Entrepreneurs’ Toolkit and Resources

Empowering Entrepreneurs to Navigate the Startup Valley of Death

Understanding your position in the Startup Valley of Death is the critical first step for every entrepreneur. Eric Mathews focuses on early-stage startup companies, helping founders move from the idea phase to the product success phase. By equipping startups at this stage, we prepare them to access the later-stage resources within their communities.

Eric Mathews recognizes that, as entrepreneurs bring their ideas to life, they face significant challenges, burning through time, money, and resources as they navigate the valley of death. The journey demands an extraordinary commitment to personal growth, patience, and continuous learning.

The Founders’ Toolkit

To support entrepreneurs on their journey, we’ve developed the Founders’ Toolkit. This resource is designed to help founders make consistent progress both independently and during active mentorship. Combining open-source tools with Eric Mathews’ proven methods, the toolkit provides a structured approach to navigating four critical stages of development, ensuring that foundational elements are addressed before pursuing later-stage resources like investment funding.

While our core offerings include ad hoc mentorship and structured programming, the toolkit emphasizes the importance of entrepreneurs continually advancing their skills and refining their business models. Successful founders often revisit these methods to strengthen and evolve their ventures.

Founder Preparedness

The average founder fails 3.7 times before achieving business success. To overcome this, entrepreneurs must focus on personal growth, continually evolving to better lead their ventures.

Key Steps for Founders:

Align with co-founders on critical questions like equity splits, decision-making processes, and long-term goals.
Name your startup with these qualities in mind: memorable, short, descriptive, unique, and easy to say/spell.
Assess your personal readiness: finances, family commitments, and life events must be aligned with your entrepreneurial goals.

Preparing for Customer Discovery

Before engaging with customers, ensure you’re well-versed in your business concept and industry. Start with secondary research: use online tools, library resources, and government data to uncover insights into your market, competitors, and customer pain points. Look beyond the specific problem you aim to solve—explore all challenges your target customers face.

Key Tips:

Stay updated: Industry trends and market conditions will change over time.
Avoid bias: Focus on discovering customer pain points without pushing your solution.
Build a strong foundation: The more knowledgeable you are, the better your customer discovery efforts will be.

Assessing Your Personal Situation

Starting a company impacts every aspect of your life. Prepare yourself financially and personally:

Finances: Save at least $15,000 for a short runway, or seek support from friends and family.
Fail Fast: Expect initial funds to test your idea’s viability, with pivots likely along the way.
Personal Readiness:
Discuss your plans openly with your family.
- Don’t leave your job until you’re ready to commit full-time.
- Consider major life events like marriage or children when planning your startup journey.

Honest Question: Are you fully prepared to go all-in?

The Startup Wheel

View your idea from a high level. Ensure you’re addressing all components necessary to build a sustainable business, including operations, market fit, finances, and growth.

Learn How to Storytell

Storytelling is one of the most powerful tools for founders. A great story builds connections, inspires belief, and drives action.

Why Storytelling Matters:

Build a Vision: Inspire others with a clear and emotional vision of the future.
Engage Investors: Share the “why” behind your company to generate excitement and confidence.
Attract Talent: Show potential employees why your mission matters and how they can be part of it.
Connect with Customers: Create emotional bonds with your audience to foster trust and loyalty.
Differentiate in the Market: Highlight what makes you unique in a way that resonates.
Drive Culture: Shape your company’s values and inspire alignment internally.

By preparing thoroughly, assessing your readiness, and mastering storytelling, you’ll be better equipped to navigate customer discovery and position your startup for success.

Want to learn more about founder prepardness? Sign up for Eric Mathews’ newsletter:

The 3 D’s of Starting Up

1. Discovery: Validating Your Idea

Customer discovery is the foundation of a successful startup. It involves testing your ideas and hypotheses with real potential customers to gather insights and refine your strategy. Follow these structured steps to ensure a thorough process:

Step 1: Division of Labor

Define roles within your team:

Product Development Team: Focuses on refining and building your product.
Customer Development Team: Engages with potential customers to validate assumptions.

Step 2: Test the Four Hypotheses

Problem Hypothesis:
- Define the core problem your product addresses.
- Understand why the problem persists and how painful it is for customers.
Solution Hypothesis:
- Identify the minimum viable product (MVP) features required to solve the problem.
- Consider features, benefits, delivery methods, and intellectual property.
Price Hypothesis:
- Determine if customers will pay for your product and at what price.
- Decide if it’s a one-time purchase or a recurring subscription.
Go-to-Market Hypothesis:
- Outline how customers will discover and acquire your product.
- Create a customer brief that defines key customer types (decision-makers, users, influencers) and maps customer routines, influence points, and the type of market (existing, re-segmented, or new).

Step 3: Testing with Customers

Identify 50 target customers who align with your customer brief.
Conduct 1:1 interviews with at least 10 individuals per week.
Use open-ended questions to validate hypotheses and uncover insights.
Refine your hypotheses based on the feedback, and consult mentors for additional guidance.

