In this episode we dive into category creation and what it takes to win in a new category. Many startups are building products unlike anything that has existed before, but how do you build a category around it? How do you let people know it even exists? We are here to help! In this episode we answer questions including:

• What is category creation?
• How do you anticipate the need for a new category?
• How do you educate the market that your new category exists?
• How do you maintain a competitive advantage as your category grows?

Sean Byrnes has co-founded, scaled, and sold multiple startups and has invested in and advised countless others. "Category creation" has been central to Sean's ability to go from 0 to 1 and beyond. Ash and Nic put Sean on the hot seat to unlock winning strategies around category creation.

All of these questions were submitted by listeners just like you. You can submit questions for us to answer on our website TheStartupHelpdesk.com or on X/Twitter @thestartuphd - we'd love to hear from you!

Your hosts:

• Sean Byrnes: General Partner, Near Horizon www.nearhorizon.vc
• Ash Rust: Managing Partner, Sterling Road www.sterlingroad.com
• Nic Meliones: CEO, Navi www.heynavi.com

Q0: What is category creation?
If you are selling something where there was nothing like it before, it’s category creation. This differs from scenarios where you are selling a product that replaces something else (a product, a person/role). In those cases, it’s a replacement.

Q1: How do you anticipate the need for a new category?
Category creation starts with problems. For example, you may observe old problems that go from small to huge (SaaS). Another way for opportunities to emerge is from problems that arise through new technologies, markets, or changes (mobile apps).

“What kinds of problems are increasing in pain but now may be solvable given this shift?” These opportunities all start with inflection points: something needs to change to disrupt the status quo.

Creating new categories is usually not the best approach. Even if it is, it often takes years before people recognize that the category exists.

Q2: How do you educate the market that your new category exists?
While replacement products are all about competitive advantages, category creation is all about education.

Most of the education is not about your product. Instead, educate your prospective customers that it’s possible to solve the problem! You just want everyone to know that solutions exist. Teach people what to look for in solutions: give them criteria and teach them how to evaluate.

With “education” as a central component of your strategy, you still need to stay true to your classic startup principles: validate that people have a need, show them a clear use case, and generate proof that prospective customers want it badly.

Q3: How do you maintain a competitive advantage as your category grows?
First mover advantage is a fantasy. You would much rather be second or third. If you do create a category, there are a few advantages you can build up:
- Premium customer logos.
- Create your own conferences.
- Prime positioning with analysts/industry coverage.
- Defining the industry standard.

Treat customers like co-researchers on this emerging frontier. Earned and owned media builds trust and buy-in.

Lightning Round
How do you validate demand for this type of startup? Is it different in any way than the classic methods that startups should take?

What’s more important: a crystal ball type of ability to anticipate a new category of opportunity or the ability to iterate quickly when an opportunity presents itsel

In this episode we dive into new kinds of Venture Capital firms and what they offer startups. Many startups seek venture funding, but most funds look the same. What can new types of funds offer? When are they a good fit for you? We are here to help! In this episode we answer questions including:

• How involved should a typical VC be?
• What’s more important the founders or the market?
• What are examples of an “unfair advantage” that a startup can have?

We also hear details on Sterling Road and Near Horizon, two new kinds of venture firms started by our own Ash and Sean!

All of these questions were submitted by listeners just like you. You can submit questions for us to answer on our website TheStartupHelpdesk.com or on X/Twitter @thestartuphd - we'd love to hear from you!

Your hosts:

• Sean Byrnes: General Partner, Near Horizon www.nearhorizon.vc
• Ash Rust: Managing Partner, Sterling Road www.sterlingroad.com
• Nic Meliones: CEO, Navi www.heynavi.com

Q1: How involved should a typical VC be?

For a typical investor, ideally they should not be involved much at all. Many VCs don’t have experience operating a startup, thus, their advice can be distracting. Nonetheless, it is still important to keep them regularly tuned in via monthly status updates.

For investors that have built and led startups, their help can be significantly more meaningful. With Sterling Road, Ash provides regular cadence coaching to help your startup at the earliest stages. This also includes hiring intros, customer intros, community access, and fundraising help.

Sean explains that Near Horizon gets as involved as possible, but they aren’t the CEO. You need a CEO with vision and deep knowledge of the space; Near Horizon is the booster rocket to make them better. They support the CEO with a wide range of founder-centric efforts, but fundraising and hiring remain the CEO’s responsibility.

Q2: What’s more important the founders or the market?

You need both! Let’s talk about the table stakes for a startup:

1: The market: it needs to be a huge problem with a lot of potential buyers.

