Venrock's Ascher: Don't ramp up too soon

Venrock Venture capitalist Brian Ascher says have a brutal sense of reality

One of the biggest mistakes startups make is ramping up too fast, resulting in spending too much time and resources on managing, and less time on building a product. Another mistake is staffing up before knowing if a product really has demand.

This is one of the lessons Brian Ascher learned after working with a number of portfolio companies as a venture capitalist at Venrock.

"Wait to fire until you see the whites in their eyes," he said. "I’ve been involved in some companies where we interpreted that early customer interest for wild customer love just ready to smother us... You scale up and before you know it you went from a 10 person company to 20 person... and you only have a handful of customers. You have to wait and see that early interest converts, and the first customers are reference-able, and that they represent a big market, not just a few early adopters with unique need."

Bottom line: Don't ramp up too soon, thinking "that you’re at the beginning of the curve, when you’re not."

Additionally, with no guarantees or certainty as to when the economy hits bottom, the best strategy for startups is to stay lean. We've heard that a number of times. But it's probably a good thing to hear it over and over again. "Cash is king," said Ascher. "Hunker down," he said."Everyone's going to have to work harder, work longer."

As for how to raise funds in this environment, Ascher had one of the more helpful answers I've heard. 

"Combine two traits," he said. "Have a brutal sens of reality and where your challenges are combined with abundant optimism that you'll eventually get to that goal."