Every year, new entrepreneurs join our Lab, focused on growing and scaling their businesses. Here is some of the advice portfolio companies received from senior leaders across the firm.
It may take a village to raise a child, but it takes nearly as many people with just as many different perspectives to grow a startup. The Morgan Stanley Inclusive Ventures Lab accelerator provides tech and tech-enabled startups with access to investors, tools, resources and connections that they need to thrive. That includes mentors within the firm who help them drive toward Demo Day, the conclusion of the five-month program and an exciting opportunity for each founder—currently representing startups from the U.S. as well as from Europe, the Middle East and Africe (EMEA) and chosen from roughly 8,000 applicants—to pitch their companies to potential investors.
But it also features a carefully curated curriculum designed to teach founders all aspects of scaling, marketing and pitching their companies, a curriculum taught by leaders representing the full breadth of Morgan Stanley, from supplier diversity to human resources. Here, we’ve compiled some of their choice tips for underrepresentedl founders.
1. Know your limits—so you can rise above them
You need to have a very solid understanding of the one or two biggest constraints on how fast you are going to grow in the next two to three years. You have 10,000 things on your plate and you’re really busy, but you have to find time to take the longer view, which is where, typically, one to two critical factors will make or break how much revenue you can generate. It could be that you’re not developing your technologies at a fast enough rate, but it could also be that you’re not hiring enough salespeople once you get to a certain stage or planning for a new ad campaign ahead of when you expect to roll out new product or features. It’s your ability to anticipate those key bottlenecks and speedbumps that will enable long-term growth. —Brian Nowak, Head of U.S. Internet Equity Research
2. Define how to measure success
“When it comes to marketing, a lot of founders are so focused on growth, they don’t take the time to step back and understand what that really means or what exactly it takes to make it happen. It’s like a quarterback throwing a pass without knowing the score, the down or how many yards he needs to convert. Before setting a marketing budget with a goal toward growth, define your success metrics, whether that’s website traffic or conversion/purchase rate. Always set boundaries to enable you to test and learn. As just one example, try setting a target cost per account acquired between $30 and $50 per account. Once you define your metrics, growth and success are no longer fuzzy concepts.” —LaToya Wilson, Americas Head of Morgan Stanley Inclusive Ventures Group
3. Learn how to accept constructive criticism
“Don’t take a rejection personally—receive it as a learning opportunity. Rejection is a recipe for perfection. I think back to a woman-owned company that supplied art to corporate clients and who I encouraged to pitch to Morgan Stanley. At first, it didn’t go well; she was nervous and she hadn’t read up on the firm before she presented. I encouraged her to go back to the drawing board and try again. She did and she’s been a supplier of ours for over 10 years. My point is that corporations make decisions on how to spend their money based on what’s going to give them the best return on investment. That has nothing to do with you as a person, so you need to look at rejection the way an investor does and not internalize it but learn from it." —Shendora Pridgen, Executive Director, Global Head of Supplier Diversity
4. Spend time determining your valuation
“Investors are uniquely focused on investing in companies poised to disrupt. When pitching, it is essential to capture investors’ attention. One way to do that is to speak the language they know best: key financial and business metrics that investors will use to underpin their view on valuation today and in the future. Capturing and tracking the right metrics, including using them to develop financial models, is absolutely critical to the longevity of the business. Understanding how similar companies track and share metrics will make it easy for investors to understand your business and draw key parallels to known, successful businesses. By doing your homework and understanding what matters most in your business and industry, you will be best positioned to present your business to investors in the most favorable light possible.” —Brandon Daye, Executive Director, Investment Banking Technology
5. Build a collaborative and inclusive firm culture
“There are many different roads to success, but a few things remain consistent: You must believe in your work, even—and especially—when you are trying to find others to believe in it with you; you must build a strong culture; and you must prioritize diversity of thought from the start. Encourage everyone on your team, from the most junior to the most senior, to speak up if they have a good idea or a solution to a problem that no one has thought of. A diversity of opinions—as much as a diversity of experience and backgrounds—creates the wealth of perspective that brings about success.” —Jeff Brodsky, Vice Chairman
6. Train others to perceive you the way you want to be perceived
“Perception is the co-pilot to reality. What do I mean by that? Train investors to think about you the way you want them to think about you. To do that, think of three adjectives you’d like them to use to describe you once you’ve made your pitch and left the room. Those three adjectives should be consistent with who you are and how you want to present yourself, but they should also be consistent with what’s valued within the organization you are pitching, which means you have to do a little homework on how they invest and what is important to them as investors. Hint: Check their websites, LinkedIn articles, etc.—they usually disclose it in interviews or their home page. Think of those adjectives whenever you have interactions with those investors. Always be projecting yourself in terms of those qualities and success will follow.” —Carla Harris, Vice Chairman and Senior Client Advisor
7. Hire in phases
“As the founder of a tech startup, you need to think of talent acquisition in phases. First, focus on acquiring engineering and UX talent, as these hires directly impact the customer experience. As your company grows, the need for talent will continue to expand but in various parts of the organization. Building a sales force will become a priority, and you will need to continue to fill technical roles. One area you might want to consider is outsourcing. Partner with a company that specializes in recruiting engineers and make sure to be very explicit about what you need. Lastly, focus on developing the skillsets of the team you have in place. Make sure to understand what it is that excites them—how you can make them feel invested, and ensure they are contributing to your overall goal.” —Sean Manahan, Global Head of Technology Business Development