Thought waves on seed venture

This is supposed to be a blog about the company Shippit, one of the first investments by Tidal (or the company that was to become Tidal) back in 2017. The two companies sort of grew up together.

I could have written at length about how they are revolutionizing the way shipping works in Australia and overseas and raising capital left and right, but when I interviewed the Shippit founders, I decided to focus on their magic partnership and the relationships that have helped them succeed. 

It’s hard not to reach for words like ‘bromance’ and ‘misterhood’ to describe the easy rapport and sentence-finishing communication that long-time friends and business partners Rob Hango-Zada and William On enjoy. And it doesn’t take a startup genius to realise that their relationship is a key ingredient of their success.

Relationshippit first

Great relationships seem to be at the centre of all Shippit’s growth success, from building rapport with customers, finding the right investors and employees, and realistically assessing the gaps and making the right call on how to scale up. 

Will says their approach to most things is “we don't know all the answers and our focus is to get the right people around us.” When applied to investors, Rob explains that “any investor coming in is a long term relationship; and we want to partner with people who are really invested in our company.” 

If the three most important things in an investor are “getting along on a personal level, having a solid understanding of the domain and people, being able to push us in terms of our thinking,” then Tidal is an ideal fit.

Grant McCarthy and Murray Bleach were Shippit’s first Tidal contacts. “Grant and Murray took a more US VC style of approach that added value beyond the checkbook.” This was important, according to Will, because having input about product, finance and deal flow meant that Tidal became part of the team. 

Co-investing in Series A with Aura Ventures, Grant was keen to participate. He has “a lot of knowledge around the last mile logistic space, understanding of where the market was going. He also really understood the macro themes of an open network two-sided marketplace with logistics and e-commerce.” which Rob says made them a great match.

“90% of the battle is having the right people around you.”

- William On

All work and no playbook

Getting to Series A from angel and seed stage takes a lot of work and a lot of grit, getting to Series B, even more. Fortunately, the Tidal team were able to help in the form of a go-to-market expert called Georgie Turner.

According to Rob, Georgie literally “implanted herself at Shippit for about six months” to help set up an operational manual that became their Series B Playbook. This was rich enough guidance on how to set Shippit up for success to a [future Series B raise]. Being there in person made a huge difference to the founders.

The playbook for Shippit contained all the “key metrics that needed to be landed” in order to drive the business forward. Will and Rob nod at each other, “we ran our whole business off that.” It prepared Shippit for the next capital raising round, laying the groundwork for success they enjoy now. 

When reflecting on what Tidal is like compared to other investors, Rob observes that “we've got more investment [dollars] from other partners who don't give us anywhere near as much counsel and guidance, or encouragement.” In business speak, he jokes “they definitely over-index on their investment versus their involvement.” What a compliment!

Think big and then think bigger 

A pivotal moment for Rob and Will was during a conversation with Grant, who said “you don't realise this yet, but this is a billion dollar company. You need to be thinking in terms of a billion dollar business, how you are going to change the world and what you're going to do.” It’s this kind of Tidal truth bomb that has helped Shippit to realise they are “no longer building a product, but building a company.”

Will explains that “the conversations that we're having now are around organisational design, having the right people on the bus, checking they are sitting in the right seat.” This is where Tidal has steered them, in part, toward being that billion dollar business and thinking like one too. 

When I asked if this meant they no longer felt so green, they concluded there’s always something to be green about. And despite onboarding many investors since the start, Tidal is often the go-to for advice and guidance. This can mean hands-on help or a late night phone call with Wendell or Grant to “have a glass of wine and talk about the business.”

Regardless of what you're going through, they're there for the good and the bad, thick, and thin to get you through what you need to get through.”

- Rob Hango-Zada

Foundational friends and future relationships

Rob and Will have been friends for 17 years, and in some ways it’s hard to believe they are first time founders. They are wise and self-aware. Perhaps this comes from knowing each other really well or maybe they’ve just learned to be confident and believe in their team. 

Will reveals his secret to staying calm through everything, “whatever happens you and I will figure it out and that's my secret.” Rob says their biggest strength is being able to “take outside information and apply the concepts that we've got to come up with the best answer.” Either way, they work as an inseparable team. 

When it comes to Tidal’s place in things, the founders say they “take more of a partnership based approach, which is empathy, understanding and pushing us, or encouraging us to think bigger about the problem, which is why they have been so important to us over the last couple of years.”

“Having Wendell on the board from a product perspective, Georgie on board from a finance perspective, then capital raising and how we think about our future state from Grant. All of these different people from Tidal make up a really good front for us. They’re fully part of our team.”

As Rob concludes, “regardless of what you're going through, they're there for the good and the bad, thick, and thin to get you through what you need to get through.”

