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daily articles for founders

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

How realistic should your icons/symbols be?  

When designing your product's interface, arguments about which icons to use for what are inevitable. Having some kind of principles or guidelines can help lessen the amount of time wasted on "but I think this icon is better" types of discussion.

Here, then, is an excellent article from 2010, by Lukas Mathis that gives numerous examples about how to use detail in designing navigational icons for your applications.

People are confused by symbols if they have too many or too few details. They will recognize UI elements which are somewhere in the middle.

The trick is to figure out which details help users identify the UI element, and which details distract from its intended meaning. Some details help users figure out what they’re looking at and how they can interact with it; other details distract from the idea you’re trying to convey. They turn your interface element from a concept into a specific thing. Thus, if an interface element is too distinct from its real-life counterpart, it becomes too hard to recognize. On the other hand, if it is too realistic, people are unable to figure out that you’re trying to communicate an idea, and what idea that might be.

One important exception when it comes to logos:

There is at least one specific area where more details are good: application icons. You want your icon to depict one specific idea: your application.

Coda’s leaf isn’t a representation of the idea of a leaf; it’s a very specific leaf, the Coda leaf. Acorn’s acorn isn’t just any acorn, it’s the Acorn. Adding details moves these images from a generic concept towards a specific entity, and in the case of an application icon, this is exactly what you want.

Paths and deterministic design  

Brad Hargraves:

In a path-driven business, each experience that a user — especially a first-time user — encounters is designed with the singular purpose of pushing a user to the next experience and perhaps collecting some information along the way. In the case of web businesses, each “experience” is a page. To generalize, a path is deterministic in nature; a subject’s destination on any particular page has been determined by the page’s design.

(...)

I’m not arguing against design. But good design is hard, and design outside of the constraints of a deterministic path is really freaking hard. And if you’re a founder of an early-stage company, your job is already hard enough.

Embrace the desire to make money

"If you want to make money, go into banking, not into startups."

"Only go into startups if you're really passionate about them, because you probably won't make any more money than from a good job, and probably a lot less."

"Startups are very risky, you'll probably fail to make any money."

"A startup's purpose should be to change the world for the better in a meaningful way."

Raise your hand if you've ever heard this. Raise your other hand if you've ever said this to others.

I have both hands up. If you searched through my voluminous HN posting history, you'd probably find at least the first statement in there word for word. What can I say, youth errs.

An alternative view

Having a good job in a high-wage industry can potentially result in having a relatively high wage. For example, being in finance (or indeed in software engineering in the Valley) can result in pretty high wages.

However, those wages are taxed very heavily. Of what remains, a lot goes into maintaining a certain lifestyle that goes with the job. Whether that's spending half your disposable income on rent in the Valley or having to go out to expensive bars all the time in the City, somehow, many if not most people working in these high-wage jobs don't accumulate all that much money.

Moreover, whilst those kinds of jobs used to be relatively steady, it can hardly be said that they are risk-free, especially in today's world. If you're working in a job, that means you're at the mercy of factors that you cannot see and which may drive you out of that job with little notice. And once the job is over, so's the money.

Finally, the kinds of jobs that pay well also have a tendency to require complete focus. They consume your attention, your life. You can't be an M&A banker earning hundreds of thousands of pounds a year without working incredibly long weeks that sap your life in exchange for all this money. When you work that kind of job, you have to be all-in.

I contend that a job, any job, is a very poor way to "get rich". It can be a good way to learn, but to get rich? Nope.

What about startups?

Startups in the Valley sense are also a pretty poor way to get rich, because they are like jobs with a high potential payoff on exit. If you sell your business for hundreds of millions, you will be rich. If you don't, however, you will just have collected a (probably not so great) salary for a few years, while pouring your entire life into the game. This is not that dissimilar to the banking world.

The quotes I started the article with are actually not so far off the truth, if you limit the word "startup" to the funded kind.

However, if you include all aggressively growing businesses in the word "startup", as per my definition from some time ago, then the picture changes. A rapidly growing business can definitely make you rich. In fact, one might say it's the best and most popular way to build a fortune.

However, no business will make you rich unless you actively want to make money. If you go into business with the mindset that you're in it to change the world and don't want any money, then guess what: you probably won't make much money. You probably won't change the world either, but that's another matter.

