daily articles for founders

Here are 10 quality posts from the Founder's Library:

Never negotiate piecemeal  

Great piece by Mark Suster:

The problem with negotiating piecemeal as Stuart taught me is that you trade on every item. You don’t prioritize the issues which you really care about. If you don’t want to give a millimeter on one item you have a hard time doing that point-by-point. Done as a “package deal” you can say, “I gave in on these 5 issues that you asked for. On this issue I can’t give.” That’s much harder to pull off piecemeal.

Piecemeal you might be reasonable in your negotiation on each of those first 5 issues as each came up. You found middle ground on each of them. When the 6th point comes us – the one you really care about – you’ve lost your leverage. You might have been better off not finding middle ground on the first 5 points but rather having given completely on all of them in exchange for not budging an inch on point 6.

Chalk it up as one of these "obvious once you've been told" ideas that can save you a lot of money and worries.

True ecosystems  

I somehow missed posting this last year, when it was published. An excellent article by our very own Salim Virani, on the topic of ecosystems.

Sal and the rest of the FounderCentric team spend a lot of time working with incubators, accelerators, governments, outreach teams at large companies, etc, and helping them develop their startup scenes. Their mission comes from the heart (they really care about helping startup founders), and they are, as far as I know, the best at it at this point, in Europe.

So their thoughts on the topic of how European ecosystems should develop are worth paying attention to. Here's one of the points that particularly stood out for me:

He leaves us with the final takeaway “Support only the best people who have set the objective of being the 1 in 50,000”. So, only support the hugest successes - and leave the others stranded?

From a broad ecosystem perspective, investors are often stumps we have to ignore and grow around to get to the next level. “Like a rotting treestump in the forest, they've established themselves from a past leadership position, still get all the attention, but get in the way of progress.” They do what works for them, but we have to see the broader picture to grow a successful ecosystem.

Investors aren't bad guys; most work in the best interests of startups from their point-of-view.

The problem is when they perpetuate the idea that the “best” startups for them are the best startups for everyone.

Taking the Silicon Valley definition of a "successful startup" and requiring that everywhere in the world as a bar to entry is short-sighted for people who want to bootstrap a startup ecosystem in a city where there is none. There are many ways to build successful businesses, and the "funded mega-high-growth startup" way, the unicorn chasing approach, is simply not a smart approach for most parts of the world.

If you're interested in startup ecosystems, read the full article here.

More about finding cofounders  

Some great ideas in this Quora thread, as a follow up to earlier today. Hat tip to Salim Virani of LeanCamp.

Paulina Sygulska on: How to network effectively

Paulina Sygulska is a founder of GrantTree, a business (which I cofounded with her) that helps UK-based tech companies get tax credits from the government. She's a member of BNI and an extremely active networker.

In this article, Paulina shares some advice on how to go about generating business out of networking events.

For a great many types of businesses, networking is a crucial way of acquiring leads, particularly at the early stages of growing a business. And yet many people either get it wrong or ignore it completely. This is particularly the case in tech circles, where many people shy away from small talk and so end up deciding that networking is not for them, a waste of time. In some cases, they might even be right! Networking is not for everyone.

In this article, I'll try to provide some fundamental principles for how to go about networking so that it's not boring, and it's lucrative.

Strong relationships

The first thing to say about networking for leads is... don't. If you go to events and just focus on what you can get out of it, you'll get very little, if anything.

Instead, try to figure out how to make useful connections for those you meet, and how to help them. The most successful networking salesmen that I met where those who built strong relationships by, first and foremost, giving a lot of referrals.

Be seen as a generous business person, who is focused on the bigger picture, not just the bottom line of their own company. When you give people good leads, you achieve 3 things:

  1. they will feel inclined (or, in some cases, obliged) to help you in return;
  2. they will spread a good word about you;
  3. they will trust you more.

It may sound cliché'ed to say that givers get, but when it comes to business networking, it's a fundamental principle. The more you are able to help other people, even (or particularly) those who are not potential leads for your business, the more leads you will get in return. So the first question you should ask yourself whenever meeting someone is: what lead can I pass to help them?

Once you get in the habit of asking this question, and once you've built up a decent rolodex of useful contacts, the awkward "small talk" stage tends to disappear. There's a purpose to the conversation right from the start: you're trying to help someone, the person in front of you.

Practical advice

Although you should not directly focus on getting leads from networking, there are some general principles you can apply to increase the chances that you will in fact get leads, direct or indirect.