The art of the demo is an essential craft that needs to be honed in start-ups as its used in so many high-impact moments. It could be a founder pitch, planning a new feature, creating a new product horizon or (re)defining your vision to stakeholders. But there is a big difference between going through the motions of demoing your product versus developing a demo muscle that forms the cultural identity of your company.

Demos are the higher-order bit of story-telling for startups. It is a compass for authenticity and its value cannot be underestimated. A great demo is priceless.

During my time at Atlassian we productised many of our operations or rituals. The result was the Atlassian Playbook. My contribution was co-creating the Project Poster and Demo Trust. We developed these plays (and many more) as scaffolding to scale during a period of hyper growth for the company.

The plays gave us a common language when working on feature proposals, new initiatives and offered a dedicated forum to refine and improve the product experience via demos. They served as guardrails for our freshly minted teams.

However these plays were not optimised for startups that are running fast and could benefit from a more streamlined approach. So I wanted to provide a guide that's a short and sweeter remix optimised for seed stage companies. It contains the essentials that will illuminate a path to a solid demo.

The best part is there are opportunities to demo around every corner. Each moment is a chance to build this muscle and make it a part of your company culture.

Overview

One of my formative experiences as a founder was early on in my first startup. I showed a rough demo of a shortcut feature at a conference and I unexpectedly heard ooh's and ahh's from the crowd. Boy did it give me conviction about our direction. It was validation of how powerful a demo is for storytelling and we were acquired less than 3 years later. But what was it about that demo that cut through to make a difference?

In his book The Macintosh Way, Guy Kawasaki wrote a chapter called “How to Give Good Demo,” where Kawasaki suggests that good demos should be short, simple, sweet, swift, and substantial, and that starting with a script that satisfies these requirements is the foundation for success.

This advice is still valuable today, but I'm going to argue that above all it needs to be authentic. Why? Because often you are continually tuning different aspects of your demo and so it's okay to compromise on some of these points early on. But when you give an authentic demo you really:

1. Focus on what matters to your audience and in turn your company. We talked about drift in the Connected Roadmap. An authentic demo is validated by your users, stakeholders and teams and is a practical tool in finding and retaining product-market fit.
2. Expedite how you communicate value through a shared understanding. How many times have your users or stakeholders had a different thought bubble about how they interpreted your explanation or email? A demo is a tangible way to share an idea, reduce ambiguity and get alignment.
3. Fast-track team velocity as you cut to the essence of intent. If you are doing the first two things well, in my experience it also unblocks the typical hurdles in reaching stakeholder alignment and decision-making. While this may not be as big a deal as a seed stage company, it sure as hell gets more difficult as you scale up. It empowers the team to make difficult trade off decisions whilst holding true to the core idea.

How to get started

I recently finished reading Creative Selection by Ken Kocienda about his takeaways as a software engineer and designer at Apple in the early years. One of the core concepts in the book is they often used demos, dog-fooding and continual refinement as tangible expressions of ideas from creators and stakeholders and let natural selection decide which would thrive or go extinct. While this book focuses on an insiders' experience at Apple, this culture was certainly not exclusive to Apple. I had similar experiences as a leader in prior companies.

Similarly you have opportunity to integrate the practice of demos neatly into your existing learn, build, measure cycles. The steps below are a guide in developing that muscle 💪

Demos should fit neatly into your development lifecycle

Define your hypothesis

Conduct preliminary research: Clearly articulate why you are doing this.

What problem are we solving?

Impact of the problem?

What data to we have to support our thesis?

Expected Outcomes

Explore your assumptions: Document what you know, don't know and must achieve.

What additional data do we need to obtain?

How do we judge success? Quantitative metrics & qualitative observations.

Possible solutions:

• List all approaches in very briefs paragraphs.
• Select best approach and build a prototyped demo (ideally code, but early stages can be as scrappy as you need to convey the ingredients below).
  

Validate your hypothesis

Synthesise the demo: Create a compelling narrative for your demo.

• Scene setting: Target audience, context & motivation which could be framed as a Job To Be Done (JTBD), epic level user story etc.
• Problem / complication: Describe the pain points that eventually translate to some form of better, faster, cheaper; always make it familiar and relatable.
• Intro solution: Talk about the why; if it's faster, make it about how you'll save time, if it's cheaper, talk about how you'll save money (this is ok, but hopefully not your only benefit), if it's better, show me how I'll enjoy doing it, at least more than compared to today.
• How it works: This is the core part of the demo and communicates the workflow, interaction or journey the user is likely to experience.
• Highlight and delight: Touch on the key aspects of the flow, and between each highlight drop-in a delighter ✨ that is an aha moment or better yet, mind-blowing 🤯
• End scene (optional): Close with summary with respect to their Return on Investment (ROI), or likely outcomes by the numbers.