2: The founders: impressive founder with a history of success and resilience is key. The founder will make or break the company.

3: Proof: then you need a great idea, evidence that it might work, a demo, and a bunch of customer discovery.

Great founders can build businesses in small markets, but not venture-backable businesses. Weak founders can show traction in big markets but will struggle to scale. Investors are looking for a unicorn, and that is very rare. Most investors review hundreds if not thousands of startups for every one investment.

Q3: What are examples of an “unfair advantage” that a startup can have?

Ash explained that Sterling Road prizes advantages in tech, network effects, and user experience (usually based on tech, otherwise a competitor could easily copy it).

Sean emphasized that Near Horizon looks for founders with unfair advantages in distribution. You need a way to reach your customers that isn’t paid advertising.

Other nice-to-haves include:

Hiring - having a network of amazing people who want to join your team.

Customer rolodex - knowing the first dozen or so buyers.

Lightning Round

• Do founders make the best investors?
• What’s a clear signal or indicator from a startup that can make it interesting to potentially invest?
• After three months of receiving the Near Horizon or Sterling Road golden touch, what’s the change that a startup should experience – what can they now do differently?

In this episode we answer questions about growth. Specifically, what do you do if your growth has stalled? How do you find a new growth engine? We are here to help! In this episode we answer questions including:

• How do I break out of a flat sales slump?
• How do I avoid spending all my time fighting with competitors for deals?
• How do I stand out in a crowded market?

All of these questions were submitted by listeners just like you. You can submit questions for us to answer on our website TheStartupHelpdesk.com or on X/Twitter @thestartuphd - we'd love to hear from you!

Your hosts:

• Sean Byrnes: General Partner, Near Horizon www.nearhorizon.vc
• Ash Rust: Managing Partner, Sterling Road www.sterlingroad.com
• Nic Meliones: CEO, Navi www.heynavi.com

Reminder: this is not legal advice or investment advice.

Q1: How do I break out of a flat sales slump?
Start by reviewing some of your growth fundamentals to make sure your key pillars are in a good spot. Your ICP: do you know your Ideal Customer Profile, and do you have evidence that this customer category has demand for a solution? Proof: do you have proof that your product is generating great value for customers (and have you created assets based on that proof)? Referrals: are you making it easy to get referrals? Make sure these pillars are in a healthy spot first.

Then, investigate which growth levers need more attention. Your sales funnel is one such lever that is critical to this process. Conduct a sales funnel analysis:
- Are we doing enough initial calls or getting enough signups?
- Are enough people getting excited or engaged when they see the product? 10-20% is a good baseline.
- Are enough people becoming paying customers after they try it out? Converting 30% of trials is a good baseline.
- Look for the chokepoints: where are the easiest places to improve?

Q2: How do I avoid spending all my time fighting with competitors for deals?
Listen to your customers. It’s likely both products fail in some way for the customer. You may be able to find an opportunity to differentiate that value you provide by addressing this unmet need. Furthermore, you may unearth a subset of customers whose needs are going unmet. Don’t be afraid to take a risk and test new ideas and features.

Much of this is a function of changing how you – as the founder – frame the strategy. Spend less time talking about the competitor and more time talking about how the world should look. Seeking parity is what turned Blackberry from a global force in cellphones into what it is today. You want to build an iPhone, and that’s not going to come from matching the competition.

Consider how you can change the game through radical product changes, radical pricing changes, and radical strategic moves.

Another avenue to consider: this can be a great opportunity for a merger! There are many notable examples (include Sean with Flurry) where two high growth startups merge, with one brand leading the charge moving forward.

Q3: How do I stand out in a crowded market?
You never win by playing the same game as everyone else. Look at where the market is going and try to get there first. Understand the pain better and find a new way to fix it. Find a new crowd!

A common mistake is to differentiate by highlighting the features you have compared to the competition. Instead, differentiate through storytelling – what opportunity is emerging in the world, and how can your startup be the engine that makes it possible for your customers to participate in that opportunity? That's what people care about.

In this episode we answer questions about your top employees. The biggest problem with top employees is that they might leave! How do you make sure they stick around? We are here to help! In this episode we answer questions including:

• What to do if a key employee wants to become a founder themselves?
• How do I handle competitors trying to hire my best salespeople?
• How do we keep our first employee as the company scales?

All of these questions were submitted by listeners just like you. You can submit questions for us to answer on our website TheStartupHelpdesk.com or on X/Twitter @thestartuphd - we'd love to hear from you!

