As the year draws to a close, I find myself looking back over the past 12 months and taking stock of my first year as a founder. Hindsight is, as always, 20/20, and in the spirit of Broadmic, I’d like to share what I’ve learned with this community of female founders with the hope that you won’t fall into some of the same traps that I did. Though you’ll undoubtedly find others, here are three from my own experience that I advise you to watch out for.
Trap #1: Falling in love with your idea
This is possibly the hardest one to avoid, and might seem a little counterintuitive because being an entrepreneur necessarily means that you passionately believe in your idea. You spend your days building the product and convincing others that your idea is the idea to fill the “white space” that exists. Yet there’s a big difference between believing in your idea and falling head over heels in love with it — such that you are unable to see its flaws quickly enough to make adjustments or change direction when you need to.
When it comes to Broadmic, I was absolutely convinced that using technology to scale the advice of accomplished female founders and investors was crucial to closing the gender gap in entrepreneurship. “You’ve got to see it to be it.” I surveyed potential users, did competitive analysis, conducted market research and built a prototype based on the findings. Yet I didn’t stop to ask myself: Is this the best medium to approach the problem? What are its technical limitations and are they solvable? Is this a business with a sustainable revenue model?
The latter is the question it is most necessary to have a concrete answer to. In my case, I didn’t think long and hard enough about launching a business with an ad-sponsored revenue model even though as an angel investor, I’d always been skeptical of the risks involved. (Just one out of 30 companies in my portfolio was a content business; it was acquired this year).
However, with my entrepreneur hat on, I somehow glossed over my investor reluctance and immediately went into production mode, continuously pumping out content without taking a breath. In retrospect, I should have paused after our first season to reassess and evaluate the data…but, as with any first love, it’s almost impossible to apply the brakes when you’re enjoying the ride so much.
Trap #2: Assuming success in one field means success in another
One of my biggest rules as an angel investor is to only invest in those with industry expertise; it’s a basic way of mitigating risk. If a founder doesn’t have the experience necessary to run the business, it becomes necessary to hire expensive talent and possibly give away a lot of equity to pay for that outside talent.
I will be the first to admit that I broke my own rule — and I did so purely out of hubris. As a successful trader and then angel investor, I jumped head first into entrepreneurship with a bit of a cavalier, how-hard-can-this-be attitude. But success in one — or even two — industries does not predicate success in another. In my case, I’ve been in finance my whole life. So if I had looked at myself across the table, I would have seen someone with little to no industry experience in digital media, the space I was trying to play in. And I did exactly what I try to avoid having founders I invest in do: I hired outside talent.
I found two rockstar hosts and a knowledgeable digital media producer, but hiring employees with years of experience while having none of my own meant that in the early days, I had to defer to their expertise. It took a lot more work and a lot more time than I expected for me to learn what I needed to know about running a media company. And while it’s turned out fine for us at Broadmic, it’s not a position any founder should be in, especially if you’re soliciting outside investors.
Trap #3: Believing that if you build it, they will come
Because I was so in love with my idea, I believed that if I built out my vision, an audience would immediately follow. It sounds like an easy mistake to avoid, especially for someone with as much investor experience as I have, but it’s not as simple as you think. Many startups today are creating products that have no direct predecessors, or are using a nascent technology, so as a founder you may be building a product or brand with no preexisting market — assuming that it will be attractive enough to appeal to a big audience.
I made the mistake of comparing my yet-to-be-created podcast to those published by much more established players such as Gimlet Media’s “Startup” and assuming that BroadMic could achieve the same kind of reach in fairly short order. Moreover, when it came to market-sizing, I estimated that, with over 2 million aspirational female entrepreneurs in the country, we could garner around 1% of that market as regular subscribers. Yet I failed to consider that we would be competing for those listeners’ attention during an election cycle when, instead of spending a free half hour listening to a smart podcast about entrepreneurship, they instead focused their attention on politics.
Even if the demand exists, there’s also the issue of supply. What I didn’t realize when I launched Broadmic is that while the number of people listening to podcasts is increasing exponentially, so is the number of podcasts. (Depending on the source you use, it has doubled or quadrupled in the past year alone.) Some of this is to be expected, but the growth is mind-boggling even for industry experts. I doubt that even the most experienced of producers could have envisioned a world in which so many brands are jumping on the podcast bandwagon; even Goldman Sachs has some 300 podcasts out there. At a higher level, there’s the issue of social media giants — Facebook, Snapchat, and YouTube — competing for attention. Let’s face it, people only have so many hours in a day to absorb the onslaught of information in all its variety.
All that said, being both a founder and an investor simultaneously has been an oddly gratifying experience. As the former, I want to build, create, innovate…basically, just go for it. As the latter, I am constantly aware of the risks I’m taking and mistakes I’m making despite the fact that “I should know better” after almost two decades of angel investing. It turns out that I need the advice that Broadmic’s podcast guests offer just as much as every other founder. That’s why I’m sharing all of this with you: It’s one thing to give advice, and quite another to take it, even when it’s your own.
Before founding BroadMic, a podcast for and about female entrepreneurs, investors and industry leaders, Sara Weinheimer was a Goldman Sachs executive and angel investor with a focus on women-led companies.angel investor, believe in your idea, Brexit, business experience, entrepreneur, entrepreneurship, market sizing, nascent technology, startups, U.S. presidential election