When developing your demo DNA ideally embody your product and customer facing teams such that there is a shared accountability of authenticity. In other words, call bullshit when a demo does not fulfil the promise of your mission or what you are setting out to do in your regular planning cycles. But always make sure you do it thoughtfully.

Demo Formats

A demo can take many forms such as live presentation, video, or storyboard. They each have their purpose and can be useful, particularly as organisations accept flexible work arrangements. Practical examples I've adopted in the past:

• Live: When you want an active way to develop your shared accountability of your demo authenticity, there is nothing like presenting live. This is generally face to face for workshops, design sparring, but perfectly fine over video screen-sharing.
• Video: This provide a passive way to develop a culture of demos and sharing with teams to assist distributed teams where timezone or async check-ins helps flexibility. Videos are easy to create and really force you to consider the script, flow and delivery. Silent demos (no talk track) can also work if the flow is self-explanatory. I would suggest titles and spotlights to assist the viewer.
• Storyboard: For teasing out conviction of early stage concepts, you can't beat a storyboard. The key frames help you structure their thoughts into bite-sized ideas before investing any engineering or other effort. Yes, anyone is capable of drawing shapes and stick figures!

Demoing API's

But hold the fort! I hear you hark "I have an API or platform that does not have a traditional user interface". Fear not, all of this is still very much applicable. In fact you should be even more invested in a demo. But the difference is about expressing the possibilities and/or seeding with one or more examples to inspire your audience which is often a developer. In these cases I tend to lean on great documentation, live samples and lowering the barrier to getting started.

• Stripe: Probably the most referenced example and for good reason. The simplicity, quality and comprehensive coverage for their developer audience is incredible and it all started with helping developers quickly transact using their recognisable checkout experience.
• Search.io: How do you demo a search engine that specialises in e-commerce? Well you provide a complete "kitchen sink visual demo, to a fictitious store where a dev can kick the tyres.
• FrankieOne: KYC and AML got a little more exciting by allowing an institution to understand how they might incorporate RegTech into their existing apps, backend, workflows.

Inspirational Examples

Here are some inspirational demos or experiences that invoke some or all of the ingredients we seek in a great demo and loosely follow the narrative flow above:

• Superhuman: Well known for their white-glove onboarding demo via their customer success that truly make you wonder where has this email client been all my life. Best to actually do the 1:1 onboarding to experience it for yourself.
• MmHmm: Phil Libin makes a really personable video that is just down to earth and really expresses all the frustrations we've been having with video calls while in lockdown or potentially as the new norm. So why should we settle?
• Descript: This may be a meta example. While it is a very orchestrated marketing video, it still hits all key points in a great demo with some really next level experiences for making video editing easier. Descript could even be your next tool for making awesome demos.

Demo outcomes

As founders and product leaders, you strive to tell meaningful stories that are authentic. This virtue must shine on in your demos too. If you are nailing all the points above you should be achieving the following outcomes:

• Validation: You are always experimenting, so every learn, build, measure iteration is a chance to validate your thesis and assumptions.
• Excitement: Acknowledging user pain points and motivations in every story you tell creates an emotional connection to your audience.
• Alignment: Each time you share your story, you refine through validation, replace scepticism for excitement and tie back to your purpose and vision.

The sum of these parts results in conviction for you and potential investors. In short it represents a path to unlock funding and provides a succinct and tangible communication tool.

Proactively developing your demo DNA will benefit you and your startup as it is a powerful mechanism to cut through so many things that often get lost in translation. Think of it as a vital part of your founder or leadership arsenal.

An authentic demo can be truly game-changing. After all, isn't that what we are all striving for?

Shippit is a logistics orchestration platform enabling the selection and management of carriers for delivery of goods by retailers of all sizes.

Earlier this month, Shippit announced a A$30 million Series B led by New York-headquartered venture capital fund, Tiger Global. This brings the company's total funding to A$41 million since 2017, commencing with the Seed round led by Tidal Ventures (branded as AddVenture Fund at the time).

Let's travel back in time for a minute and look at the opportunity from the perspective of our 2017 investment notes.  

Markets with tailwinds

We shared a belief with many investors that e-commerce would be the long-term retail transaction method of choice for consumers. The purchase convenience of any time, anywhere, along with the unlimited choice and price comparison consumers have online was always going to outshine a physical store.

It was our view that both the logistics infrastructure and the overall experience for the Retailer and the Consumer were broken.  The average NPS for delivery experience in Australia hovered around -35, so we clearly weren't the only ones with this view. The broken state of this market looked like a classic technology opportunity to us.