Your hosts:

• Sean Byrnes: General Partner, Near Horizon www.nearhorizon.vc
• Ash Rust: Managing Partner, Sterling Road www.sterlingroad.com
• Nic Meliones: CEO, Navi www.heynavi.com

Reminder: this is not legal advice or investment advice.

Q1: What do I do if a key employee wants to become a founder themselves?

Ideally, you would be the one suggesting that this key employee become a co-founder, not the other way around. You don’t want someone to hold you ransom on their pursuit of this new title. Further, becoming a co-founder is another level of commitment. If they have demonstrated they are up for the task, set expectations about what new responsibilities come with the co-founder title.

One of the challenges with adding a co-founder later in the process can be equity. Be generous with equity without sacrificing your ability to hire more great people. Don’t be afraid of big equity grants on 6 year vesting schedules. Lastly, you can make key employees feel exceptionally valued without giving them a co-founder title. Don’t rush into offering someone this new responsibility before thinking about how else to value their great work.

Q2: How do I handle competitors trying to hire my best salespeople?

Top salespeople are an incredible asset – there is always a risk that your competition will try to lure them away. Salespeople are motivated by money. If they think they will make more money with you, they will stay. However, this means they need to believe they can sell more with you.

Make sure your commission plan is competitive. This allows you to further reward performance with less pressure to raise salaries and guaranteed money. Give your salespeople more accelerators for hitting or exceeding their targets. Make sure the targets are not unreasonable.

This proactive approach can keep you in the driver seat. The golden ticket to stopping the competition from hiring away your best talent? Continuously create great reasons for top performers to stay.

Q3: How do we keep our first employee as the company scales?

So, one of your best engineers wants to leave and start their own company. And you’re worried others might leave with them? When you hire great talent, there is always the risk that they will leave to pursue their next great opportunity. Once someone talks about leaving, odds are they are going to leave eventually.

The best policy for retention is love not fear. Wish them well. If you have the means to do so, consider investing in their next startup.

Going forward, do a better job of understanding top employees’ motivations. You can provide more ownership to someone like this, much earlier in the process.

Implement a transition plan. If they aren’t on a deadline, they might be willing to stay for a few months so you can hire a replacement. Along the way, make sure you understand if there is anything they are running away from.

Most importantly, give others a reason to stay. If your startup offers more value to top performers than the alternative, you can make staying better than leaving.

In this episode we answer questions about underperforming employees. If you have a team, some people on that team will underperform. What do you do when that happens? Can you turn them around, or do you have to let them go? We are here to help! In this episode we answer questions including:

• How long should you give an employee to ramp up?
• Why would a top sales person start missing targets?
• What do you do about executives that aren't working full time?

All of these questions were submitted by listeners just like you. You can submit questions for us to answer on our website TheStartupHelpdesk.com or on X/Twitter @thestartuphd - we'd love to hear from you!

Your hosts:

• Sean Byrnes: General Partner, Near Horizon www.nearhorizon.vc
• Ash Rust: Managing Partner, Sterling Road www.sterlingroad.com
• Nic Meliones: CEO, Navi www.heynavi.com

Reminder: this is not legal advice or investment advice.

Q1: How long should you give an employee to ramp up?

An underperforming new hire is not good news. You should be excited about new people joining your company, not concerned!

It is critical to move quickly. For a technical new hire, you want them to at least be pushing code by the 2 week mark. If a new hire hasn’t made you say “wow” in the first 6 weeks, the odds of it working out are not in your favor.

Overall, an 8-12 week ramp up timeline is reasonable, as long as you are seeing the proper early milestones and an acceleration of key contributions. That being said, if it is not working out by as early as the 2 week mark, you need to take action. Remember, the longer you keep someone who isn’t working out, the harder it is for them to explain the gap in their resume. Thus, deciding to part ways early in the process can benefit both your startup and the new hire.

Q2: Why would a top sales person start missing targets?

Start by investigating why they missed their targets. Is there not enough pipeline? Are their close rates low? Figure out if it’s the sales person, the pitch, the process, or another factor.

Interact with the sales person regularly to correct course. Always make sure you are setting clear expectations. Get them a coach. Pair them up with someone doing well. In short, do what you can to intervene, understand the issue, provide support, and get back on the winning path.

Top sales people are in high demand. If it turns out the performance issue is a result of them interviewing elsewhere, evaluate your incentives plan to see if you are creating enough reasons for them to want to stay and keep performing at a high level.

Q3: What do you do about executives that aren't working full time?

