We recently sat down with early stage investor Lee Jacobs to get his take on the connection between customer centricity and startup success.
Wootric: Hi Lee! Tell us about your career and how it led you to investing in early stage entrepreneurs.
Lee Jacobs: I was always interested in early technology. When I was at the University of Pennsylvania, I helped start a company and was an intern for Venmo as it just was getting started, so thinking about how technology can have positive impact on people’s lives has always been an interest of mine. When I moved to Silicon Valley I started a company called Colingo. Its mission was to help provide greater access to english skills globally. After Colingo, I started to make early stage investments, spent some time at MHS Capital, and then started working at AngelList. At AngelList I learned a lot about how best to support entrepreneurs in fundraising. Now do early stage tech investing with a group of really awesome entrepreneurs that make up the Edelweiss team. We have invested in companies like BlueBottle Coffee, Pipefy, Wonderschool, etc.
Customer empathy and grit are traits of successful founders
W: Those are admirable companies and Pipefy is a Wootric customer, so we love that. What makes a great founder? How does the customer help shape their success?
LJ: It is important to me to understand the motivation of why someone starts a company. What I am looking for is a founder with deep customer empathy. Basically, I want to know that the customer problem deeply resonates with the founder. It is a pretty crazy thing to do to start a company and I want to know that founders are motivated by something beyond money–namely helping customers with a particular problem.
Beyond that, I look for signals of grit and determination. It is one thing to deeply understand a difficult customer problem, but a founder needs to have the determination and will to solve it. Typically software startups are attacking problems that have not been solved yet, so by their very nature solving the problem is complex. Alessio Alionco, the founder of Pipefy really exemplifies this grit for me. The Pipefy team interviewed me for a piece where I talk about Alessio’s dedication to the customer problem.
So all in all, I’d say the customer has a major, major impact on what makes a great founders. In the best companies, those that are customer-centric, it is almost like the customer is an additional co-founder!
The challenge of staying focused on the customer
W: Early stage founders tend to be product leaders or passionate domain experts. Yet there’s this belief that successful companies win by being customer-driven rather than product-driven or growth-driven. Do you think this applies at the early-stage, before product-market fit, or only at the growth stage and beyond?
LJ: I think it is massively important to be customer centric at any stage of the business. In the earliest stage you are trying to figure out what product solves a customer’s needs and I think the only thing you should be focused on is spending time with customers. At the later stages of a company its likely that your product or service will have competition. You will need to understand the customer’s problem more thoroughly than your competition in order to win.
W: What’s preventing founders from making customer experience a top priority? How would you help a founder who sought your advice on this?
LJ: Running a company is extremely stressful. Founders have all sorts of things pulling them in many directions (employees, investors, vendors, etc.), so it is tough to focus sometimes. Yet you need to find a way to prioritize voice of customer feedback. Having a platform like Wootric to easily take the temperature of customers and help you close the loop is certainly a great way to keep the customers needs front and center.
Seek culture fit with your investors
W: Edelweiss has been around since 2013 and you work with an impressive list of founders. What’s your advice for other startup founders looking to fundraise?
LJ: I talk about it a little bit in this blog post — there all sorts of investors out there with different strategies. I think it’s important be do the work upfront to make sure you find people that are a good fit for your business and also for your company culture. I’ve also written about how you can make your company stand out and differentiate from your competition when you are fundraising.
W: Thank you so much for your time, Lee. Where can we go to keep up with your thinking?
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