In this episode we dive into competitive advantages. Everyone knows they need them, but what are they? How can you have competitive advantages when you are just starting out? What happens if you lose them? We are here to help! In this episode we answer questions including:

• What competitive advantages can you have when you first start?
• What happens if we lose our competitive advantage?
• How can we turn one advantage into many?

All of these questions were submitted by listeners just like you. You can submit questions for us to answer on our website TheStartupHelpdesk.com or on X/Twitter @thestartuphd - we'd love to hear from you!

Your hosts:

• Sean Byrnes: General Partner, Near Horizon www.nearhorizon.vc
• Ash Rust: Managing Partner, Sterling Road www.sterlingroad.com
• Nic Meliones: CEO, Navi www.heynavi.com

Reminder: this is not legal advice or investment advice.

Q1: What competitive advantages can you have when you first start?
Competitive advantages evolve over time. However, some may appear on day 1. For example, a founder with deep technical expertise can offer a unique product. Furthermore, a founder with an established brand can bring an existing audience to sell to. Having an existing distribution channel – and brand name early customers to provide social proof – helps fortify an early distribution advantage.

While these advantages are helpful, the key is to continuously understand your customers and validate their needs.

Q2: What happens if we lose our competitive advantage?
Advantages are often short-lived, especially as your competition learns from you and copies your advantage.

A competitive advantage offers a head start, but the goal is to transform that head start into ongoing customer engagement and product development that solve your customers' problems and exceeds their expectations. Thus, an enduring advantage comes from constantly "talking to users" and building products they love.

Building a talented and committed team is also key. If you can keep talented folks working at your company longer than the competition, that is an advantage.

Q3: How can we turn one advantage into many?
Your product being the "best" is rarely enough. Founders must stay tuned into their customers' needs while understanding why prospects choose the competition. If people are buying solutions to address their problems, that's already good news! Now you need to understand how to assure that customers consider your startup during the buying decision.

Test new approaches to better communicate the value that your product provides prospective customers. At the same time, complete "postmortems" with lost prospects to understand why they chose your competitor.

The more time you spend talking to customers (prospective buyers, existing buyers, and those that you lost to the competition), the faster you can unlock new advantages.

In this episode we dive into raising extensions and bridge rounds. Many companies are looking to these as ways to extend their runway, but they can be complicated. How do you go about raising these kinds of rounds? We are here to help! In this episode we answer questions including:

• What is the difference between an Extension and a Bridge round?
• How do I talk to my investors about an Extension?
• What happens if one of my investors won't participate?
• How much should you raise for an Extension?

All of these questions were submitted by listeners just like you. You can submit questions for us to answer on our website TheStartupHelpdesk.com or on X/Twitter @thestartuphd - we'd love to hear from you!

Your hosts:

• Sean Byrnes: General Partner, Near Horizon www.nearhorizon.vc
• Ash Rust: Managing Partner, Sterling Road www.sterlingroad.com
• Nic Meliones: CEO, Navi www.heynavi.com

Reminder: this is not legal advice or investment advice.

Q0: What is the difference between an Extension and a Bridge round?
Extensions and bridge rounds are the same: you’re raising a smaller amount before the next priced round, instead of an actual priced round. There are 2 reasons to do it: a position of strength or weakness. Weakness is the most common situation and you will see people use the term "bridge round" more often here. The term "extension" sounds better, so you should always use that.

When pursuing this type of round, usually you have not grown as fast you would like and thus need more time to hit the milestone needed for the next round. That time requires a little more money.

When pursuing an extension from a position of strength: you have grown very quickly, your existing investors are desperate to add more to their investment and you only need a relatively small amount to skip the next round completely.

Q1: How do I talk to my investors about an Extension?
You really don’t want this to be the first time they hear the news. Make sure you send regular monthly updates to your investors. This makes a huge difference in investors' willingness to help. Make a basic plan first, with the projections and expected outcomes: the extension should prepare you for a great priced round or liquidity event. Then, contact your friendliest folks first and build momentum.

Investors say "no" via email all the time to founders. It is important to break through the noise. Call your investors or meet them in-person to ask for their participation in the extension.

Q2: What happens if one of my investors won't participate?
This is a very common problem. Close the yeses now. A SAFE is one of the more common funding methods for this type of round. Then, you have to decouple the dependencies. Does this investor have real concerns and obstacles? Does this investor just not have the cash to allocate to the extension?