There are always exceptions, of course. However, it's never healthy to count on being one of the exceptions. A good plan, after all, doesn't just present one path to success - it sets things up so that all, or at least most, paths lead to success.

Embrace it

I meet far too many entrepreneurs who seem almost embarrassed to admit they want to make money. This is a very nasty side-effect of the Valley mentality of "it's about changing the world", a mentality that's contaminated the rest of the world (with both good and bad side-effects).

Wake up! If you're broke, it's perfectly ok, admirable even, to want to make more money. Society has little respect for the broke idealist waiting for his or her big break. If you're a student living with your parents (or about to once you leave university), or if you're beholden to a soul-sucking job because it pays your rent, or if you find yourself never able to afford the things you want, even though they are reasonable things like an up-to-date computer and a decent house to live in - then you absolutely should want to make money.

Money is not evil. It's a token of success in today's world. Wanting to make some money so you get the good things that go with it (like comfort and security) is a perfectly valid and admirable desire for anyone who's broke.

Of course, if all you ever want in life is money, then that's a different issue, but my guess is if you're still reading this article, that's not your problem.

A successful entrepreneur actively finds and uncovers opportunities for financial gain in the world around them. In order to find those, you need to be in the right mindset, and that mindset includes wanting to find these opportunities. If you've brainwashed yourself, or let others brainwash you, into not wanting money, you will not be a successful entrepreneur.

There will come a point in life where you have enough money, hopefully. At that point, you probably should start ventures that aren't about making money (though money-making businesses are a very robust way to change the world). However, that time is not when you're living off pot noodles and unable to afford a car.

In conclusion

Don't listen to people who tell you you shouldn't want to make money, that you should be "in the game" to change the world instead.

Until you've made enough money to at least be comfortable, you should be in the game to make money, explicitly, without any shame or hesitation about it.


Building a strong company trunk  

Here's an excellent article by Spencer Fry of of Carbonmade, about the importance of building out a very strong core capability before branching out into other domains.

Think Apple and Facebook — both launched with a single stripped down product — Apple's operating system (their hardware was just a delivery system) and Facebook's simple social networking: messaging and, more importantly, photo sharing. Both focused all their attention on building their trunk and then leveraged their core product to branch out.

Spencer also has some good advice for how to go about building this strong trunk: be patient, persistent, and focused.

Too many entrepreneurs think that they need to rush to become overnight successes or they'll never get there. They think it's a sprint and not a marathon. Carbonmade has been around for five years as of December, 2010. It took us three years to be able to work on it full-time, and then another year and a half before we were able to hire our first two employees. Carbonmade is only at 1% of what it'll be in five years. Patience, my friends.

Other than having patience, you need to build a stripped down, functional product that is focused on a special type of user, but at the same time something that can still be used by a more general audience. That way you aren't discouraging anyone from using it.

What's your company's trunk?

Don't build a swiss-army knife product  

Des Traynor on the Swiss Army Knife disease of design:

When you’re drawing the line around your software, make sure you’re not leaving in marginal utility features in an attempt to add more value. These little wannabe-features hang around unloved, bloating your app, hogging the UI and adding to maintenance costs.

So far so good. However, I'm not convinced by the two-dimensional evaluation graph that Des proposes to decide which features to build. By reducing features to two questions (who will use it and how often), it reminds me of the Pritchard method for evaluating poetry, discussed in Dead Poets Society (script), where poetry is also reduced to two dimensions: the perfection/form of the poem, and the importance of its subject.

Deciding which features to include is not quite as much of an Art as poetry, but it's still complex, multi-faceted, and can be fairly subtle.

As a simple counter-example, Woobius's commercial model means that only a small proportion of users (project managers and company owners) will want to use the account upgrade feature, and they will do so very rarely (probably just once during their lifetime as a customer). This would place the "upgrade" feature down in the bottom left corner of Des's graph - and yet upgrading is obviously an essential functionality if Woobius is to make money.

So, my suggestion is to use Des's model as one data point in evaluating feature, but not as the only one. Products are complex creatures.

Whatever works, works  

Here's a 2008 article by Paul Buchheit making several excellent points:

You can take the smartest, most experienced, most connected, most brilliant people in the world and have them build the most stunningly designed and technically advanced product in the world, but if people don't want it, then you will fail.

