What should I do with $5m?

This article is the second instalment of a series of posts written by Evan Larbi. You can read the first here. Evan runs the strategy practice Studio Junction. His focus is on creating compelling brands, helping startups to create compelling a brand voice, business vision, and product suite. If you're a founder and are looking for brand strategy advice, drop Evan a line at hello@studiojunction.io.

Brands and business

Most companies approach my practice, Studio Junction, to help them form their brand strategy. Specifically, they usually want to draw out the voice of their brand and products. In reality, this often means working with founders on their businesses more broadly. Some might try to avoid talking about the business – for whatever reason – but you’ll always run into trouble trying to build a brand without having a close understanding of the business.

A lot of time our work involves giving advice on all kinds of questions. In a previous post, I talked about taking investment. This one’s about what to do with that investment.

What should you do with $5m? A real question an early-stage company was facing. Of course, there is certainly stuff you shouldn’t do with it, but there’s no right answer, and there’s a lot you can do with that sort of money. Think of the below as a number of factors you should consider.

What success looks like

One of the first points to think about is what you want the business to achieve. What does success look like for you as a business owner? While raising money you’ve probably had to identify some lofty goals. These may change, but be willing to set them out and communicate them. Regularly. Whether you chalk them up in a vision, a series of objectives, metrics, or whatever else, defining these at the start will guide you. These just need to be captured in the way that reflects your business.

Put in some milestones and checks to gauge the direction of the business against how you see success. Everyone (especially those who invest in you) will have a view on what success for your company looks like. You’ll do well to define it yourself – and be prepared to defend that.

Mindset and approach

Consider the kind of business you’ve raised money for and are now running – how do you need to shift your thinking to manage that business? I’ve worked with a number of founders who come from outside digital tech who find themselves running a tech business. If you’ve raised money for a SaaS company, for example, you have to think about what it means to manage this kind of business. Recognise that there are lots of areas to figure out here, on top of questions about product, culture, hiring, churn, and scaling up, all of which need addressing. A key part of building your team means bringing in commercial people who are keen to understand the sector and customers, not just flog products or services.

State of the market

Try to learn what’s happening in the market your product is in. Learn from everyone you can, not only through research but from talking to partners and customers. Who are the incumbents and how well are they doing? Are you planning to create an entirely new market? If so, you’re going to need an extremely coherent – and convincing – marketing and sales approach.  

Know your customer

Spend considerable time understanding the people who use your product or service. This goes beyond writing up some vague characteristics as personas, but really getting to grips with your customers’ behaviours and ways of thinking. This doesn’t mean only doing ‘user research’ at the beginning. Throughout the lifecycle of a product or service, factor in the time to gain a meaningful appreciation of how people are using your product. Ensure you have the right analytics in place. Lots of founders start to create a business without really thinking about who their customers are, why they’ll buy the product, or how they’ll use it. It usually doesn’t end well.

Invest in an experience

What is the experience of using your product and how is it to engage with your company? This cuts across a customer’s journey as well as what it’s like to work with you as an employee or partner.

You may think setting out that experience is irrelevant to you (and it’s always worthwhile guarding against taking this to a ludicrous degree) but everyone will have an experience of your business and if you haven’t set this out consciously it may not be the experience you want them to have.

What does that experience feel like and what are the mechanics of it? Success means getting people engaged whether they’re a customer, an investor, or member of the team.

An evolving product

Getting your product right is crucial to your investment – and getting it right means designing, building, launching, learning, and evolving. There’s much to be said about creating the best possible product, which I shan’t spell out here, but it’s an intricate process that takes time and lots of investment.

Your brand, your voice

As a studio that works primarily on brand and voice, you’d expect us to say this, but carve out the time to establish your company’s brand strategy – and do it well. This doesn’t have to be mountains of money and a big name, but a well-targeted investment to make sure that brand fits you as a business. Building a brand is not about creating works of art; it’s not about lovely drawings. Brand has a function, an outcome. At its core, it’s about establishing what your company stands for, and how it stands out. It doesn’t mean being zany or wacky. It demands creating a set of principles and a voice that reflect your vision and approach.

Iterate. Then iterate. Then…

In all of the above, whether it’s the product, your customers, your view of success, or your brand, look at them continuously. Are they consistent with the goals and outlook of your business? Is your product evolving in line with, or against, your customers’ behaviours? Is your brand feeling tired? Keep checking in, keep iterating.

Come on. What’s the answer?

So what should you do with $5m? Take a breath, create a plan, and start doing. Don’t get overawed by the size of the raise. Get the right people around you to keep you honest and focus on building the company, rather than being dazzled by what you’ve won in investment. And don't spend it too fast. Experiment and find what works, before you try to scale. As you can read here, $5m is surprisingly easy to waste!

This article is the second instalment of a series of posts written by Evan Larbi (read the first here). Evan runs the strategy practice Studio Junction. His focus is on creating brands, helping startups to create compelling a brand voice, business vision, and product suite. If you're a founder and are looking for brand strategy advice, drop Evan a line at hello@studiojunction.io.

Image credits

– Maserati (featured) image by Tyler Clemmensen.