If you cannot get this investor to participate in the round, start rallying new investors. Consider alternatives such as crowdfunding, too.

Q3: How much should you raise for an Extension?
What's your next milestone? Agree on that first. Then: how much cash do you need to reach your next milestone?

Aiming for 12+ months of runway is not a bad way to frame it, but milestones are more important. Is there a critical revenue milestone that you are approaching? Is there a key growth milestone that this extension can help you achieve? Investors want their cash to be fuel for reaching major milestones. Identify the right milestone, and map out how much cash you need to reach it. With that number in hand, remember that you almost always need more funding than you think to reach a given milestone.

In this episode we dive into category creation and what it takes to win in a new category. Many startups are building products unlike anything that has existed before, but how do you build a category around it? How do you let people know it even exists? We are here to help! In this episode we answer questions including:

• What is category creation?
• How do you anticipate the need for a new category?
• How do you educate the market that your new category exists?
• How do you maintain a competitive advantage as your category grows?

Sean Byrnes has co-founded, scaled, and sold multiple startups and has invested in and advised countless others. "Category creation" has been central to Sean's ability to go from 0 to 1 and beyond. Ash and Nic put Sean on the hot seat to unlock winning strategies around category creation.

All of these questions were submitted by listeners just like you. You can submit questions for us to answer on our website TheStartupHelpdesk.com or on X/Twitter @thestartuphd - we'd love to hear from you!

Your hosts:

• Sean Byrnes: General Partner, Near Horizon www.nearhorizon.vc
• Ash Rust: Managing Partner, Sterling Road www.sterlingroad.com
• Nic Meliones: CEO, Navi www.heynavi.com

Reminder: this is not legal advice or investment advice.
Q0: What is category creation?
If you are selling something where there was nothing like it before, it’s category creation. This differs from a "replacement": selling a product that replaces something else (a product, person, role).

Q1: How do you anticipate the need for a new category?
Category creation starts with problems. You may observe old problems that go from small to huge (SaaS). Another way for opportunities to emerge is from problems that arise through new technologies, markets, or changes (mobile apps).

“What kinds of problems are increasing in pain but now may be solvable given this shift?” These opportunities all start with inflection points: something needs to change to disrupt the status quo.

Creating new categories is usually not the best approach. Even if it is, it often takes years before people recognize that the category exists.

Q2: How do you educate the market that your new category exists?
While replacement products are all about competitive advantages, category creation is all about education.

Most of the education is not about your product. Instead, educate your prospective customers that it’s possible to solve the problem! You just want everyone to know that solutions exist. Teach people what to look for in solutions: give them criteria and teach them how to evaluate.

With “education” as a central component of your strategy, you still need to stay true to your classic startup principles: validate that people have a need, show them a clear use case, and generate proof that prospective customers want it badly.

Q3: How do you maintain a competitive advantage as your category grows?
First mover advantage is a fantasy. You would much rather be second or third. If you do create a category, there are a few advantages you can build up:
- Premium customer logos.
- Create your own conferences.
- Prime positioning with analysts/industry coverage.
- Defining the industry standard.

Treat customers like co-researchers on this emerging frontier. Earned and owned media builds trust and buy-in.

Lightning Round
How do you validate demand for this type of startup? Is it different in any way than the classic methods that startups should take?

What’s more important: a crystal ball type of ability to anticipate a new category of opportunity or the ability to iterate quickly when an opportunity

In this episode we dive into new kinds of Venture Capital firms and what they offer startups. Many startups seek venture funding, but most funds look the same. What can new types of funds offer? When are they a good fit for you? We are here to help! In this episode we answer questions including:

• How involved should a typical VC be?
• What’s more important the founders or the market?
• What are examples of an “unfair advantage” that a startup can have?

We also hear details on Sterling Road and Near Horizon, two new kinds of venture firms started by our own Ash and Sean!

All of these questions were submitted by listeners just like you. You can submit questions for us to answer on our website TheStartupHelpdesk.com or on X/Twitter @thestartuphd - we'd love to hear from you!

Your hosts:

• Sean Byrnes: General Partner, Near Horizon www.nearhorizon.vc
• Ash Rust: Managing Partner, Sterling Road www.sterlingroad.com
• Nic Meliones: CEO, Navi www.heynavi.com

Reminder: this is not legal advice or investment advice.