Step 4: Iterate and Repeat

Customer discovery is an ongoing process. Continuously revisit and refine your hypotheses as you learn more about your market and customers. Each round of testing will bring you closer to a well-defined, validated business model.

Crafting Your Elevator Pitch

An elevator pitch is essential for introducing your business concisely and effectively.

Verbal Elevator Pitch (60–90 seconds)

Include:

Clear Description: State who your customers are and what problem you solve.
Differentiation Story: Share a compelling example of how you’ve helped a customer, emphasizing results and your unique value.
The Ask: Align your request with your current needs (e.g., connections, mentors). Avoid asking for funding too early.

Written Elevator Pitch

A written pitch should capture attention and support introductions. Include:

What is the Product?: What does it do, and who does it serve?
Problem/Opportunity: What significant problem are you addressing?
Traction: Highlight growth metrics or milestones (e.g., revenue, user numbers).
Team: Showcase the expertise and qualifications of your team.
Call to Action: State what you need (e.g., mentors, partnerships).
Contact Information: Provide clear, accessible details.

Building Your Media and PR Strategy

Public relations is critical for credibility and visibility. While startups can tell their own stories via websites and social media, earned press coverage remains invaluable.

Key Elements of a Media Strategy:

Why You? Why Now?: Focus on what makes your story unique and timely.
Determining Purpose: Define your PR goals, whether for investor visibility, event promotion, or customer awareness.
Targeted Media: Choose outlets and reporters that align with your audience. Build relationships and craft personalized pitches.
Angle Your Story: Offer different story angles for various media types, such as economic development for business outlets or personal narratives for lifestyle media.

By blending customer discovery, effective pitching, and targeted PR, you can refine your business model, engage key stakeholders, and position your startup for success.

Having trouble with customer discovery? Sign up for Eric Mathews’ newsletter:

2. Delivery: Turning Ideas into Reality

Once the four hypotheses have been defined and refined, the focus shifts to developing and delivering your product or service. This phase moves from creating prototypes to building a minimum viable product (MVP) and, eventually, a fully functional version that customers are willing to pay for.

Why Prototyping Matters in Delivery

Prototyping is a critical step that transitions your idea into a tangible solution. It allows startups to test, refine, and validate their offerings while managing risks and aligning with market needs.

Key Benefits of Prototyping:

Rapid customer feedback shapes the product early on.
Prototypes reveal missing features and complexities.
Iteration ensures alignment with evolving market and customer needs.

Types of Prototyping by Industry

1. Consumer Products: Testing Usability and Design

Use low-cost methods like 3D-printed models or handmade prototypes to explore functionality and customer experience.
Example: Dollar Shave Club refined its packaging, logistics, and customer appeal with manually assembled prototype kits.

2. Hardware Startups: From Proof of Concept to Production

Build prototypes using off-the-shelf components to demonstrate feasibility and attract investment.
Example: Pebble created basic versions of its smartwatch, gathering feedback and resolving manufacturing challenges before scaling.

3. Web and Software: Prototyping User Experiences

Develop wireframes or clickable mockups with tools like Figma or Adobe XD to validate design and user flows.
Example: Airbnb tested its marketplace concept by manually managing bookings and photographing rental spaces before automating its platform.

4. Integrated Prototyping: Bridging Physical and Digital

Simultaneously refine hardware and software for cohesive functionality.
Example: Nest Labs developed both its smart thermostat hardware and companion app, ensuring seamless integration.

5. Services and Operational Models: Simulating Success

Prototype business processes to identify logistical challenges and refine workflows.
Example: Uber began with a text-based system to validate its ride-sharing concept before building its app.

Stages of Delivery

Early Prototypes:
- Rough models like wireframes, videos, or diagrams to visualize the concept and gather initial feedback.
Intermediate Development:
- Functional but basic versions that demonstrate customer use while addressing usability and functionality.
Advanced Iteration:
- Refined products incorporating user experience elements (e.g., visual, tactile, and linguistic design) to appeal to the target market.

Customer Feedback Cycle

Engage customers consistently throughout prototyping.
Early feedback helps refine your product and determine readiness for launch.
Look for key signals of success, such as customers asking when the product will be ready or sharing it with others.

Prototyping as a Strategic Advantage

Prototyping is the foundation of the Delivery Phase, enabling startups to iterate quickly and minimize risks. Successful ventures embrace scrappiness and adaptability to meet customer demands and position themselves for growth.

Key Principle: Iteration Trumps Perfection.

By refining your product through prototyping, you can confidently move from concept to execution and deliver a solution that resonates with your market.

Join Eric Mathews’ newsletter for more tips on turning ideas into reality:

3. Dollars: Building the Business Infrastructure to Scale

Once founders have developed themselves, validated their business idea, and created a functional product, it’s time to focus on scaling. This stage involves generating revenue through sales and leveraging investment capital to build a sustainable business infrastructure.

