We’re very excited to introduce Liz Zalman, who, after much polite begging and insistent badgering, has agreed to be a part-time Founder Advisor at Crane. Liz is the Co-Founder and former CEO of both strongDM and Media Armor. Our founders are already benefiting from her many years of experience building companies, finding PMF, and tussling with investors.
Liz took some time to speak with me about the realities of being a founder, some secrets to early sales success, and her upcoming book with Jerry Neumann where they lay out the contrast between the founder and investor perspectives on important topics like fundraising.
For those joining us for our annual Flight Summit the first week of October, you’ll see Liz and Jerry discuss some of these topics on stage! We’ll be recording it for everyone who can’t attend, so no one will miss out. 🙂
Aneel: Liz, you’ve gone from zero to one, and then some!, in both the founder’s seat as well as from the vantage point of an early employee. And now, as an angel and advisor to a dozen some companies. What are some of the things that no one tells founders that they need to hear at the very start?
Liz: I’m a big fan of information and I believe it’s a founder’s job to traffic in it. A trend I’ve seen over the past year is that many founders seem to be lacking in it. It’s critical to know when your competition is fundraising and when adjacent companies are pivoting. You have to know when buyers of your product have changed jobs, when outrageously good talent is looking, and when there’s an opportunity to score a speaking slot at a conference that hasn’t been announced yet. You need to read other companies’ job specs to figure out what they’re building before they want you to know. And you get it by picking up the phone or emailing or reading obsessively. You are better with information than without it.
Aneel: In your first Crane “Teach In”, where we bring experienced operators in to dive into a specific topic for our founders, you focused totally on customer discovery. Why do you think it’s such an important topic?
Liz: As a founder, your job is to build technology products that sell. What is the thing that someone will pay at least one dollar for? If you can’t describe why someone bought, you won’t be able to replicate the sale.
For example, at strongDM, a prospective customer might say “we aspire to a zero-trust security posture”. That’s fantastic, but it is distinctly not a reason to buy. It’s critical to get to something like, “today I have to manually deprovision SSH keys from the bastion server when someone is terminated and we’re about to go from 20 to 100 engineers”. If you can understand how the process works and how it breaks today, then you can demonstrate how life will be infinitely better tomorrow with your product.
Aneel: In your work with founders over the past few years, what are the one or two skill or practice gaps that you’re repeatedly running into?
Liz: Oooh, two jump out at me immediately! Don’t laugh 🙂 because the absurdity of it has shifted from funny to just plain sad. First, it’s called being on time. In the past year, I’ve had maybe two calls out of 60 or 70 in which the founder was on time. That’s INSANE! And of the rest, not a single person sent a note saying, “I’m so sorry, this other call is running late”. My favorite was a founder that I emailed to see if they were still joining, didn’t get a response and so hopped off after 5 minutes, and then I got an email 7 minutes later saying they were sick. You’ve been sick all morning. It’s now 2pm. You couldn’t send me an update beforehand?
The second is research. Founders show up for calls having put in zero effort, not even a LinkedIn search, to know who I am and why they’ve been introduced. Nor do they come with an agenda of what they might want to get out of the call. I don’t care about you looking me up because I have an ego; I care about the respect you should have for the person on the other side of any call. I’ve done my research on you because I’m here to help you or I want to invest or I’m vetting you on behalf of someone else or whatever it is. Why don’t you do the same? It’s a waste of your time not to, not to mention mine. And it becomes immediately obvious within 90 seconds of our call when you haven’t. Do everyone a favor and spend the 15 minutes, which will pay off in spades.
Aneel: Same question, but for VCs!
Liz: One thing that has always frustrated me with investors is that they have great advice to give, but it’s typically always from the perspective of a professional investor and not as a founder. Investors are fantastic at pattern matching (“companies like yours find $x to be helpful at your stage”), but less so at operating, simply because most of them haven’t been operators before!
For example, investors will often tell you to hire sales folks far earlier than you should. Salespeople are great at following a playbook and less superb (read: not at all) at creating one. If you hire sales too early, they’ll fail and you’ll be set back.
Aneel: You’re writing a book with Jerry about the founder vs investor / board perspective in company building. Can you give us a little preview? Why should founders read it?
Liz: In our space, we’ve bought into the idea that the best way to build a billion-dollar startup is to team up with VCs. Founders bring the vision, investors bring the money, and both benefit.
This is a mirage, and I believe one that both sides unconsciously create to avoid some hard truths. Our desire for success is the same and yet the journey is long and motivations are wildly different… so different, in fact, that even our definitions of success wildly diverge. Both sides then find themselves at odds while simultaneously believing the other just doesn’t get it. Misunderstanding, mistrust, boardroom drama, fired founders, and failed companies are the result.
In order for the partnership to work as smoothly as possible (which may not be so smoothly), it’s critical to understand what is going on in the other’s head. Why does the founder respond so badly when the investor pushes to grow faster? Why doesn’t the investor want to sell the company for a seemingly great return? What are the motivations behind their behavior?
Jerry and I decided to lay bare each side’s motivations based on our decades of experience. We square off, providing a brazenly honest debate on how startups are built, broken, and fought over throughout a company’s lifecycle