Q1: How involved should a typical VC be?
For a typical investor, they should not be involved much at all. Many VCs don’t have experience operating a startup, thus, their advice can be distracting. Nonetheless, it is important to keep them regularly tuned in via monthly status updates.

For investors that have built and led startups, their help can be significantly more meaningful. With Sterling Road, Ash provides regular cadence coaching to help your startup at the earliest stages. This also includes hiring intros, customer intros, community access, and fundraising help.

Sean explains that Near Horizon gets as involved as possible, but they aren’t the CEO. You need a CEO with vision and deep knowledge of the space; Near Horizon is the booster rocket to make them better. They support the CEO with a wide range of founder-centric efforts, but fundraising and hiring remain the CEO’s responsibility.

Q2: What’s more important the founders or the market?
You need both! The table stakes for a startup:
1: The market: it needs to be a huge problem with a lot of potential buyers.
2: The founders: impressive founder with a history of success and resilience is key. The founder will make or break the company.
3: Proof: then you need a great idea, evidence that it might work, a demo, and a bunch of customer discovery.

Great founders can build businesses in small markets, but not venture-backable businesses. Weak founders can show traction in big markets but will struggle to scale. Investors are looking for a unicorn, and that is very rare. Most investors review hundreds if not thousands of startups for every one investment.

Q3: What are examples of an “unfair advantage” that a startup can have?
Ash explained that Sterling Road prizes advantages in tech, network effects, and user experience (usually based on tech, otherwise a competitor could easily copy it).

Sean emphasized that Near Horizon looks for founders with unfair advantages in distribution. You need a way to reach your customers that isn’t paid advertising.

Other nice-to-haves include:
Hiring - having a network of amazing people who want to join your team.
Customer rolodex - knowing the first dozen or so buyers.

Lightning Round

• Do founders make the best investors?
• What’s a clear indicator from a startup that can make it interesting to potentially invest?
• After three months of receiving the Near Horizon or Sterling Road golden touch, what’s the change that a startup should experience – what can they now do differentl

In this episode we answer questions about growth. Specifically, what do you do if your growth has stalled? How do you find a new growth engine? We are here to help! In this episode we answer questions including:

• How do I break out of a flat sales slump?
• How do I avoid spending all my time fighting with competitors for deals?
• How do I stand out in a crowded market?

All of these questions were submitted by listeners just like you. You can submit questions for us to answer on our website TheStartupHelpdesk.com or on X/Twitter @thestartuphd - we'd love to hear from you!

Your hosts:

• Sean Byrnes: General Partner, Near Horizon www.nearhorizon.vc
• Ash Rust: Managing Partner, Sterling Road www.sterlingroad.com
• Nic Meliones: CEO, Navi www.heynavi.com

Reminder: this is not legal advice or investment advice.

Q1: How do I break out of a flat sales slump?
Start by reviewing some of your growth fundamentals to make sure your key pillars are in a good spot. Your ICP: do you know your Ideal Customer Profile, and do you have evidence that this customer category has demand for a solution? Proof: do you have proof that your product is generating great value for customers (and have you created assets based on that proof)? Referrals: are you making it easy to get referrals? Make sure these pillars are in a healthy spot first.

Then, investigate which growth levers need more attention. Your sales funnel is one such lever that is critical to this process. Conduct a sales funnel analysis:
- Are we doing enough initial calls or getting enough signups?
- Are enough people getting excited or engaged when they see the product? 10-20% is a good baseline.
- Are enough people becoming paying customers after they try it out? Converting 30% of trials is a good baseline.
- Look for the chokepoints: where are the easiest places to improve?

Q2: How do I avoid spending all my time fighting with competitors for deals?
Listen to your customers. It’s likely both products fail in some way for the customer. You may be able to find an opportunity to differentiate that value you provide by addressing this unmet need. Furthermore, you may unearth a subset of customers whose needs are going unmet. Don’t be afraid to take a risk and test new ideas and features.

Much of this is a function of changing how you – as the founder – frame the strategy. Spend less time talking about the competitor and more time talking about how the world should look. Seeking parity is what turned Blackberry from a global force in cellphones into what it is today. You want to build an iPhone, and that’s not going to come from matching the competition.

Consider how you can change the game through radical product changes, radical pricing changes, and radical strategic moves.

Another avenue to consider: this can be a great opportunity for a merger! There are many notable examples (include Sean with Flurry) where two high growth startups merge, with one brand leading the charge moving forward.

