Positioning a Generative AI Startup: Erik Severinghaus, Founder and CEO of Bloomfilter (Part 2)

Sramana Mitra: How did you get that off the ground?

Erik Severinghaus: It began with me just investing my own personal money – the money I made at IBM and some of the money that I made at iContact. After maybe a year or so of running it, I started to look for outside capital and raised about a million dollars seed round.

Sramana Mitra: When you went out to raise your seed round, what was the situation? Did you already have a product in the market? Did you have customers?

The Startup Velocity Question: What CANNOT be Fixed?

Within the runway of a venture-funded startup, it is excruciatingly difficult to fix core technology problems. 

The Startup Velocity Question: Is it Positioning?

We are in 2024.

Almost every market is super crowded.

Most often, the problem is not with the sales team, nor with the technology.

The problem is with Product Positioning.

The Startup Velocity Question: Is it the Sales Team?

When things are not going right, especially in B-to-B SaaS, the blame falls on the sales team.

As a company switches from Founder-led Sales to a Repeatable Sales Process, often, sales do falter.

Velocity cannot be achieved without a repeatable sales process.

The Startup Velocity Question: Is it the Market?

Entrepreneurs often bet on markets that are yet to develop.

Good entrepreneurs often create new markets. Steve Jobs CREATED the smartphone market.

VCs bet on such bets.

The Startup Velocity Question: Is it the Product?

Product and Technology are not the same. 

While technology failures are difficult to recover from, product issues can be addressed.

Often, once a startup starts to engage with the market, it develops a more sophisticated understanding of the market’s needs. Features, functions, integrations, APIs – a lot of input comes into the company through customer immersion.

The Startup Velocity Question: Is it Technology?

At the heart of most tech companies is, of course, technology. Today, the market is particularly frothy around Artificial Intelligence. AI is a technology that is notorious for not working as envisioned.

The Startup Velocity Question: What Hinders Acceleration in VC Funded Companies?

I have been running 1Mby1M since 2010. I find myself saying to entrepreneurs ad nauseam that VCs want to invest in startups that can go from zero to $100 million in revenue in 5 to 7 years.

Startups that do not have what it takes to achieve velocity should not be venture funded.

Experienced VCs, over time, have developed heuristics to gauge what constitutes a high growth venture investment thesis.