1. Don't spam

The most common mistake is spamming fellow networkers with business cards and information about you.

Any information about you is almost useless before you establish credibility. The founder of the most successful business referrals organisation globally, Ivan Misner, talks about the CVP process: Credibility, Visibility and Profitability. Those are key stages in networking for leads and if you try to omit one of them, you minimise your chances to succeed as a networker.

2. Allocate the time

Be prepared to invest a lot of time.

Studies have shown that successful networkers invest six hours or more in networking and follow-ups every week, whereas those that claim networking doesn't work for them are prepared to dedicate on average two hours a week to it.

When you are new to a particular networking scene, expect to have to invest a few weeks to a few months (depending on the industry you are in) before results start to show.

3. If you don't ask, you don't get

Don't just assume that because people know what you do, they will give you business or make connections.

Be humble enough to simply ask for things you need, in such a way that the recipient of your request doesn't feel pushed against the wall. Most people will rebel when feeling forced to do something so when you ask for a favour, give the fellow networker the freedom (and a way) of saying no without appearing mean.

Educate fellow networkers about ways to help you, and ask for things other than access to customers. Think about ways in which people could do your business a favour without risking their credibility. Once you have gotten someone to help you with one, easy thing, they're more likely to help you again in the future. It's often good to ask for help for a contact of yours rather than for yourself, to appear more generous.

Of course, only do this after you've done your best to help the other person.

4. Fish across ponds

Most people tend to network only with their peers, or with the personality types they're most comfortable with. As Iqbal pointed out earlier this week, that's not where your customers (or leads to your customers) are.

Don't be afraid to network with people you wouldn't naturally tend to speak with, be it because of the sector they are in or their personality. If you are in financial services or nanotechnology, don't look down on tradespeople. Find ways in which you can relate to the way a person from an entirely different industry does business, and ways in which you can help them. I've heard numerous stories of IT system integrators getting their biggest leads from beauticians or other completely unrelated sources.

Show interest and respect for what the person you've met does, find out about what, in all the things they do, really rocks their boat. Most people have some things they're really passionate about. One of the easiest ways of opening people up is getting them excited.

According to William Moulton Marston, who developed a popular personality profiling system in the 1920s, there are four basic types of personality, with two of them being people-focused (Influential, Steady), and two being task-focused (Dominant, Conscientious). If you are one of the former, then, when networking, you will feel there is more potential in conversations with people focused folks, and tend to steer clear of more withdrawn people. This is natural. The problem, however, is that you will miss out on 50% (or more) of possible opportunities.

So, each time you network, set yourself a task of approaching at least a few people who clearly aren't those you would get on with perfectly from the first minute. Feel out their energy and mood, and try to adjust to it, so that you don't appear threatening, frustrating or bored.

5. Present yourself

Before you've approached anyone, or said anything, your image has already spoken tons about you.

Look professional and neat but not boring. Generally it is better to be over- than underdressed, even in the age when tech tycoons wear blue jeans and black turtlenecks. People do subconsciously associate what you look like with how well you are doing.

This works in reverse too. Upon entering a room full of people, I quickly identify those I want to speak with, based just on their image (dress sense, posture, energy). In most cases, I find that my intuition suggesting I should approach someone was correct. Make sure you are one of those people others decide to approach when scanning the room.

6. Be sociable, energetic and clear-minded

Don't go networking unless you are willing to make the effort to be sociable and proactive.

If you are worn out, tired, or down, it's best to give it a miss. You will need energy to gracefully break into conversations, approach people in a friendly way, and be an interesting, intelligent partner in conversation.

And, it may sound obvious, but don't get drunk at networking events. It makes a terrible impression when the first words out of your mouth are a slurred out "Heeey, haaao's it goin...!" Have a couple of drinks if it relaxes you, but stay sharp.

7. Entering and exiting conversations

To enter a conversation, three approaches generally work in most cases. First, if you scan the room and see anyone standing by themselves and looking available, just walk right up to them and introduce yourself. If no one is free, approach an existing group, and listen in on their conversation, and wait for an appropriate time to make an intelligent comment. Alternatively, if you're feeling brave, just walk up to a group and introduce yourself! This takes a little courage, but once the conversation gets going, people rarely remember how it was started anyway.

Almost all networkers find that it's easier to enter a conversation than to exit it. To deal with the latter, typically, saying "it was nice to talk to you" with confidence and shaking someone's hand works much better than trying to come up with an excuse, or, even worse, running away to the loo. If you are talking with just one person, suggest that both of you should join another group and meet new people.