Q3: How do I stand out in a crowded market?
You never win by playing the same game as everyone else. Look at where the market is going and try to get there first. Understand the pain better and find a new way to fix it. Find a new crowd!

A common mistake is to differentiate by highlighting the features you have compared to the competition. Instead, differentiate through storytelling – what opportunity is emerging in the world, and how can your startup be the engine that makes it possible for your customers to participate in that opportunity? That's what people care about.

In this episode we answer questions about your top employees. The biggest problem with top employees is that they might leave! How do you make sure they stick around? We are here to help! In this episode we answer questions including:

• What to do if a key employee wants to become a founder themselves?
• How do I handle competitors trying to hire my best salespeople?
• How do we keep our first employee as the company scales?

All of these questions were submitted by listeners just like you. You can submit questions for us to answer on our website TheStartupHelpdesk.com or on X/Twitter @thestartuphd - we'd love to hear from you!

Your hosts:

• Sean Byrnes: General Partner, Near Horizon www.nearhorizon.vc
• Ash Rust: Managing Partner, Sterling Road www.sterlingroad.com
• Nic Meliones: CEO, Navi www.heynavi.com

Reminder: this is not legal advice or investment advice.

Q1: What do I do if a key employee wants to become a founder themselves?

Ideally, you would be the one suggesting that this key employee become a co-founder, not the other way around. You don’t want someone to hold you ransom on their pursuit of this new title. Further, becoming a co-founder is another level of commitment. If they have demonstrated they are up for the task, set expectations about what new responsibilities come with the co-founder title.

One of the challenges with adding a co-founder later in the process can be equity. Be generous with equity without sacrificing your ability to hire more great people. Don’t be afraid of big equity grants on 6 year vesting schedules. Lastly, you can make key employees feel exceptionally valued without giving them a co-founder title. Don’t rush into offering someone this new responsibility before thinking about how else to value their great work.

Q2: How do I handle competitors trying to hire my best salespeople?

Top salespeople are an incredible asset – there is always a risk that your competition will try to lure them away. Salespeople are motivated by money. If they think they will make more money with you, they will stay. However, this means they need to believe they can sell more with you.

Make sure your commission plan is competitive. This allows you to further reward performance with less pressure to raise salaries and guaranteed money. Give your salespeople more accelerators for hitting or exceeding their targets. Make sure the targets are not unreasonable.

This proactive approach can keep you in the driver seat. The golden ticket to stopping the competition from hiring away your best talent? Continuously create great reasons for top performers to stay.

Q3: How do we keep our first employee as the company scales?

So, one of your best engineers wants to leave and start their own company. And you’re worried others might leave with them? When you hire great talent, there is always the risk that they will leave to pursue their next great opportunity. Once someone talks about leaving, odds are they are going to leave eventually.

The best policy for retention is love not fear. Wish them well. If you have the means to do so, consider investing in their next startup.

Going forward, do a better job of understanding top employees’ motivations. You can provide more ownership to someone like this, much earlier in the process.

Implement a transition plan. If they aren’t on a deadline, they might be willing to stay for a few months so you can hire a replacement. Along the way, make sure you understand if there is anything they are running away from.

Most importantly, give others a reason to stay. If your startup offers more value to top performers than the alternative, you can make staying better than leaving.

In this episode we answer questions about underperforming employees. If you have a team, some people on that team will underperform. What do you do when that happens? Can you turn them around, or do you have to let them go? We are here to help! In this episode we answer questions including:

• How long should you give an employee to ramp up?
• Why would a top sales person start missing targets?
• What do you do about executives that aren't working full time?

All of these questions were submitted by listeners just like you. You can submit questions for us to answer on our website TheStartupHelpdesk.com or on X/Twitter @thestartuphd - we'd love to hear from you!

Your hosts:

• Sean Byrnes: General Partner, Near Horizon www.nearhorizon.vc
• Ash Rust: Managing Partner, Sterling Road www.sterlingroad.com
• Nic Meliones: CEO, Navi www.heynavi.com

Reminder: this is not legal advice or investment advice.

Q1: How long should you give an employee to ramp up?

An underperforming new hire is not good news. You should be excited about new people joining your company, not concerned!

It is critical to move quickly. For a technical new hire, you want them to at least be pushing code by the 2 week mark. If a new hire hasn’t made you say “wow” in the first 6 weeks, the odds of it working out are not in your favor.