(...)

Even if you aren't the smartest person around, and your product is kind of ugly and broken, you can still be very successful, if you just build the right product.

Where "the right product" is a combination of your product idea, paying close attention to what the market is telling you, and having a market that's worth serving.

The key take-away is summarised near the end of the article:

So what's the right attitude? Humility. It doesn't matter how smart and successful and qualified you are, you simply don't know what you're doing. The good news is that nobody else does either, though some are foolish enough to think that they do (and that's why you can beat them).

What is the humble approach to product design? Pay attention. Notice which things are working and which aren't. Experiment and iterate. Question your assumptions. Remember that you are wrong about a lot of things. Watch for the signals. Lose your technical and design snobbery. Whatever works, works.

If you hadn't yet read this post when, go read it now.

What is a startup?

After my recent post about the startup escape path, a comment on HN complained complained about my overly narrow definition of the word "startup". This is kind of funny, because if anything, my definition of "startup" is much wider than the usual HN definition.

So, considering this site's title is "swombat.com on startups", let's explore this topic a bit. We'll start by covering some other people's definitions.

The naive definition

Before people get stuck into the tricky art of coming up with a scientific definition of what is a startup and what isn't, they have a simpler approach, dubbed "I know it when I see it".

By that definition, most people will agree (today, in late 2011) that Path, Instagram or Duedil are startups. They look, smell, behave like startups. Most people will also agree that IBM, Apple or Walmart are not startups.

The problem with this approach is it leaves an enormous grey area. Is 37signals a startup? Maybe, depending on your point of view. What about Twitter and Facebook? Probably. Google? Probably not. This is a grey area the size of the pacific ocean, if it fits companies all the way from FreeAgent to Twitter. In trying to resolve this grey area, people come up with all sorts of arbitrary distinctions, which just muddy things up.

"Startup" should have a relatively simple definition in one sentence. Especially "startup". Of all the words in the dictionary, this one certainly deserves a decent elevator pitch.

What about that dictionary?

The next possible solace is our good old friend the dictionary. No luck there, though. Most dictionaries (and spell-checkers) seem to regard "startup" as an alternate and possibly incorrect spelling of "start-up", and they have completely useless definitions like:

start-up [stahrt-uhp]

noun: the act or fact of starting something; a setting in motion.

Seems like startups literally need to throw away the dictionary. At least if they want a good definition.

The technological approach

"Startups are fresh, new, innovative companies trying to do cool stuff with technology."

This a common instinctive definition, trying to put the naive definition into words. It's terribly restrictive, however, and full of vague words that promote misunderstanding. Saying that startups are exclusively technological is missing the point, too. In many startups, the innovation may be supported by technology, but it's largely business innovation - and it's that innovation and the growth it brings which makes the business a startup, not the fact that it has a website built in Ruby on Rails. We can do better.

Startup America/Britain/etc

There have been a number of government-blessed efforts to promote "startups". However, their definition of "startup" tends to basically include any newly formed company. Whether you're creating a restaurant, a design consultancy, or the next Google, those guys think you're a startup.

I actually like this definition, because it's inclusive. It's arrogant to think that the only interesting new companies are high-tech disruptive startups, and much of the advice given to one group applies to the other as well. The skills for creating a successful brick-and-mortar business have a lot of overlap with those needed to create a successful online business.

The main problem with this over-inclusive definition seems to be the backlash it generates in the "traditional" startup community. When StartUp Britain launched, it faced a backlash. Soon after, I had a chat with Oli Barrett, one of the founders of StartUp Britain, and he confirmed that in his mind, "startups" included all sorts of non-technological businesses. The advice on sites like StartUp Britain is not geared towards startups as the average HN member understands them, but towards all new businesses.

People in tech circles feel, perhaps rightly, that this definition dilutes a word which they depend on. I agree that it's probably too expansive, though it does serve a purpose. Let's move on and look for another definition.

Steve Blank

Steve Blank has perhaps one of the best definitions for startups as the tech community understands them:

A startup is an organization formed to search for a repeatable and scalable business model.