First, have a serious conversation about expectations around availability. Second, focus on why people want to stay. Give them reasons to want to work hard! Finally, make sure motivation and engagement is part of your interview process. Hiring motivated self-starters is always in season.

Ultimately, you want underperforming executives to turn the tide and start creating more value for the company. Consider setting more ambitious goals for them. In doing so, you will have a measurable way to see if their output rises to the occasion which, in turn, should result in increasing their work-time presence. Include regular check-ins as part of the process to achieve the goal.

In this episode we answer questions about innovation. Startups are expected to innovate, but what does that mean? What is innovation and how does it become an advantage? We are here to help! In this episode we answer questions including:

• What is innovation?
• Is there a process to innovation?
• What is the cost to not innovating?
• How do I know if I'm being innovative?

All of these questions were submitted by listeners just like you. You can submit questions for us to answer on our website TheStartupHelpdesk.com or on X/Twitter @thestartuphd - we'd love to hear from you!

Your hosts:

• Sean Byrnes: General Partner, Near Horizon www.nearhorizon.vc
• Ash Rust: Managing Partner, Sterling Road www.sterlingroad.com
• Nic Meliones: CEO, Navi www.heynavi.com

Reminder: this is not legal advice or investment advice.

Q0: What is innovation?
Innovation is the process to generate a new method, idea, or product that solves a problem. Innovation is an umbrella term that includes entrepreneurship, corporate innovation, social innovation, and others.

Adoption is key.

Q1: Is there a process to innovation?
Yes! However, innovation is not a direct line process. While there are common paths and milestones, the process requires judgement and the ability to cycle backwards and iterate.

Key steps include:

1. Small teams
2. Be uncomfortable: short deadlines and pressurized situations
3. The common start across every innovation process is to identify “the problem”. Talk to people. Don’t do surveys. You need to find problems people need fixed. When you have done enough user interviews and found a problem, define it with precision.
4. Brainstorm a variety of ways that you can solve the problem.
5. Then, another important “judgement” moment. Amongst all of the possible ways to solve the problem, prioritize one. Figure out the solution that is closest to magic but also plausible to build.
6. Run fast, incremental tests to try to solve part of the problem for your “true believers” – the people who feel the problem strong enough that they are willing to try your v1 solution.
7. Collect data from your tests, iterate, and test again.

Resources available online include content about Human Centered Design, Design Thinking, and more. In fact, two of our hosts have produced tons of fantastic content on the topic: Ash Rust on Medium and Sean Byrnes’ The Breaking Point on Substack.

Q2: What is the cost to not innovating?

The cost for doing nothing can be catastrophic. A PwC survey of more than 4,700 CEOs worldwide showed that “45% of the respondents were worried that their businesses wouldn’t be viable in a decade without reinvention.”

Innovation is a durable skill set.

Innovation is hard to learn, but it is one of the few advantages you have. You won’t win by playing by the rules, you win by creating a new game.

Q3: How do I know if I'm being innovative?

There is no set of rules to guarantee that you are being innovative. Your innovation success requires adoption.

That being said, if you answer “yes” to the following questions, you are on the right track:

• Are you talking to customer and users to understand where opportunities exist?
• Are you describing problems with precision?
• Are you running fast tests then iterating?

If customers want your product or at least the idea of it, awesome. If competitors copy your idea, that’s a sign that you are bringing new value to an opportunity.

In this episode we answer questions about startup accelerators. Accelerators are programs that promise to help improve your chances of startup success, but how do they actually work? We are here to help! In this episode we answer questions including:

• What do I get if I join an accelerator?
• How do I know if an accelerator is worth it?
• How do I get the most out of my accelerator?

All of these questions were submitted by listeners just like you. You can submit questions for us to answer on our website TheStartupHelpdesk.com or on X/Twitter @thestartuphd - we'd love to hear from you!

Your hosts:

• Sean Byrnes: General Partner, Near Horizon www.nearhorizon.vc
• Ash Rust: Managing Partner, Sterling Road www.sterlingroad.com
• Nic Meliones: CEO, Navi www.heynavi.com

Reminder: this is not legal advice or investment advice.

Q1: What do I get if I join an accelerator?

Well-established accelerators typically provide:

• Cash: they typically invest. The amount varies and the terms are often on the lower side vs. what you could get from going directly to multiple investors to raise a round.
• Demo Day: the fastest way to 100 investor meetings. Accelerators host a showcase event for their startups and their network of investors to meet. This can be a huge value, helping you to line up investor meetings.
• Network: an accelerator immerses you into a network of fellow founders, investors, and company builders.
• Tools: accelerators may also provide tools to simplify how you connect with and benefit from the network.
• Healthy competition: working alongside and learning from other ambitious founders is a great way to create some healthy urgency for your startup.
• Serendipity: all of this combines to create new opportunities for you. If you put in the right kind of work, you may be surprised to see what doors open.