Our thesis: changing customer expectations & innovation that disrupts legacy systems and improves supply chain inefficiencies will power the growth in e-commerce globally

Founders that hustle

Cliché, but this continues to be a question we ask ourselves for each new opportunity: can the founders do what it takes to persevere. What we recognised in Rob and Will as founders from our very first meeting was their uniquely complementary skills, their unhinged enthusiasm for the challenge, and most of all, their ability and willingness to listen and learn from others.

The Seed round was all about investing in Rob and Will as founders to see if they could execute a basic and repeatable promise and experience to retailers. They nailed it.

Shippit continues to demonstrate one of the best can-do cultures we have seen.

Series A: a defensible moat

Fast forward to Series A. We examine how the company created a moat surrounding its product and opportunity set, the key to it cementing a credible position within the market.

Building trust with customers

As a 'SaaS as a Network' business, the size of the marketplace (or network) was critical to underpinning demand for the software. To achieve material growth in the network in the early days it was critical to build demand volume that would provide for a critical mass of suppliers (carriers). Winning large volume Retailers to underwrite the ability for the business to attract carriers on the platform was key. The business focused on winning key logos early, whilst simultaneously creating brand association & awareness through content-led programs like the Rocketeers of Retail.

This volume also enabled the company to prove out its carrier selection algorithm, an automated assessment of the "right carrier x right delivery type x right price" (think of this as the logistic industry’s version of Google’s quality score!). Shippit began to provide Retailers with an aggregated view of their deliveries and started directing volumes to carriers a Retailer may never have used before. The improved performance off the back of these initiatives formed the foundation for a trusting relationship between Shippit and the Retailer.  

Shippit offered Retailers transparency. The delivery of that promise (no pun intended...) built a small flywheel in its volume momentum that has underpinned the business’ growth to date.

Route intelligence

Building a sustainable competitive advantage through the delivery insights provides benefits beyond their customers, but also the parcel recipient.

Shippit is able to intelligently route parcels for e-commerce retailers and in turn provide superior quality, performance and rates.

Series B: Product-led growth

We talk a lot about product-led-growth ("PLG") within the virtual four walls of Tidal. We see this as a critical capability for a startup to achieve superior unit economics and significant operational leverage.

Shippit’s ability to unlock the value of PLG in the last 12 months played a critical role in the success of its Series B.

Things at Shippit were growing exceptionally well from the end of 2019 into early 2020, but we still had to ask ourselves all the normal questions when COVID hit: 'How will we be impacted? Do we need to cut costs? How will we keep staff safe? How will we change the way we sell when we can’t meet anyone?'.

Rob, Will,  the entire leadership team and staff stepped up and made some tough calls – they reduced the workforce by 20% and cut expenditure on non-core projects. Most importantly, Rob and Will sat back and asked the question:

What does this give us the opportunity to do and can we make changes for the better for our business, staff and our customers?

The actions they implemented in response have led to achieving some of the best growth SaaS operating metric's we have seen in any market. John Curtius from Tiger Global agrees with us, having been quoted in the AFR saying, "Shippit has some of the best metrics we've seen for a company raising at this stage".  

Positioning and customer segmentation

We took a deep-dive with the team on the positioning of Shippit’s value prop for each of its customers segments. The end result: Enterprise and SMB segments now have fundamentally different messaging and value propositions, which drive more efficient marketing spend and higher customer satisfaction & stickiness.

High volume funnel

The most significant change was the process of structuring their inbound funnel to support high volumes. Introducing more self-serve capabilities allowed the shift from pre-sales to post sign-up product qualified leads that were either pure low-touch or assisted by a Customer Success function. This materially impacted their ability to acquire customers efficiently at scale. This transition (which is in continual refinement) came to fruition when the explosion in demand during lockdown serviced the step-change in growth with limited headcount expansion.

By capturing leads after a customer had experienced firsthand the value of the platform, Shippit was able to bypass the need to "sell the dream" and focus on an exceptional customer experience and revenue expansion, thereby unlocking the strategic value of PLG

To a billion parcels and beyond 🚀

We’ve now invested in Shippit at Seed, Series A, Series A extension, and Series B, and we know we’ll keep going. We are in the early days of mass consumer adoption of e-commerce and we believe these founders and this business has what it takes to build a significant enterprise. We congratulate them on the journey so far and look forward to the challenges ahead.

A note on the e-commerce thematic

We have strong conviction that there will be a number of winners in the e-commerce tooling space – in other words, the businesses that provide the picks and shovels to Retailers that help them build and deliver great experiences for their customers (other examples span product search, payments, inventory management and so on). Post-transaction, logistics for the fulfillment of the order is a critical component to ensure an e-commerce experience has comparable or improved benefits over traditional shopping. Shippit is advancing towards this ambitious goal within Australia and South East Asia. If you're a visionary founder who is ready to make waves, please reach out via our website.

Upflowy is a low-code signup engine that empowers growth leads to build and test lead signup flows without needing to utilise the scarce resources in their engineering teams.