Sales: Managing the Sales Cycle

A well-developed and managed sales cycle is essential for any business. It provides visibility into the status of leads at each stage, highlights bottlenecks, and ensures effective resource allocation.

Why Sales Cycles Matter:

Connect directly to financial projections, answering, “How much money can you make?”
Prioritize leads and reduce the time it takes to close sales.
Identify hidden opportunities to improve revenue generation.

Steps of a Sales Cycle:

Prospecting: Identify and define what a good lead looks like.
Initiate Contact: Approach leads with value, not a hard sell.
Identify Needs: Ask targeted questions to uncover customer pain points.
Present Offer: Tailor your solution as the ideal answer to customer needs.
Manage Objections: Equip your team to address common objections effectively.
Close Sales: Break the close into smaller commitments to build confidence.
Onboard and Manage Clients: Ensure post-sale satisfaction with follow-ups.
Repeat Sales and Referrals: Create systems to drive repeat business and referrals.

Factors to Consider in Your Sales Cycle:

Time Allocation: Break down time needed for lead generation, outreach, selling, and feedback.
Capacity: Determine how many leads your team can manage at once.
Optimization: Focus on reducing lost leads, improving close rates, and shortening the cycle.

Tips for Improving Sales Processes:

Learn from top-performing salespeople and replicate their strategies.
Use tools and templates to standardize the process.
Set specific targets for leads at each stage and time spent at each step.

Raising Investment Capital

Securing funding is critical to scaling operations, refining your product, and entering the market effectively. Follow these steps to raise investment capital strategically:

1. Determine Your Capital Needs:

Calculate how much funding you need and why.
Break this into short-term (e.g., marketing campaigns, prototyping) and long-term needs (e.g., scaling, hiring).

2. Choose the Right Funding Source:

Bootstrapping: Use personal savings or revenue to retain full control.
Friends and Family: Access small investments from personal networks with favorable terms.
Angel Investors: Wealthy individuals who fund early-stage ventures in exchange for equity.
Venture Capital (VC): Professional investors focused on high-growth startups, often requiring equity and governance roles.
Crowdfunding: Validate your product and raise funds from a wide audience.
Grants and Competitions: Seek non-dilutive funding sources that don’t require giving up equity.

3. Build a Strong Pitch Deck:
A compelling pitch deck should include:

Problem: Clearly define the problem you’re solving.
Solution: Highlight your unique value proposition.
Market Opportunity: Showcase market size and growth potential.
Business Model: Explain how your business generates revenue.
Traction: Provide key milestones and metrics.
Team: Emphasize your team’s expertise and experience.
Financials: Present revenue, expenses, and projections.
The Ask: Specify the funding amount you need and how it will be used.

4. Perfect Your Pitch:

Combine data and storytelling to make your pitch engaging and persuasive.
Prepare to address tough questions about risks, competition, and scalability.
Tailor your presentation for different audiences (e.g., angels focus on vision, VCs focus on metrics).

5. Build Relationships:

Network with potential investors early by attending pitch events and leveraging platforms like LinkedIn or AngelList.
Seek warm introductions through mutual connections.
Keep investors updated on your progress, even if they don’t invest initially.

6. Negotiate and Close:

Agree on valuation and equity exchange.
Understand key investment terms, including voting rights, exit strategies, and dilution.
Provide documentation such as financial statements, intellectual property details, and legal agreements.

Understanding Competition and Market Position

A strong understanding of your competitive landscape is vital to attract customers and investors. Claiming “no competition” signals a lack of market research or an unviable market.

Why Competition Matters:

If your product is truly novel, you may face high costs educating the market.
Competition validates the market and ensures customers are ready to adopt solutions.

Key Areas of Competitive Analysis:

Competitive Rivalry: Identify competitors, compare features, pricing, and market share.
Barriers to Entry: Assess how new competitors could disrupt the market and evaluate your advantage.
Customer Alternatives: Understand alternative solutions customers might choose.
Customer Power: Evaluate customer leverage over pricing, quality, and features.
Supplier Power: Analyze how supplier dynamics impact your operations and costs.

Tips for Understanding Competition:

Visit competitors and learn directly from their customers.
Use online research and industry reports to gather data.
Leverage free government resources and library research to assess market trends.
Continuously evaluate your competitors’ strategies, strengths, and weaknesses.

Scaling with Dollars

The Dollars phase focuses on building your revenue engine through effective sales processes and raising the necessary capital to scale. By refining your sales cycle and understanding your competitive position, you can create a sustainable, scalable business infrastructure that attracts customers and investors alike.

With strong sales strategies and a clear funding plan, you’ll be ready to take your startup to the next level.

Need help scaling? Join Eric Mathews’ newsletter:

Never-Ending Iteration

The entrepreneurial journey is one of continuous learning. Customer discovery, product development, and competitive analysis are ongoing processes that must adapt to evolving market conditions.

With the Founders’ Toolkit, you’ll have the resources to navigate these challenges and build a thriving business. Let Eric Mathews guide you through the Startup Valley of Death and beyond.