Overall, an 8-12 week ramp up timeline is reasonable, as long as you are seeing the proper early milestones and an acceleration of key contributions. That being said, if it is not working out by as early as the 2 week mark, you need to take action. Remember, the longer you keep someone who isn’t working out, the harder it is for them to explain the gap in their resume. Thus, deciding to part ways early in the process can benefit both your startup and the new hire.

Q2: Why would a top sales person start missing targets?

Start by investigating why they missed their targets. Is there not enough pipeline? Are their close rates low? Figure out if it’s the sales person, the pitch, the process, or another factor.

Interact with the sales person regularly to correct course. Always make sure you are setting clear expectations. Get them a coach. Pair them up with someone doing well. In short, do what you can to intervene, understand the issue, provide support, and get back on the winning path.

Top sales people are in high demand. If it turns out the performance issue is a result of them interviewing elsewhere, evaluate your incentives plan to see if you are creating enough reasons for them to want to stay and keep performing at a high level.

Q3: What do you do about executives that aren't working full time?

First, have a serious conversation about expectations around availability. Second, focus on why people want to stay. Give them reasons to want to work hard! Finally, make sure motivation and engagement is part of your interview process. Hiring motivated self-starters is always in season.

Ultimately, you want underperforming executives to turn the tide and start creating more value for the company. Consider setting more ambitious goals for them. In doing so, you will have a measurable way to see if their output rises to the occasion which, in turn, should result in increasing their work-time presence. Include regular check-ins as part of the process to achieve the goal.

In this episode we answer questions about innovation. Startups are expected to innovate, but what does that mean? What is innovation and how does it become an advantage? We are here to help! In this episode we answer questions including:

• What is innovation?
• Is there a process to innovation?
• What is the cost to not innovating?
• How do I know if I'm being innovative?

All of these questions were submitted by listeners just like you. You can submit questions for us to answer on our website TheStartupHelpdesk.com or on X/Twitter @thestartuphd - we'd love to hear from you!

Your hosts:

• Sean Byrnes: General Partner, Near Horizon www.nearhorizon.vc
• Ash Rust: Managing Partner, Sterling Road www.sterlingroad.com
• Nic Meliones: CEO, Navi www.heynavi.com

Reminder: this is not legal advice or investment advice.

Q0: What is innovation?
Innovation is the process to generate a new method, idea, or product that solves a problem. Innovation is an umbrella term that includes entrepreneurship, corporate innovation, social innovation, and others.

Adoption is key.

Q1: Is there a process to innovation?
Yes! However, innovation is not a direct line process. While there are common paths and milestones, the process requires judgement and the ability to cycle backwards and iterate.

Key steps include:

1. Small teams
2. Be uncomfortable: short deadlines and pressurized situations
3. The common start across every innovation process is to identify “the problem”. Talk to people. Don’t do surveys. You need to find problems people need fixed. When you have done enough user interviews and found a problem, define it with precision.
4. Brainstorm a variety of ways that you can solve the problem.
5. Then, another important “judgement” moment. Amongst all of the possible ways to solve the problem, prioritize one. Figure out the solution that is closest to magic but also plausible to build.
6. Run fast, incremental tests to try to solve part of the problem for your “true believers” – the people who feel the problem strong enough that they are willing to try your v1 solution.
7. Collect data from your tests, iterate, and test again.

Resources available online include content about Human Centered Design, Design Thinking, and more. In fact, two of our hosts have produced tons of fantastic content on the topic: Ash Rust on Medium and Sean Byrnes’ The Breaking Point on Substack.

Q2: What is the cost to not innovating?

The cost for doing nothing can be catastrophic. A PwC survey of more than 4,700 CEOs worldwide showed that “45% of the respondents were worried that their businesses wouldn’t be viable in a decade without reinvention.”

Innovation is a durable skill set.

Innovation is hard to learn, but it is one of the few advantages you have. You won’t win by playing by the rules, you win by creating a new game.

Q3: How do I know if I'm being innovative?

There is no set of rules to guarantee that you are being innovative. Your innovation success requires adoption.

That being said, if you answer “yes” to the following questions, you are on the right track:

• Are you talking to customer and users to understand where opportunities exist?
• Are you describing problems with precision?
• Are you running fast tests then iterating?

If customers want your product or at least the idea of it, awesome. If competitors copy your idea, that’s a sign that you are bringing new value to an opportunity.