we can be dispassionate too. We helped you think through your strategy and if it’s not working, we can pivot and easily help you think through the next stage.

Lauren has a question and I’ll send this one to you, Ashley. “Can you wait too long as a company beyond early-stage to get funding?”

I don’t know exactly what Lauren means by that.

Can you be too mature in business or past that girl-stage and so forth? The answer is you raise capital when you need it.

You raise capital before you need it.

That’s true. You go to the well before you need the water, but you have to have a plan for it. If you don’t have a plan for how you’re going to deploy it, then you don’t necessarily want to do it. She added that so much focus on funding is about an early stage in the business. Lauren runs a business that she’d been able to bootstrap and done quite a bit on her own and make it further down the life cycle of the brand. She is now looking to raise growth capital. I know that’s very difficult with not a lot of information.

I don’t think you’re ever too long or too late to raise capital if you’re raising it strategically. You have to have a plan and layout that plan financially and strategically for what you’re going to do with that capital. Often, companies don’t “need” the capital if they’re profitable, but take it in order to fuel growth quicker. There are multiple options on how you can skin the cat, but you are never too late for raising capital.

There are different investors out there and everyone always thinks, “I’m looking for early-stage companies.” Companies that have been around for a while, they’ve gone a little slower and they’ve figured it out. In that conversation where you need to convey it to the investors, we’ve figured it out, and here is now why I’m raising capital and what it’s going to get to me. Good investors may have been at it for 6, 7 years. We backed a company that had been around for 5, 6 years. He was trying to figure it out. He had pivoted a few times and he found his product-market fit. We were new to the conversation, so we probably didn’t understand how long it took them to get there.

There are other people who are like, “He’s been at it a while. I’m not sure he’s figured it out.” We had fresh eyes and we said, “This is an interesting business.” Twelve months later his business is scaling how we exactly thought and even better. Hopefully, we’re going to raise more capital. I don’t think it’s ever too late. Oatly started in the ‘90s. It was a business in Scandinavia for a very long time. They did all their massive growth in the last few years and that came from new investment. It’s never too late.

You’ve done the hard work. You’ve de-risked the investment for the investor. You’ve shown us that you can build your vision, your playbook, and your engine. If you can prove that you’ve achieved product-market fit, capital is the least of your concerns.

Sometimes it takes a category to catch up to a brand. Sometimes brands are so early in the nascent category that the market opportunity isn’t there but you see it coming, and then you wait until the market starts to catch you up to the brand. I want to give each of you this question and that is advice for the founders as they set out upon trying to self-examine strategy and think through strategy. What actionable insight can you share with them?

The first advice I’d give is to take the time to sit there and think through your strategy and bounce ideas off of your advisors, your investors, and your team, and think for it yourself. The most important advice is to take a step out of the day-to-day and delve into your strategy and think through the different components of your business. We gave you three frameworks, and I’m happy to share if anyone wants to email me a bit more around the details of how you think through this. What is your vision? What are you trying to achieve in the market? How are you going to do that? What is your playbook? What are the resources? What’s the engine that’s going to enable you to succeed? Flowing that through, what does that mean? What are the key questions? What metrics do I need to measure? What are my strategic initiatives? How am I going to measure that and flow that through? That’s my overall advice.

Starting a business is a journey. It has lots of ups and downs. It’s important as an entrepreneur that you recognize those, and that you set up a good support system around you to think about how do you manage the downs, but also celebrate the highs. Along that journey, keep in mind what you’re building. What is the secret formula that you are trying to discover, build and demonstrate? Just keep going, keep fighting, and keep asking your questions. If something’s not working, change it up. If something’s working, do more of it. Keep trying to get other people to support you. Keep selling and hopefully, it works out. If not, find the next secrets to discover.

I’ll end with a question for you both and that is, rather than having you received a bunch of emails that are people wanting to talk about in more depth, what if I did a quick informal poll here if there would be an interest in doing a true webinar with the actual deck, and letting you all go through and present that? One, would you be willing to do that? If there’s enough interest, could we schedule that?

For sure on that. I’m happy to share our presentation and do a webinar. That would be interesting.

As per usual, we get off on these questions and this format makes it harder to take people through it. Going through it myself, it would be beneficial to many founders to understand this framework and begin to leverage it in their business. If there is a willingness to jump on another Zoom webinar, which I know sounds torturous to many, then I’ll certainly be happy to post it. If you guys are willing, we can get that scheduled.

We’re happy to do it. We’ll try to make it as fun as possible.

We would want it to be interactive too. People can bring some key questions around what they’re trying to figure out as well because it’s always good to say, “I’ll apply these skills.”

Maybe we won’t do it as a webinar. Maybe we’ll do it and we’ll put a little bit of FOMO onto it. We’ll do it for the first 25 founders who sign up for it. It will be a regular Zoom call where they can ask questions by video directly and have a little workshop around it.

Whatever works for you.

Thank you both so much for doing this. This has been a super cool conversation. We look forward to possibly doing a workshop in the near future. We’ll have more information made available and to lean in into our word of the day when we get our shit together.

Thanks, Elliot. You have awesome questions as does your audience.

Thanks, Ashley and Andrew.

Important Links

• Bluestein Ventures

• Measure What Matters

About Ashley Hartman

Ashley is involved in all areas of Bluestein, including screening, due diligence, portfolio company support, and portfolio strategy. She has deep experience leading growth strategy and establishing scalable infrastructure necessary to build sustainable ventures. Prior to Bluestein, Ashley was Vice President of Strategy & Operations at Hartman Windows & Doors, where she was responsible for growth strategy, leading expansion across the U.S. as well as setting the platform on which to grow. Ashley also worked for Coinstar in Business Development, focusing on launching their new ventures. After college, Ashley was an Analyst at NERA Economic Consulting.

Active in the Chicago community, Ashley serves on the Selection Committee and Associate’s Board of the Good Food Accelerator and is a mentor at The Hatchery. She is also a Member of the Board of the Harvard Business School Club of Chicago, where she co-leads the HBS New Venture Competition in Chicago; as well as the National Leadership Council of United States Artists. Ashley received an MBA with honors from Harvard Business School and a BA in Political Economy, summa cum laude, from Williams College.

About Andrew Bluestein

Andrew is the co-founder and Managing Partner of Bluestein Ventures.  He is responsible for driving the firm’s strategy, leading it’s investment committee, and advising it’s portfolio companies. He sits on three boards and is an observer on another three, including Factor_, Bizzy Coffee, and Local Foods. In addition to his work at Bluestein, Andrew has been a judge at Kellogg’s & Booth’s new venture competitions and a mentor to the Good Food Business Accelerator and 1871 communities.

Andrew brings to Bluestein a deep and diverse background working with emerging leaders to grow their businesses. Andrew spent over seven years as a strategy consultant at Monitor Deloitte, working on corporate, competitive, marketing, and organizational strategies with a diverse set of retail, CPG, hospitality, and business service clients. Andrew has an MBA with distinction from the Kellogg School of Management and a B.S. in Industrial and Labor Relations with Honors from Cornell University.

Outside of work, Andrew loves to spend time with his wife, Kate, and their two kids, Vivienne (5) and Aidan (3).  Andrew is an avid Chicago Bears, White Sox, and Bulls fan, struggles to reclaim his high-school golf glory days, but thrives elevating his barbeque and tailgate experiences.

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