A year ago, we formed Hattery because we wanted to change the way businesses are built. Like most entrepreneurs, the three of us created our business because we had a strong belief that there was a market opportunity that we could — and should — harness.
We recognized the potential of startups to make an impact in the world, and we wanted to create a business model that would truly get behind businesses we believe in. Our idea was to raise a venture capital fund to invest in a relatively small number of startups, and to help them succeed by offering the resources of an in-house creative team.
Here are some of the things we’ve learned in the last year about starting up a business.
Keep the destination in sight, but don’t be afraid to change your route.
The “pivot” is a key part of startup vernacular, thanks to Eric Ries. The concept generally has a negative connotation, but with a little flexibility, adjusting along the way is something every entrepreneur should be prepared to do. It’s inevitable that a startup will need to revise its approach at some point — the important thing to remember is to keep focused on the original purpose, no matter how often the organization evolves.
One of the great surprises from the last year has been our ability to begin investing without raising a fund immediately. Since February, we’ve invested in seven companies, some as part of syndicates with leading venture capital firms. This has given us the opportunity to get moving on building businesses faster. Two of our portfolio companies have already gone on to raise subsequent rounds, and the others continue to go strong.
We also discovered that we could build a larger and more diverse pool of talent within the firm by taking on engaging client work, instead of relying solely on fund management fees to pay salaries. Consequently, we’ve been able to work on projects as diverse as building Poop Games with the Gates Foundation to infographics and analysis with Google, taking advantage of the full capacity of our team while stretching ourselves on other projects we care about.
A need to be frugal can build a culture that is rich.
Our seed financing constituted the life savings of the partners, including 401ks — a familiar scenario for most entrepreneurs. Out of necessity, an ethos has evolved at Hattery of watching every dollar and making it count — but the consequence of this has been a rich company culture that is close-knit and resourceful.
Our decision to hire a chef and serve meals achieved two important things. It allowed us to serve lunch and snacks at a cost of $4.50 per person, per day — in contrast to the individual cost of $7.50 per day for lunch in our SOMA neighborhood. More importantly, it helped us build a culture of eating healthy, hearty meals together while sharing stories and ideas. The kitchen is fondly regarded in our office, and our daily lunches together have inspired a culture that is warm, considerate, and convivial.
Pick a team that can move as quickly as your startup needs to.
Every successful entrepreneur will tell you that identifying talent is the most important job of any leader. We’ve been fortunate to assemble a very talented team, and it’s been extremely rewarding to watch our relatively young group mature and excel quickly.
We have a marine biologist leading user experience, and a biomechanical engineer working on startup advocacy. Many of our team members come from nontraditional backgrounds — but what matters even more than experience accrued is the ability to learn. The team we’ve assembled is comprised of people who are innately curious, and able to quickly acquire new skills or borrow from other disciplines. Our team has to be able to learn quickly, and then teach what they have learned just as fast. All of our entrepreneurs are jumping off the deep end — all the better to have done it first.
Startups have to opt-in to politics.
Entrepreneurs are inherently focused on building their product and getting to market quickly. Very early stage entrepreneurs don’t have the time, resources, or the wherewithal to become involved in policy. A compliance department doesn’t come until it’s time to IPO, and a lobbying arm might get added when serious revenues are already being generated.
Working alongside startups — and being one ourselves — we’ve experienced the frustration of trying to comply with complex regulations that seem designed to protect antiquated markets and products. We helped form Engine Advocacy in December to give startups a voice in the political process, and do the heavy-lifting on influencing policy that allows entrepreneurship to thrive. Engine has advocated for startups on issues as diverse as copyright, crowdsourced investments, skilled immigration, and software patents, and remains a resource for our portfolio companies and the community at large. Working with Engine, we’ve hosted elected officials from across the political spectrum, eager to learn from startups about the problems their businesses face.
The startup community is invaluable. The startup “scene” is a distraction.
Time is short. Opportunity cost is high. It can be counterproductive to get sucked into the startup “scene” — trendy conferences, parties, and even demo days can be a distraction from a startup’s main focus of its product and the people who use it. While we recognize the value in being an engaged member of the wider community, we believe a heads down focus on building the best possible products has served us better. The kind of community we have built at Hattery has proved invaluable to us and to our portfolio companies and clients, from the daily information exchange that happens over lunch or in shared spaces in the office, to the access our companies have to a network of advisors and service providers.
Celebrate your successes.
In the startup world, it’s common to blow past your achievements as you strive for the next milestone — but in an environment where people are working fast and lean to create a product they have passion for, recognizing accomplishment can be an inoculation against burnout and an important reminder of the bigger picture.
Last month, we celebrated our one year anniversary. It was an opportunity for us to reflect on what we’re proud of: the work we’ve done over the last year, the space we’ve built, and the team that made it happen.
We’re looking forward to what the next year brings, and to sharing it with you.