This is a good one. I like it because it doesn't focus on the technological element. Instead, it highlights the uncertain nature of startups. When you create a restaurant, you're pretty certain what your business model will be. When you create a startup, though, you have to be open to the idea that it will turn out very differently from what you initially thought (if you're not open to that idea, you will usually fail).

What about Nokia? I've argued before that Nokia is a startup, but in serving the goal of finding a good definition, I'm willing to recant. What about BlackBerry? They're in a similar situation, but somehow they don't feel like a startup. Does facing similar challenges make them startups? Not really.

Of course, you could argue that Nokia doesn't count as a startup by Steve Blank's definition, because it wasn't formed to search for a business model. It found it already, and then lost it.

This word is the crux of my problem with this definition. What about organisations which weren't explicitly formed with the goal of finding new business models, but which stumbled on one anyway, and grabbed the opportunity to grow.

37Signals, for example, was not formed to search for new business models. It started its life as a consultancy, and then developed a product, which then took off and enabled them to drop the consultancy work and focus on product work. As far as we know, 37signals' explicit goal was never to find a new business model, and it certainly wasn't formed for that purpose. And yet I'd argue it's definitely a startup. It looks like a profitable, successful, growing startup, by my internal compass.

The swombat.com definition

I propose the following definition:

A startup is a business which has ambitions and plans to grow by a large factor (10x or more) over the next few (1-5) years.

Let's break it down.

A startup is a business: As much as people talk about social enterprise and other nifty and charitable concepts, I believe a startup is a business, not a charity. If your aim isn't to make money with it, it ain't a startup. This rules out the slew of "check out my new startup, it's a plugin for Firefox" efforts which, while perhaps very useful and worthwhile, are not startups, just pet projects. Note that making money via selling the business itself is a valid business model by this definition.

which has ambitions: Beyond the need for discovery of business models, I think startups are primarily about ambition. If you want to build a chain of restaurants to take over the UK in the next few years, in my book you deserve the moniker of "startup". Building something like this business involves a lot of ambition and uncertainty. Snog deserves to be called a "food startup".

and plans: This is important, because if you ask most small business owners whether they'd like to grow by a factor of 10 in the next 3 years, most will say yes (though many will say no). But if you ask them how they're going to do it, most don't have a plan, or any idea how to get there - in fact, they probably think (rightly) it's not possible. Even the most uncertain startup has some kind of idea how they'll get all that growth. "We're going to build something awesome and get VC investment" is a plan, albeit very Silicon-Valley-centric. If there are no plans (correct or false), just a general wish or hope, it's not a startup.

to grow by a large factor (10x or more): A lot of arguments about "what is a startup" focus on "lifestyle businesses", whose aim is to provide income for a handful of people at most, vs "scalable businesses", which aim to grow. I would argue that although Tim Ferriss's "muses" and other similar businesses are very interesting, fun and worthwhile, they're not startups, and the same is true for other, less scientific efforts to build a small business. With no intention to grow, those are simply cool small businesses. The ambition to grow much larger than you are today is a defining characteristic of startups.

over the next few (1-5) years: of course, that ambition needs a timescale. If your ambition has no timescale attached to it, it's probably not a real ambition, just a dream.

Applying the recipe

So, with that in mind, let's revisit some of our earlier candidates.

Is 37signals a startup? Based on bits of avaialble analysis, they seem to be growing their revenues by a factor of 2 or so every year, so in terms of actual growth they're within the 10x in 5 years. Was that their ambition? Yes, I think Jason Fried and DHH have had that ambition for quite some time. Their growth is definitely deliberate, and they probably were aiming even higher. So yes, 37signals is (or was) a startup. Whether they are one now would require knowing what their current ambitions are.

Are Twitter and Facebook startups? Maybe. They're still growing fast, and aiming to continue growing fast, to justify their lofty valuations. Certainly they were startups before. Their growth ambitions may still qualify them as startups.

Google? Google has grown nice and fast, but in 2005 their revenues were about $6b, and in 2011 it's looking like about $37b. I would say that Google long ago reached the scale where it's simply not possible to grow that fast anymore. The same is true for, say, Microsoft. At that scale, it's very hard to grow that fast. This rules out most mega-companies, like Nokia, HP or RIM, regardless of what uncertainties they may face.