This month the Tidal team made an investment in Upflowy and we're publishing our investment notes below. Although we invest across a range of markets, models and products, there are core principles that we live and die by in our investment decisions. For more information on the pillars that make a great Tidal Seed Investment, see our investment criteria here.

Markets with tailwinds

We are in the midst of a customer experience movement and trend toward self-service online. Businesses need to respond with slick and more efficient / high converting digital products. To achieve this, testing and iterating on new products has become the norm and businesses that look to acquire customers online understand that the user experience and journey through the funnel needs to be continuously optimised.

But there is a problem and it is two-fold.

1. Growth teams that are looking to optimise the customer journey through the online acquisition funnel are constrained by the product roadmap and tech availability of the business. We have experienced this issue directly in our own portfolio companies. One of the Upflowy founders was previously solving this problem at his last business using a complex array of 90 online forms. We know early stage product-led growth companies with teams of 10+ people trying to solve this problem by stitching together basic tools.
2. It is exceptionally difficult for most teams to set up and track an end-to-end customer journey funnel, with all the relevant metrics. Tools like Hubspot are doing a good job of owning the Top of Funnel metrics piece, but there are limited options to track the user journey from discovery through onboarding and offboarding and data & insights into this critical part of the acquisition funnel is limited.

Products that change the game

Upflowy provides a SaaS product for growth teams to build user flows and test and iterate against those in an easy to use, low code environment. This significantly alleviates the burden on the IT side, and democratises the ability for low-tech users to move forward with continuous user flow updates. The product also opens up access to end-to-end funnel analytics, which gives instant insights into the performance of the funnel and arms the team with the data they need to make changes to the user experience.

The 'hook' for the customer is the ability for marketing/product teams to build sign-up flows without needing to divert resources from the engineering team. The 'currency' of the product is the data and insights around customer journey through the funnel, which is directly correlated to converted revenue.

Our thesis: if Upflowy is able to demonstrate clear improvements to sign-up flows right at the point of the customer's customer transaction, it will be sticky and defensible within its customers day-to-day test and optimise workflows.

Founders that hustle

The Upflowy founding team is the one to solve this problem. All three co-founders have successfully built and exited multiple startups. Guillaume Ang is a serial entrepreneur and B2B SaaS growth expert. Matt Browne is also a serial entrepreneur with exit success from Whispli and DoneSafe. Alex Girard is leading product and engineering, having built 20+ SaaS products and held technical co-founder roles. The team has come together with a mutual frustration for the problem at hand and the necessary skills across ops, growth and product to build a globally scalable solution for the market.

A compelling business model

The great thing about low-code products is that they are easy to use by design and are usually built with a specific target user archetype in mind. This lends itself well to a product-led growth model, which we know creates compelling business value over time. This is a great starting point, but the real amplifier of value creation comes from layering on top immense value creation for the customer itself. By 10X-ing the customer's online conversion rate through better sign up flows, Upflowy earns the trust of its customers right at the point that matters to them the most: revenue generation. This gives them the right to further monetise that customer relationship with better product, data and insights over time - that is the beauty of the next evolution of SaaS businesses that unlock valuable primary data that didn't exist before.

The seed phase

We loved the speed with which the Upflowy founding team were able to get an initial test product in market, validate it with early customers and build a business case and growth plan around it for their Seed Phase. Whilst the core focus early on has been around the 'brute force' part of working closely with early users and hitting the phones, the founders have done this with an eye toward their scalable path to market and are building for a frictionless growth plan from day 1. Next step will be to make a beautiful product easily accessible to customers and start testing growth channels.

Using these core principles, we gained conviction at Tidal to back the Upflowy team early in their journey and we look forward to welcoming them into the fold and supporting them as they pursue their world domination plans through their seed phase.

A note on the low code / no code thematic

Business users want access to the productivity, workflow automation and data accessibility that they have become accustomed to in their consumer experience of technology. But they don't want to have to learn how to code to get it and nor should they. The low code / no code movement is about democratising the ability of business users to build the tools they need, alleviating pressure on core engineering teams and drawing on their unique knowledge of the problem to be solved. This will speed up the capacity for teams to innovate and create.

Upflowy is just one of many tools that we see emerging in this category. If you're a visionary founder who is ready to make waves, please reach out via our website.

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Why we started Tidal

The Australian startup ecosystem has developed in leaps and bounds over the past ten years. As it matured, a gap in funding at Seed has widened, with many of the Tier 1 funds focused predominantly on later stage investment. There are limited options for Aussie and Kiwi founders to work with professional venture investors in the early years of their startup, resulting in a lack of access to the product testing, GTM frameworks, white-boarding sessions, talent & customer introductions, investor networks and other non-capital resources so readily available to their US counterparts.