About when to exit: a common mistake that even good networkers make, usually out of politeness, is taking part in irrelevant, time-filling conversation with a person they are not going to be able to help or want to stay in touch with.

Exercise mental discipline. When the conversation looks like it's going to drag on, ask yourself: "Would I want to continue this conversation for months after the end of the event?"

If the answer is no, move on! If the answer is yes, and you can see an immediate opportunity of some sort, why not suggest to your new acquaintance to join you for a meal or drink right after the event (or during a break)?

8. Follow up

Lastly, networking only begins with face to face conversations. When and how you follow up is crucial to how the relationship develops.

The key principles with follow-ups are that you should always get in touch, rather than waiting for the other person to do so, that you should do what you said you would (whether that's testing out their product, writing a testimonial, making a connection, etc), and that you should present some "next steps" for the relationship to develop. Make it easy for people to trust you and for the relationships to grow.

Once you understand these basic principles, there are a lot of different follow-up systems that can be applied.

I know a successful networker who would write a follow-up email the next day, but, instead of sending it, save it in "Drafts" and connect to the person on LinkedIn instead. It's enough to remind someone about you and draw their attention to your profile. Two or three days later he would send the saved email which then had a much better chances of being recognised and opened.

Personally, I usually follow up almost immediately and, after a few days, call potential strategic partners/clients/introducers or the most impressive networkers I met and suggest a coffee.

In short

The key to successful networking is to focus on helping the other person. Give what you want to get. If you want to get leads from networking, you should be a source of leads yourself. In addition to this fundamental principle:

  1. Don't spam. Before you tell others about your business, establish your credibility.
  2. Set aside enough time, for both events and follow-ups. This can add up to over six hours a week.
  3. Tell people what you're looking for, after you've done your best to help them.
  4. Don't network only with the people you're comfortable with. Many leads will come from people in unrelated industries, or people with different personality styles.
  5. Present yourself well. Be one of those people who everyone wants to talk to.
  6. Be sociable, energetic and clear-minded. If you're worn out, go home and sleep.
  7. Don't get caught in never-ending, unproductive discussions. Learn to enter and leave the conversation smoothly.
  8. Follow-up consistently. Be the one to follow up, come through on your promises, and provide some "next steps".

I hope you find this advice useful, and I look forward to bumping into you at networking events!

This article is part of a series.

Tools to find available startup domain names  

Duane Jackson of UK online accounting software KashFlow, lists some useful tools for finding a good domain name:

A useful list to keep bookmarked for next time you need to do this.

Attention infrastructure vs fundamental businesses  

Great post by Garry Tan, cofounder of Posterous and now designer-in-residence at YCombinator, about the difference between infrastructure businesses and fundamental businesses.

Attention infrastructure businesses like Facebook, Google, Twitter et al:

  • require significant capital infusion;
  • are high-risk, high-reward;
  • tend to be created by technologists.

Fundamental businesses:

  • earn money immediately;
  • are less risky upfront;
  • can still go huge.

This turns out to be a valuable framework for identifying viable Internet startup ideas. Are you building something that could become infrastructure? Or are you building a fundamental value-generating business that uses the infrastructure? Both are amazing business models, but have radically different risk profiles. But as Apple has reminded us today -- it's good to be king.

Worth closing with a perhaps obvious point: frameworks are just (sometimes very useful) ways to analyse things. Reality is often more complex.

How to detect a toxic customer  

Excellent article, and vital information. The less time you spend on toxic (and unprofitable) customers, the more time you can spend on good (and profitable customers). Recognising toxic customers is a vital skill.

Warning signs (see the article for more details):

  1. Disrespectful or Abrupt
  2. Asks for a Discount (With No Reason)
  3. Multiple Contacts, Often Through Multiple Channels
  4. Unrealistic Expectations
  5. Multiple Questions that Can Be Answered from Your Website

The article also describes an amusing encounter with a toxic customer, recognised early, and, unlike many such stories, it actually finishes well.

Update: excellent response from Joel Spolsky on HN.

Dealing with conflicts in your business  

Would you believe it, startup founders are human beings, and face the same kinds of difficult human issues that the rest of the world faces.

The techniques that Dr. Jared Scherz outlines work for situations other than those found in startups. They work, in fact, for many difficult situations. In particular, stepping outside your immediate situation to look at it objectively is a powerful technique for dealing with conflicts.