What about GrantTree, my own productised service company? With the incredible insight I have into the mind of the founders of GrantTree (one of them is sitting in my chair right now!) I can tell you that our ambition is indeed to grow the company by about 20x in the next 5 years, and we have planned out how to achieve that, so I would call us a startup by the swombat.com definition.

I think this definition works relatively well for most situations - though you often require insight into the founders' minds to fully resolve it - but I welcome counter-examples. No doubt someone will post this on HN. If there are some good counterexamples there, I will link to them or discuss them in future posts.

Let me be the first to throw a spanner in the works, though. What about Apple?

Apple may not have done it in the 5 years timeframe, but their growth has been almost startup-like, from about $5b/year in 2003 to $50b/year in 2010 (and presumably even more in 2011) (source). Did they have the ambition to do this? You bet. Did they have plans? Assuredly.

I'll call Apple an outlier, and not a startup. Any definition is going to have some gap. I hope my definition has fewer gaps than others, but we'll see.

In summary

The swombat.com definition of "startup" is:

A startup is a business which has ambitions and plans to grow by a large factor (10x or more) over the next few (1-5) years.

Discuss. (on HN)

Updates: These have been added on 21st December, based on the comments on HN.

The Eric Ries definition

Eric's definition is at least as good as Steve Blank's (no surprise there, since Eric Ries was a student of Steve Blank. Here it is:

A startup is a human institution designed to deliver a new product or service under conditions of extreme uncertainty.

I have the same qualms with it as with Steve's definition: the "designed to" part. I think a lot of companies stumble on the startup model after having been designed for something else, and redesign themselves along the way. Many others are simply not designed, and just flailing around for a way to survive, and stumble on a way to organise themselves that will suit that objective (or fail to). Both of those categories deserve the name "startup".

I think Eric's definition largely exists to serve the needs of his excellent Lean Startup methodology - i.e. it is more an answer to "who will find the Lean Startup methodology useful?" than "what is a startup?". There's nothing wrong with that, but I prefer my pragmatic definition for those reasons.

The Paul Graham definition

Paul Graham's definition is harder to pin down. Although someone in HN kindly linked to this one

...essentially a startup is a new business designed for scale.

Here's another one:

Startups usually involve technology, so much so that the phrase "high-tech startup" is almost redundant. A startup is a small company that takes on a hard technical problem.

The first has the same problem as Eric and Steve's definitions. The second one, imho, was not a serious attempt at defining the generic term "startup", and so should not be criticised too harshly, but limiting startups to hard technical problems seems unfair.

I'd love to hear (and add) a considered definition by Paul Graham, though.

Many other definitions

Daniel B Markham:

Scaling is the key here. Startups are able to scale, whether at 5x, 10x, or 20x really doesn't matter. The point is that they can scale much faster than other types of businesses. This usually involves technology and automation, but not necessarily.

That's close to my definition, but with a wider range of scaling factors. I guess this definition would include Apple as a startup. I think it misses the "has the ambition" part too.

balajiviswanath:

A startup is a 1-5 year old company that has a potential to grow up its enterprise value by 50X within the next 5 years and has a business that can scale up quite easily.

I've discussed the problems with focusing on the age of the company already. Any company that can realistically aim to grow 10x in less than 5 years can become a startup.

jot questions the "grow by 10x" part:

I'm not sure this part works: "to grow by a large factor (10x or more)".

Most businesses I come across that describe themselves as startups and fit the rest of the definition, haven't yet got themselves to a point where a 10x improvement over the next year would make them that significant. I'm specifically thinking of participants in accelerator programes like YC, TechStars, Start-Up Chile and SeedCamp.

Actually, I'd argue that those companies have a non-zero value already. YC typically takes 6% for $15k, or thereabouts, valuing the company at $250k. Pretty much every company YC takes on has the ambition to grow that by 10x in the next six months, let alone the next 5 years, which is why they do qualify as startups.

I like gghootch's take on it:

A startup is a business which aims to repeatedly grow by a large factor (5x or more) in the first few (1-5) years.

This does seem to improve on my definition, though again, why the focus on the "first few years"? Tweaked to say the "next few years", it seems like a great definition.

A point by TamDenholm:

My personal definition of a startup is a company that is not yet a business. Which then brings up the definition of business. To me a business is a company that produces a stable profit, maybe 6-12 months profit.