We think the Seed Phase is critical to positioning a startup for success – it requires founders to prioritize capital, separate the "must dos" from the "nice to dos" and get to market as quickly and efficiently as possible to learn, iterate, rinse and repeat. Seed is where we play and where we see the most opportunity for Australian technology over the next ten years.

Australian founders need access to venture fund that focuses purely on the Seed phase. We exist to back the best Founders with early capital and a platform of resources that accelerates a path to hyper-growth.

We dive deep

The investment team at Tidal brings together diverse perspectives and professional experience that can help Founders navigate the many challenges of building an early stage company. We have broad coverage of the functions within a start-up due to our varied backgrounds and aren't afraid to dive in deep where we can help. Our investing team has:

• Founded and exited their own technology startups;
• Led the product function for both small and large corporations;
• Launched and established companies in new markets;
• Invested strategic capital on behalf of large technology companies;
• Managed tech "tuck-ins" within these platforms; and
• Worked alongside Founders through the good times and the bad for many years as investors, directors and friends.

You can check out our profiles here.

What ultimately unites us is our entrepreneurial spirit – we have either founded companies from the ground up or have launched existing companies into new markets, each of us facing the exciting parallels and challenges of building something new.

Our founders are trying to nail down product-market fit, hack together a scalable path to market and attract an A-grade team. These are areas where we specialise, and we've built playbooks and muscle memory to help Founders avoid the pitfalls of those that came before them, positioning their companies for the highest level of success at every turn.

What does a Tidal Seed investment look like

Products that change the game. For a product to be truly disruptive, it needs to change the game. Maybe this means it has the ability to really increase revenue for the customer, or provide a signfiicant competitive advantage. It could mean the product is mission-critical, and so sticky that the customer can't live without it. It almost always means that the produce user is in love with the product and they can really tie their use of that product back to meaningful value creation for them personally, for for their business. At Tidal we want to back the products that aren't just incremental, they are changing the game entirely.

Markets with tailwinds. Not all markets are created equal. Some are more ripe for disruption than others, depending on where the market is up to with its adoption of technology and what the tailwinds are that are changing the flows of value creation in that industry. We look for a really clear problem space that needs to be solved for, or a market expansion opportunity that no one has though of yet. We are industry-agnostic and some of the verticals we have invested behind that demonstrate strong tailwinds include logistics, e-commerce, agriculture, workflow productivity and finance. Current areas of specific interest include: cybersecurity, food technology and education.

Founders that hustle. Our founders have a unique insight or experience with the problem space they are trying to solve. They show outstanding technical competence across product and technology. We like to see a scrappy, data-driven approach to user acquisition and an ingrained culture of test, iterate and learn to get to the answer. Our founders understand that 'it takes a village' to build a business and they have the humility to draw on the strengths of those around them. They can inspire investors, customers and employees to unite around their vision and they show grit when they need to ride the hard times. They are decisive, when they need to make pragmatic decision and have a 'do what it takes' attitude to getting things done.

Compelling business model. We look for B2B or B2B2C models, and business types include Software-as-a-Service, Marketplace/Network and consumption-based models like API businesses. We believe the best way to create shareholder value is to nail down a low-cost acquisition method during the Seed phase and our founders understand that there are ways to acquire customers and show real product value without having to hire sales staff.

The Seed Phase. We invest during the Seed 'phase'. Usually this means there is an initial product in market and the business is generating revenue or user growth within its target customer segment. During this phase, the founder may seek capital to further develop their product, test a range of user acquisition methods or hire a gun growth expert. Our initial investment sizes are typically A$500k to $750k, depending on the maturity of your product, though we can write up to A$1.5 million upfront. We also have the ability to lead or follow in your first Seed round. Because Seed is a phase, it's often that we participate in several rounds over the period that spans an initial Seed cheque through to a Series A round.

We believe there is an unprecedented opportunity for Australian founders to make waves on the global stage. Tidal Fund II is currently live and we are actively investing in founders that are building products that change the game. If this sounds liks you, get in touch with us directly or submit your pitch through our website.

You have probably heard the jargon investors use to define the 'stage' of their investments: pre-Seed, Seed, Series A, Series B and beyond. What these titles lack in creativity, they make up for in practicality as the startup ecosystem seeks a common language to categorise early stage companies.

Tidal Ventures is a Seed fund. We subscribe to the notion that Seed is a phase (capturing Early Seed + Seed + Late Seed / Seed Extension). We believe it is far more useful to focus on the proof points that founding teams need to hit during this phase rather than the size of your team, revenue booked or dollars raised.

Seed: the period of time a venture-backed startup has to demonstrate the proof points required to raise a Series A from an institutional investor.