So take a moment and step back before reacting to people or situations. Ask yourself what is going on inside you to trigger your feelings. Consider what is driving the actions or inactions of others around you. Scan the team to see how people are working together and what the underlying causes are for problems. Base your responses on what emerges through your awareness to prevent impulsive decision making. As the CEO you are responsible for attending to the processes of your startup, not simply executing a wonderful product or service.

Worth a read if you feel you could use a primer in how to deal with conflicts in your business.

Startup gung-ho

Businesses, investors and consumers alike are gregarious. They want to go where everyone else is going. They want to buy success, from successful companies.

This leads to a perversion that affects the startup world as well as the rest of the business world: the need to appear more successful than you are, in order to get business, investment, customers.

This is not entirely artificial. Building a successful business is also about being able to project the right image to appeal to customer, and an appearance of success is part of that. Fake it till you make it, as they say. People don't want to buy from or invest in a dying company, so you've got to look like you're doing great, even if you're an invoice away from technical bankruptcy.

But there's a reverse side to that, which I believe is harmful to some startups: this projection of fake success extends to meetings with other startups and potential mentors at networking events, and because of that, founders who could really use a good dose of advice from a more experienced entrepreneur end up flying blind and making all the same mistakes again.

Startup networking events

When I turned up to my first startup networking event, I didn't know what to expect, so naturally, I turned on the "we're doing great" façade (which, I quickly observed, everyone else did too). Isn't it amazing how, in a high-risk industry where most companies are expected to fizzle out in the next few months or years, everyone is doing great, growing fast, acquiring more users, etc? How often do you meet a new founder and hear "Yeah, well, I've been at this for 9 months and our revenues are still way too small, so I think I'll be throwing in the towel and trying something else soon, because this isn't working."

Another aspect of this problem is that once you start putting up the appearance of success, it becomes very tempting to do so consistently, with everyone. Anyone could refer you to some business, after all, so you have to be on your toes all the time. Otherwise, you might miss out on some great opportunity that would have come your way if only people thought you were doing well. At least, that's how it often feels.

To make matters worse, if you introduce yourself by presenting what's wrong with your business, people will peg you as a negative type, and that's not the kind of founder people think of as being headed for success. No, you have to be an outgoing, friendly, open extrovert with a strong dose of self-confidence and a very slight touch of arrogance.

I'm very lucky that I can genuinely say that at this point, the two businesses that I am involved in are doing very well. But this wasn't always the case.

Missed opportunities

In the times when my companies were not successful, did I get any amazing opportunities by claiming to be successful to my startup peers? I don't think so. Founders have a pretty finely tuned bullshit detector. I doubt anyone was all that fooled. What about investors? With them, faking success is even less useful. VCs will not invest without doing a fair amount of due diligence. Claims that you're doing great when you're going bust will never lead to investment, unless you're a consummate con man.

What opportunities did I really miss, then?

How about opportunities for advice? Entrepreneurs are a helpful lot, but if you don't present your problems clearly, your peers won't be able to help you. Even non-entrepreneurs seem more likely to offer advice and connections if they think you're struggling and they could make a difference. Perhaps the only set of people to whom you might want to project the "appearance of success" are clients, during a pitch. Even that is unclear, though. It really depends on your industry. In some industries, a fledgling startup is more likely to get a foot in the door than a mature, successful company, and expectations will be lower, and therefore easier to beat.

In summary

  1. Appearing more successful than you really are will destroy more opportunities than it will create.
  2. Instead, be honest with fellow entrepreneurs. Don't be negative about it, but don't claim to be doing great when you're not.
  3. VCs will not invest based on an appearance of success, so bullshitting them won't work either.
  4. Appearances of success may work with some types of customers in some industries, but think about it for a few minutes instead of simply defaulting to the startup gung-ho attitude.

B2B SaaS growth techniques  

Solid article by Lars Lofgren about five key techniques to get more users for a B2B SaaS app. The five techniques listed are:

  1. Integrations with other products that target businesses
  2. Work emails: leveraging the fact that many of your users have colleagues
  3. Embeds: enabling businesses to embed their content into their site
  4. Powered by: tagging your product when it's being used
  5. Free stuff: giving away something valuable (e.g. a thorough guide) to encourage referrals

Each technique is described with examples and best practices. Even an experienced B2B entrepreneur will probably learn a thing or two from reading this article.

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