Personally i think calling very well established businesses like 37signals a startup is quite insulting, as to me, its saying they're not successful, which they clearly are.

"A company that is not yet a business" seems too inclusive. Most home businesses are not really businesses - are they startups? I don't think so. Also, by this definition, RIM is a startup, since it's not profitable right now. As for 37signals being offended by the "startup" label, I don't see where in my definition of "startup" it suggests lack of success.

A question from thesash:

The key differentiator addressed by both Steve Blank and Eric Ries in their definitions, is that a startup is innovating. A company taking an existing, proven business model and attempting to build a business based on it (whether in the tech space or elsewhere), does not qualify as a startup, even if it is aiming for hyper growth.

By this definition, none of the SaaS startups out there qualify, since their business model is largely proven. I disagree with that.

And finally, a question from billpatrianakos:

Wouldn't you also agree that a true startup needs to have the requirements you listed but at the same time start from zero. Companies that just start out, have the growth you talk about in the time frame you talk about would definitely be startups. Companies that have been around for a while and suddenly have explosive growth and hit the other requirements only resemble startups.

No, I think a company could be plodding along for years or decades (for example as a consulting company) and then decide to try out something new. The age of the company is, imho, as irrelevant as the original intent of the company. What matters is their current ambition.


Hiring well is hard  

Paul O'Connell documents his startup's hiring journey, first figuring out why anyone could possibly want to work with them, and then going through many phases:

  1. Talking to their network
  2. Talking to groups, communities and meetups
  3. Talking with students
  4. Talking to recruitment agencies
  5. Looking at offshore options
  6. Pushing the recruitment drive online

They finally arrive at the apparently disappointing conclusion:

There aren’t really alot of conclusions to be made from such a fluid process like this apart from Europe has a shortage of talent. Finding more innovative ways of attracting the hot resources that are developers and making the company somewhere you love to work at is definitely a must, this is a startup, so culture is everything!

While we haven’t found the right ‘first employee’ fit yet we do recognise that as long as we continue the drive for another member of our team, it will happen when it needs to happen. Things happen not when you want them but when you need them. So our journey continues. Wish us luck.

But I think that's much better than settling for 'ok'. "Ok" is a terrible idea when it comes to your first few hires.

Motivation

One thought from my own experience: what will motivate someone to work with you on your early startup is typically your vision and drive made tangible. If you don't have a concrete plan that sounds like what they want to do, they probably won't be motivated. "Come join us, we have no idea what we're doing!" is not a convincing pitch. Would you work for a company that doesn't really have a clear direction or business?

One is reminded of the parable of the three stone-cutters:

A traveller in the middle ages happened upon a building site. Curious, he asked one stonecutter what he was doing.

The man replied curtly, "I am cutting a stone," and went on cutting his stone.

The traveller approached a second stonecutter and asked the same question.

"See there, this line? I am building a wall there," the second one replied.

Finally, the traveller asked a third stonecutter. The third man stopped what he was doing, and looked at the traveller with tears in his eyes, and said: "I am building a cathedral!"

If you don't have a clear vision and plans for a cathedral, you may struggle to attract any great startup employees (though it might still happen by luck).

How to find a technical cofounder  

Jeffrey Talajic discusses how to find a technical cofounder. In short, go to the relevant networking events, talk to people, discuss your project, let them self-select, and bring them on slowly while testing out the relationship. Oh, and be picky about who you select.

Decent advice, apart from one thing: I believe that if you've started your business already, it's probably too late to find a technical cofounder for this one (though you can find a good CTO-for-hire). But you can find a tech cofounder for your next business.

You shouldn't start a business with someone you've just met. Let the relationship evolve, grow, and solidify, and then consider starting a business with them.

Creating a great case study  

Some very practical tips, posted by Kristi Hines on the KissMetrics blog:

  1. Write About Someone Your Ideal Customer Can Relate To
  2. Tell the Story from Start to Finish
  3. Provide Easy to Read Formatting
  4. Include Real Numbers
  5. Talk Specific Strategy
  6. Try Different Formats
  7. Appeal to Different Types of Learners
  8. Make Them Easy to Find

Keep bookmarked, and go through the list next time you're putting together a case study page.

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