Let's focus on what actually needs to happen during the Seed Phase, from the perspective of three different "success milestones": (1) product-market fit, (2) finding a scalable path to market and (3) hiring a gun team.

Focus Area: Getting to Product-Market Fit

First and foremost, the Seed Phase is all about building an exceptional product that your customers simply love to use.  

Focus Area: Finding a Scalable Path to Market

During the Seed Phase, we formulate a hypothesis on the best way to access the customer and then test and iterate until we find the optimal channel.

Focus Area: Hiring a Gun Team

The hiring decisions you make during your Seed Phase are critical and will impact culture well into the life of your business.

Establishing 'proof points' and tracking performance

It's helpful to attach tangible proof points to each of these areas to help focus your team around a clear success milestone. For example:

Timing and runway

Seed is a phase with an undefined time period and the biggest constraint for the founder is usually capital availability. Seed businesses fail when they can't hit their proof points before their cash runway ends. This is sometimes due to uncontrollable risk factors such as market timing or founder break-ups.

We focus on the controllable elements: planning and team execution. By setting clear proof points upfront, founders can be clear with themselves and their team about what success looks like. By demonstrating the capability to execute against a plan, they give themselves the best likelihood of a successful Seed outcome, whether that is a Series A fundraise or otherwise.

Nailing the Seed phase

To close, here are a few things we see successful founders focus on in their Seed phase:

• Building a product that is truly mission-critical to the customer. Great product leaders will ask themselves early: "Is my product (1) core to operations (2) revenue-enhancing (3) cost-saving or (4) nice-to-have?" Don't be 4!
• Use clever design to short-circuit the "time to value" for the customer: Is there a way you can get your customers to quantify the actual value that your product is bringing them early in their user journey?
• Focus on efficient deployment of capital: If you're raising funds, ensure you've budgeted enough time to hit your proof points before raising again.
• Focus on monetisation earlier rather than later: customer revenue trumps investor capital any day of the week.
• Figure out your sustainable unit economics: Find a low-cost acquisition path and don't wait too long to figure out what you can charge your customers, use that Seed phase to test pricing and packaging before you scale.

Roadmaps serve as a powerful communications tool for product leaders.

They aim to:

1. Build a shared understanding between stakeholders
2. Show areas of investment
3. Bridge strategy to tactics

When you think about it, that’s a lot of stuff to put into a single visual. Making a stellar roadmap to solve all these problems creates a concentration of pressure. As a result, we see many teams fumble while trying to tick all these boxes.

In a world where there is growing specialization in skills, techniques, and in turn software, why are we still trying to squeeze all this information into one tool?

Recently, I had the pleasure of (virtually) meeting Marty Cagan from the Silicon Valley Product Group and author of the seminal product management book, Inspired. One of his key messages during a Q&A session was that product teams waste so much time developing and estimating feature roadmaps, when they should be focused on build, measure, learn cycles. That is, focus on product outcomes, their priority, and buy time until you have data-informed tactics.

This does a couple of things:

1. You learn what really matters to users faster
2. You avoid unwanted feature bloat

You can read more about Marty’s thoughts on this here and here.

Bottom line: the intent of a feature in a roadmap can be interpreted subjectively, and as a result we have seen teams drift from their original goal during execution. Whereas an outcome on a roadmap is unambiguous, offering a constant reminder of your desired goal throughout your delivery cycle.

Examples of drift range from:

• Anecdotal thesis: starting a project without success metrics
• Product bloat : having clear measures for success, but deviating due to over investment and sheer momentum
• Goal posts: feature scope shifts yet the measures unchanged
• Never ending story: delivery time extends with no recognition of the original desired result and in turn checks and balances for incremental delivery

We spend a lot of time reviewing product roadmaps with our portfolio companies at Tidal and many more in review sessions over my lifetime a product leader. We tend to run into this issue consistently. So we created a practical guide on developing a connected roadmap that leans on complementary artefacts to address the goals above.

Overview

Here is a visual map of how we will progressively leverage a set of common artefacts to achieve a connected roadmap:

Goals pre-flight check

Before getting started on a roadmap, we need some guidance from leadership. Your company goals form this guidance. We will use the OKR (Objectives & Key Results) format to frame them with a business lens.

This is what it might look like:

Use this checklist to inform your roadmap:

• Focus Areas: Does the OKR call out your team(s) as a dependency to achieve the goal? We recommend defining Focus Areas per OKR to set expectations for accountability and provides an opportunity to have a conversation about resourcing.
• Focused Key Result: Does each Objective have one primary Key Result? A secondary Key Result should only be used to help qualify the effort. This helps reduce unambiguity and will align behavior. An example of a primary key result would be improving sales efficiency from $x to $y, with a complementary qualifying objective that maintains your conversion rate at a floor of z%.
• Ordered Objectives: Are the OKRs an ordered list? This forces leadership to prioritize the bets the company is taking; just like you need to prioritize your roadmap. Guaranteed these priorities will be tested throughout the time span and it’s best to understand those trade-offs early.