Q2: How do I know if an accelerator is worth it?

This is a critical question to ask; there are lots of snake oil salespeople.

Ask yourself what you need first:

• Need help fundraising? YC has shown that a premier accelerator can help with that; however, not every accelerator has shown they can help.
• Need help selling? Some industry or focused accelerators can help teach you.
• Need help recruiting? Some accelerators can help mostly through association with their brand.

Generally, there are cheaper ways to get the help an accelerator offers.

When evaluating the benefits, consider the following value that accelerators can offer:

• Cash: is it at least 6 figures?
• Demo day: are there plenty of examples of recent multi-million dollar rounds from the program?
• Network: are there well known alumni and speakers at their events?
• Tools: do alumni report using their tools?

Make sure the benefits they offer have substance.

Q3: How do I get the most out of my accelerator?

Set expectations with your co-founders about the desired outcome from the accelerator. Is it to accelerate sales? Is it to fundraise? Work backwards from your end goal so that you know where to prioritize your efforts.

Talk to founders that have been through the same accelerator – preferably before applying! Identify what the most successful companies did in the program and make a plan to do those things.

Once in the accelerator:

• Hit the ground running so you’re always at the front of your class.
• Take control of who you work with, rather than waiting for the accelerator to assign mentors.
• Be creative with your tests: your accelerator companions will be eager to help you amplify what you do!

In this episode we answer questions about building your sales team. Many startups sell their product via sales people, and building your sales team is one of the most important things you will do. We are here to help! In this episode we answer questions including:

• How do I hire my first salesperson?
• What is a sales commission plan?
• How do I know if a salesperson is doing well?

All of these questions were submitted by listeners just like you. You can submit questions for us to answer on our website TheStartupHelpdesk.com or on X/Twitter @thestartuphd - we'd love to hear from you!

Your hosts:

• Sean Byrnes: General Partner, Near Horizon www.nearhorizon.vc
• Ash Rust: Managing Partner, Sterling Road www.sterlingroad.com
• Nic Meliones: CEO, Navi www.heynavi.com

Reminder: this is not legal advice or investment advice.

Q1: How do I hire my first salesperson?
To source candidates, consider various hiring platforms, such as Craigslist, Indeed, LinkedIn, ZipRecruiter, and Wellfound. Your network may have fantastic candidates. Ask fellow founders and investors. Check on people you have worked with previously.

To filter and evaluate candidates, start with a project, such as a PowerPoint sales pitch. Filter further via phone interviews, ultimately leading to an onsite.

Ash sparked some serious debate with his recommendation on the final phase of the hiring process! To combat the high attrition rate in sales and to hedge against attrition, he suggested making 3 hires per sales role that you want to fill.

Your first sales person (or three!) will contribute to your startup culture. Set up this new hire for success. Before you hire your first salesperson, make sure you can clearly articulate a few key aspects of your business, such as:

• The problem you solve.
• Your customer profile.
• How your product solves their problem.
• Why current customers value your product.

If you do not know the answers to these questions, you are setting this first sales hire up for failure.

Q2: What is a sales commission plan?
Sales people get paid two ways: salary & commissions. A sales commission plan describes the income a sales person makes based on performance.

A simple example of a sales commission plan is to pay a sales person a % of the deal value that they close (i.e. 10% of all deals).

Companies like sales commission plans because they allow the business to both incentivize and reward performance. A good sales commission plan clearly ties performance to important areas of growth for the business.

The plan you choose is important because it provides specific incentives! Do you want your sales people chasing really big deals? Or should they prioritize a larger volume of little deals? Your sales commission plan can influence priorities.

Q3: How do I know if a salesperson is doing well?
It is hard to distill progress vs. noise. There are steps you can take to add more objectivity to your evaluation process. They should:

• Immediately shadow you in all deals.
• Master your pitch in their first week or two.
• Book lots of calls: ideally 10 a week.
• Not focus their energy on a small number of marquee leads.
• Use and update the existing sales playbook vs. going in a new direction.
• Generate their own pipeline within a month.
• Own their own deals after a month.
• Move deals forward in their first quarter.

If your sales cycle is less than 45 days, they should close their first deal in their first quarter.

Sales people need to be ROI positive, so they should pay for themselves fairly quickly.