How do you Manage Risk? (with guest Leo Polovets)

The Startup Help Desk

In this episode we answer questions about how to manage risk! Startup companies face mountains of risk, and it can be hard to know which risks to focus on and what you can do about them. We are here to help and in this episode we answer questions including:

• What do I do if I think my VP of Sales is looking for another job?
• How do we handle unusual requests from our biggest customers?
• How do we stay ahead of huge numbers of new competitors?

We are joined by a special guest host in this episode: Leo Polovets from Susa Ventures! Leo is a founding partner at Susa Ventures, a $125m seed stage fund that was an early investor in companies like Robinhood, Flexport and Viz.ai. He also runs Humba Ventures, a new micro-fund in the Susa family that's focused on emerging/frontier sectors like robotics, climate/energy, and defense. Prior to Susa, Leo spent a decade working as a software engineer. He was the second non-founding engineer at LinkedIn, then worked at Google for three years, and then spent four years at Factual before transitioning into venture capital. We are lucky to have Leo join us to answer your questions!

All of these questions were submitted by listeners just like you. You can submit questions for us to answer on our website https://www.thestartuphelpdesk.com/ or on Twitter @thestartuphd - we'd love to hear from you!
Reminder: this is not legal advice or investment advice.
Q1: What do I do if I think my VP of Sales is looking for another job?
Always be ready for the "hit by the bus test." Establish clear processes (such as using a CRM) and regularly check in to confirm that teams are documenting their work. If someone leaves their role, you want to be able to pick up where they left off with minimal damage.
Second, you cannot have your startup's major customer relationships only tied to the VP of Sales. The CEO needs to have a relationship with these customers (for tons of reasons, not only to manage the relationship if the VP of Sales leaves).
Lastly, look within. Are you doing something wrong? Have regular check-ins with team members to understand the pulse of your startup. Seek honest feedback from the team member to learn more about their needs and how they feel about their role and the company.
Q2: How do we handle unusual requests from our biggest customers?
Customer concentration is a common problem for startups and there’s no easy answer. If you strike gold and this large customer asks for things you were already planning, great! Try to get some compensation out of it.
Unfortunately, that rarely happens. You should be ready to say "no" to such a request. If their revenue is critical to your survival, then it can make sense to accommodate their request. Otherwise, it is too much of a distraction. Short term sacrifices to appease your large customer will limit your ability to learn about the needs of other customers, making you more vulnerable in the long term.
Q3: How do we stay ahead of huge numbers of new competitors?
Having tons of competition emerge is a badge of success! This can be a signal that there is a real opportunity. Let's talk strategy:
Completely ignoring competitors is a mistake. Know what key industry players are doing and react appropriately. Often the right move is to ignore their actions, but not always.
The big risk is that the sheer number of competitors drown out signal in your market.
How do you stand out?
- Land big customers.
- Get press coverage to show you are a leader in the space.
- Go big on outbound.
- If you have a major product feature where you are winning, double down on it to extend your lead.
- If your competition has depth but your customers need multiple features, consider differentiating by adding breadth to your product.