Finally, are the company OKRs you are accountable for grounded in rational optimism? You want to be ambitious, but it needs to be coupled with a reality check that considers cadence, dependencies, and the timespan for achieving the result. While this is not specific input into building a roadmap, it's worth asking if you are set up for success?

Posing the checklist and your own situational questions helps develop a shared understanding with stakeholders and is half of the solution for aligning on value.

Now that you have tightened up the business OKRs, let's connect them to your product roadmap.

Outcomes not features

The fundamental challenge with most feature-based roadmaps is they are used to convey product strategy to stakeholders but are rarely self-explanatory. They require a talk track to explain how tactics (features) ladder up to strategy (outcomes), rather than stating the strategy itself and making it accessible. This way, your feature doesn't get in the way of your outcome. If your feature fails the goal, you can pivot without changing your high-level roadmap.

Outcome-oriented roadmaps help you defer and switch tactics while maintaining the original intent that stakeholders are aligned on:

Feature roadmap

• Improved onboarding (frames it from the user's lens; push this down one level)
• Establish a baseline conversion rate of at least 4%

versus

Outcomes roadmap

• Increase unassisted user adoption (frames it from the product lens)
• Establish baseline conversion rate of at least 4%

This is what it might look like:

Here are the ways to convert typical roadmap elements into an outcome-oriented roadmap:

1. Swimlanes: Use the business OKRs that require a direct contribution from product teams. Traditionally you would use themes, but they only serve as a narrative to your feature grouping rather than being an effective way to remind stakeholders how product strategy connects to your business objectives.
2. Timeline: I recommend using quarterly intervals if you are having some delivery cadence challenges or you are a time-driven organisation; alternatively Now, Next, Later may provide a more flexible structure for fluid development.
3. Bars: Cards should be represented as outcomes instead of features. Leave features for your Scrum or Kanban boards to build more conviction in your tactics through rapid iteration.
4. Milestones: this is an optional element, but should tie to a series of major stages

You may be thinking an outcome-oriented roadmap lacks the depth of the feature roadmap. But what you lose in detail you gain in clarity of purpose. It is the other half of the solution for aligning on value and illustrates how you intend to prioritise value delivery.

Now that you have expressed your product strategy using outcomes, let’s connect your strategic outcomes to your feature tactics.

Make it epic

In agile development, epics encapsulate a set of related stories. Often a few epics may be required to achieve a desired outcome through gradual iterations. The simple use of a progress bar within each (outcome) bar connects strategy to tactical delivery. It also enables stakeholders to track progress in delivering user value, associated with the outcome, and finally the business OKRs.

This is what it might look like:

We do not prescribe a specific agile methodology. That is very much a team decision. However techniques like User Story Mapping or Jobs to be Done are a useful methods in curating what actually gets on your backlog.

The mindset of having a groomed epic backlog should be strong opinions, loosely held. Each epic merely represents a way to capture your thesis of the user value impact for a given feature; and why it is a suitable leading indicator to the outcome's lagging indicator in your roadmap.

Here are ways to tweak a typical Scrum or Kanban board elements to connect your roadmap:

1. Columns: our recommendation is to capture select stages of your delivery cycle per column. Consider this as a more precise snapshot of a feature's delivery using a common language of your product team. For example we have seen teams track Backlog, Discovery, Build, Test, Beta, GA and added steps in between to suit their path to production. The use of a time-scale is less relevant at this level and you are better off aligning the team to your roadmap for time.
2. Cards: are simply the epics or stories/tasks that progress through each of your stages. Again it's important to iterate that having a rapid test & learn culture means not all things get to production. Being deliberate about this will help you forge a better product.
3. Tags: using tags (aka labels) helps connect an epic to an outcome. By doing this it should control the progress bar on each outcome's bar on your roadmap.

By tuning your board elements this way, you have connected to your roadmap, and in turn the company goals. Congratulations, time to celebrate.

Adopting a connected roadmap may resolve unwanted pressure by allowing each artefact to have a clear purpose. Everyone in the organisation should have more clarity as they can cascade up or down through each view and see how value is aligned, prioritised and consistently defined at each level.

Let’s recap the benefits of using a connected roadmap:

• You have a self-serve document that better communicates your strategy.
• Reducing communication friction allows you to spend more quality time debating the things that matter.
• Deferring tactics till slightly later in the planning cycle reduces feature bloat and speeds up your path to validating if a feature will actually deliver on a given outcome.

Thanks to Tash, Andrea, Georgie, teams at Bonjoro, Shippit, and Secure Code Warrior for contributing and reading drafts of this article.