Advice or anti-advice? Five founders on the merits of breaking convention

_{This is Lesson 4 from Bessemer's How to Lead: Founders Fundamentals Course. Sign up today for mentorship from 30+ leaders.}

The rise of the venture-backed startup has inspired an endless amount of content (including ours) and entire cottage industries dedicated to telling founders the best way to build enduring businesses. For founders, this can be a blessing and a curse.

On the one hand, the perspectives of seasoned founders can protect new entrepreneurs from learning things the hard way. On the other, the constant inundation of advice can be overwhelming, and often, the advice itself is overly simplistic and lacks industry nuance. That’s why, we're featuring the founders of Toast, Canva, Clarity Money, Teachable, and Guild and the best practices and startup gospel they didn’t follow — from “start small and iterate” to “raising more is better.”

1. Follow customers over convention

Before Toast was Toast, Kent Bennet invited its three founders, Steve Fredette, Aman Karang and Jonathan Grimm, to work out of the Bessemer office in lieu of an investment. After much deliberation, the team decided to build its own point of sale system (POS) for restaurants.  Aman shared the idea with Kent over breakfast. He was shocked. “I felt like screaming. ‘You're going to build a system to replace a 40-year old software stack with 1,000s of required features?’” He gave the team a 10% shot at a viable product, but the founders built it anyway. It wasn’t the last time they went against the grain. Later, talking to restaurant owners, the Toast founders discovered a common frustration: POS systems were out of sync with payment systems. In response, the Toast team decided to build payments into their product. “If they had bothered to ask a VC first, they would have been told this wasn’t done, given the risk and complexity involved with payments.” Fortunately, the Toast founder listened to what customers needed — not the wisdom of the day — and trusted that, with enough elbow grease, they would find a way to deliver. style="padding-left: 40px;">_{In this article, Bessemer Partner Kent Bennett shares why he initially resisted investing in Toast, what changed his mind, and more stories of the team solving things once thought unsolvable. Keep reading →}

2. Starting small and iterating is not the only way

Canva founder and CEO Melanie Perkins had a vision for her company that defied the startup gospel of the day. “My enemy for a long time was the Lean Startup. When we were initially raising funds, it was all the rage.” The Lean Startup champions an iterative approach to product development where founders incrementally improve a minimum viable product (MVP) through many small experiments. But Melanie believed strongly that Canva needed to create an international presence from day one. Today, Canva is available in over 100 languages, including the category of languages that read right to left. While localizing the platform for these languages required significant overhead in development costs, it ultimately paved the way for broad access and colossal growth. As a platform built for everyday people in 190 countries, Canva’s total addressable market (TAM) is enormous. Other than creating a product people love, focusing on global adoption since the early days has been the most significant driver of Canva’s growth to 35 million monthly users. style="padding-left: 40px;">_{In our interview, Melanie also discusses how Canva’s focus on product-led growth set off a word-of-mouth domino effect and why hard times aren’t a sign you’re on the wrong trajectory. Keep reading →}

3. A scrappy MVP beats a slick pitch deck

Adam Dell took an atypical path to entrepreneurship. As an investor, he discovered a gap in the market and founded Clarity Money in an attempt to close it. Suddenly, Adam found himself on the other side of the table at pitch meetings, going to bat for an idea in which few saw potential.  When he first started telling people about his vision for Clarity, many scoffed, believing that the personal finance management space was already saturated. When it came to turning those skeptics into believers, Adam found the most effective strategy was demoing a prototype.  “Our prototype was nothing fancy at all. I built it myself with a guy I found online.” Adam would sketch out what he wanted the app to look like, and his freelance design support would bring it to life. Then, he’d put his prototype into Invision and shop it around for feedback. Adam attributes the eventual success of the app to this early model. “I had the credibility of an entrepreneur and a venture investor, but it still wasn’t enough,” says Adam. “People need to see it, and hold your idea in a tangible way — even if it’s rough around the edges.” style="padding-left: 40px;">_{In our interview, Adam also discusses using behavioral economics to gamify personal finance and the importance of perfecting your user experience as a neobank. Keep reading →} 

4. Consume capital cautiously

Teachable CEO Ankur Nagpal knew from his very first internship that traditional jobs weren’t for him. Early in his career, he decided to start a platform that would enable people to create and sell online courses — and become entrepreneurs themselves.  Ankur’s approach to fundraising was a little unconventional. While it’s typical for founders to raise more with each successive round, Ankur only raised what was required to sustain the business. Since starting Teachable in 2013, he’s raised six rounds, never exceeding $4 million at a time. Ankur maintains that a larger injection of capital wouldn’t have allowed him to scale the business so significantly without producing diminishing returns. Plus, unlike companies pouring money into ads, extra capital was never that helpful to Teachable since its best channels were organic.  Ankur predicts other founders will begin to ditch the extravagant raises in the near future. “I’m convinced we'll start to see more raise conservatively, as they scale the business and find their unit economics working,” says Ankur. “Raising at the right price helps you establish value for your stock.” style="padding-left: 40px;">_{In our interview, Ankur also discusses trying to do one thing really well, making the goals of customers the goals of the company, and Teachable’s acquisition by an international competitor. Keep reading →} 

5. Measure success with a single metric

As CEO and co-founder of Guild, Rachel Romer is involved in a perpetual juggling act. The platform provides employers with tuition-free education, skilling, and career mobility for their workforce and its model meets the needs of schools, employers, and employees simultaneously.  That’s why the Guild team focuses on retention as its company North Star. “Our KPI ensures the win-win-win that makes the ecosystem work,” says Rachel. When retention is high, the Guild team can be confident it’s doing right by students who get free education, employers that get employees with longer tenures, and schools that get higher graduation rates. The average graduation rate for adult learners at post-secondary institutions is 50 percent, but on Guild, it’s 90. Employees who get Guild as a benefit from their employer are also more likely to stay, meaning employers are more likely to see rewards of new hire training.  According to Rachel, a unifying metric is important but doesn’t preclude the need to occasionally direct internal resources to a specific audience. “We’re constantly evaluating which group needs us most in a given quarter because that’s what it takes to attain big-picture balance.” style="padding-left: 40px;">_{In our interview, Rachel also discusses why she made Guild a for-profit company rather than a non-profit, and the opportunities that her decision has ultimately afforded to millions of Americans. Keep reading →} 

Bonus exercise

Best practices can serve many purposes. Even the ones you disagree with can help you clarify your own point of view, company circumstances, or inspire other ideas that pay off in the future. With this in mind, return to a piece of advice from a previous email in this course, or from an article, book, podcast, event, or mentor. Once you’ve chosen, write down or reflect on your answers to the questions below.

• Do you agree with this advice? Why or why not? 
• Could this advice benefit you in your current professional life? If yes, where and how can you apply it? 
• Have you received advice that conflicts with this piece of advice? If yes, what are the relevant differences between the people giving the advice and their circumstances?
• Is there a pivotal point in your career where this advice would have benefitted you? What about an instance where it may have sent you down the wrong path?

_{This is Lesson 4 from Bessemer's How to Lead: Founders Fundamentals Course. Sign up today for mentorship from 30+ leaders.}