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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.

Launch

“It’s about time.  You’ve been talking about it forever”

So much for encouragement.  My friends have heard me talk about wanting to launch my new venture for way too long.

JFDI already”

I guess they have a point.

Since moving to Silicon Valley in 2005, I knew I’d find a way of working at a place that combines my passion for start-ups, Internet/Software and Israel, but I just never quite found the right outlet.

Throughout the past 6 years, like many people I know in the valley, I’ve tried helping Israeli entrepreneurs as much as I could…  From referring investors to startups I believed in, to making business introductions, to hosting people on the sofa in my — ehem — sparse apartment 🙂

I was fortunate to work with Israeli entrepreneurs as part of my role at Yahoo!’s Corporate Development group, and I think that it has made me more aware of the challenges they are faced with.  It was clear to me that Israeli entrepreneurs have a lot to offer and many have that special “entrepreneur DNA,” but at the same time, something was still missing.  A few have written great pieces about this, highlighting what I think is the biggest obstacle:  the distance from the US market during the early stages of the startup often inhibits their growth.  It’s tough to truly understand and learn from your customers, establish meaningful partnerships, etc, when you’re half a globe away.  And, with the pace of innovation accelerating, this challenge is just getting greater over time.

In parallel, new US-based accelerator programs have emerged, doing a fantastic job in helping entrepreneurs as they are making their first steps.  Focusing these accelerator “mechanics” on Israeli entrepreneurs is at the core of my new venture, UpWest Labs.  I believe that experiencing the intensive Silicon Valley environment through a “bootcamp” will be highly conducive to creating great businesses for many Israeli entrepreneurs. In particular, I feel that the folks who would benefit most from UpWest Labs are entrepreneurs who are:

* Great learners & implementers.  The likelihood of the startup reaching product/market fit with the first version of its product is not high relatively low very low.  Matching tenacity with an ability to pick up the right insights & constantly improve is critical to an evolving startup.

* Humble & supportive.  Entrepreneurs should absolutely be confident, direct and true to themselves.  However, in a small-class environment, working well with one another is pretty important, and I personally would like to help people that are great to work with.  There’s obviously a business relationship between myself/UpWest Labs and the entrepreneurs, but I’d like to believe that the program graduates will also pay it forward and help other entrepreneurs.

Back in June I left my job to focus 100% of my time on this venture, while I’m still pre-kids & pre-mortgage 🙂  My partner in this venture, Shuly Galili, and I have spent lots of time thinking through the details and what we want to accomplish, and we’re very excited to get this going.

And indeed, it’s about time…