Find & Replace: Traction -> Momentum

I was told by investors to come back when I have more traction.” 

That’s probably the sentence I have heard most often from Israeli entrepreneurs these past couple of weeks.  It is sometimes followed by questions about how much traction I think their product should reach prior to investment, how quickly the startup should reach “traction”, etc.

Unfortunately, I don’t have a good answer to these questions…. In fact, the word “traction” frustrates me as much as it frustrates the entrepreneurs I meet, as it’s not really actionable.  How much traction is a good indicator of success? Even if I know what the magic traction number is, what will happen when it is reached? Will the startup get an investment at that time?

When I hear “traction”, I think of a specific goal that you are trying to reach, while “momentum” is really more about the process of getting there.  There have been a few great posts about traction (see Mark Suster, Fred Wilson and Gabriel Weinberg), outlining an approach that I recommend to the entrepreneurs I meet: instead of aiming for an obscure target, it is much better to focus on (1) driving momentum (2) understanding your growth (3) sharing your story with investors:

1. Drive momentum:  Momentum does not necessarily has to be in the form of number of users or total revenue, but can be anything that signals that the team is focused on the critical success factors, is getting things done and is adding value to its users/customers. Specifically, momentum can be demonstrated through:

  • Number of partnerships
  • Key employee hires made
  • Positive reviews from industry influencers

Basically, anything that shows that the ecosystem around the startup is getting increasingly interested in the value it is generating.

2. Understand your growth: It’s not enough just to show that you have momentum, but you need to understand WHY it is happening. You must be able to describe what you did to reach thousands of downloads on Android, for example, and not just celebrate that it happened. This point is often overlooked by entrepreneurs, but is really at the core of gaining momentum: if you truly understand HOW you gained momentum, you will likely be able to continue your positive trajectory.

3. Share your story with investors: In a later post I’ll write about interactions with investors, but as it relates to building momentum, be sure to share your story with the people that you want to invest in your startup.  This means that you’ll need to:

  • Identify the right investors for your venture early on.  Do the homework and find the investors with the right profile for your venture in terms of the amount you’re looking to raise, their areas of focus, feedback from other entrepreneurs they invested in, etc.
  • Reach out to them (ideally via a mutual acquaintance) and set up a meeting that focuses on telling them what you’re going to do in the next few months and asking for feedback.
  • Finally, keep in touch with them via emails or in-person meeting, sharing the progress you have made – and effectively drawing a “momentum graph” over time rather than a single “traction point”.

Not only will this process help you gain credibility in the eyes of the investor and build a relationship, but you will also get to learn about them – learn who really helps you, offers great advice, etc – which will help you make better decisions when selecting an investor.

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One response to “Find & Replace: Traction -> Momentum

  1. I find your items very interesting…..very familiar to Mark Suster’s blog (Both Side of the Table).

    Indeed…… it’s all about traction.

    My theroy is that in most of the cases you need some connections for key individuals to generate strategic partnership. This is the most important issue that (from my point of view) i’ve noticed regarding startups and traction.

    Means: Connections ( could be investors) ===> Strategic partnerships ===> Traction!!!

    This is the equation.

    Yossy.

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