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daily articles for founders

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

Silence  

From my father's blog on wisdom:

If you have a gift with words, learn to keep your mouth shut; when you speak, punctuate with pause; and when you have nothing to say, say nothing.

(...)

Your silence passes many messages; one is that you are somebody, not nobody, a person able to face a crowd and to wait. This is an almost biological power of the big secure animal looking at harmless ones. People understand or better said they feel. After this, you have a better chance to be listened to.

Silence has tremendous applications in the business world too, of course.

For me, the "aha" moment about silence came when I was working on my first startup, while still working full time as a consultant in Accenture. I was sleeping about 4 hours a night for 9 months, and so I was constantly tired. At the time I was managing a small team of people who often did not get along. So, every once in a while, I would have to set up meetings with me and two other people to resolve their conflict and keep the project moving forward.

Because I was so tired, I spent most of my time in the meetings quiet, minimising even physical movement. I would sit and listen and let the meeting go its way until I came to a moment where I felt that if I did not say something - the right thing - just at that moment, with just the right body language to support it, things would go wrong sooner or later and I would have to pay with even more tiresome activity.

I wasn't scared of being "found out" for doing the bare minimum in meetings. I was starting my first business and I believed I would be out of the corporate world soon (and I was). But I noticed something very strange. Because I talked so rarely, every time I spoke, people stopped talking and took the time to listen to me. By doing much, much less, I had somehow given the little that I did do a lot more weight.

Since then, I've used silence in many other contexts. It can be a very useful tool for sales, for example: when you're trying to close a sale, at one point you need to state your pitch, with the price, and then just shut up. If you keep talking, you will only distract the customer from evaluating the pitch and coming to a decision.

In person-to-person conversations, few people can stand a prolonged silence, particularly when it follows a certain kind of statement. "I don't know what I can do to solve X," followed by silence, will often pull suggestions for solving X out of someone who would not have volunteered them for "how should I solve X?"

Learn to use silence. It is a powerful tool in many contexts.

How to choose a cofounder  

Excellent article by Elad Gil, outlining many points that are worth thinking about before deciding to work with someone. As I've mentioned in an earlier article, starting up with someone else can be fraught with peril, particularly if they're a friend. Together with my article, this checklist of questions could save you a lot of pain.

Here are the high-level points, but please read the full article to get the substance:

Key criteria for selecting a cofounder:

  1. Ability to communicate with each other. Can you have an honest and frank conversation with your cofounder?
  2. Alignment on key questions. What are their objectives? Why a startup? What do they care about in company culture? Who do they want to hire? How do they view investors? How ethical are they? What is your role versus theirs?

Elad also points out that you should be clear about who's in charge, or else your disagreements will freeze the company, that you should avoid starting up with someone with strongly overlapping skills, and that it's a big bonus to have known them for a few years and even worked together before.

How Andrew Plotkin raised $24k on Kickstarter  

A surprisingly informative article, for CNN, by Andrew Plotkin describing how he raised $24k via Kickstarter. He proposes some tips to access this innovative way of raising funds (and not losing equity features in the process):

  • Say up front what you want to do with the money
  • Have a great video
  • Break down your audience into key groups and be sure to give them all something to satisfy them
  • For a game project, include a demo
  • Don't be afraid to plug yourself and your CV
  • Don't be a jerk - actively. Say thank you to everybody, early and often.

He also actively promoted his project by contacting interactive-fiction-related publications and getting them to help.

In short, raising via Kickstarter will take a lot of effort if you want to succeed, much like any other fundraising method. If you can raise via Kickstarter rather than traditional funding routes (or if traditional funding routes are closed to you), it's certainly worth considering.

Don't reinvent management  

Interesting article by William Mougayar, looking at some obvious mistakes that people can make when scaling up a startup's team, namely by trying to reinvent the wheel of management:

What troubles me sometimes is seeing startups that re-invent tried and true management principles, or misinterpret them, or even ignore them, for a lack of interest in researching or learning the prior knowledge that already would have served to solve the issues they face.

This is a very good point. Many startups started by developers try to throw the whole of what they call "management" out the window. But the reality is that a startup is a human organisation, even at a small size, and it needs management like any other kind of human organisation. Don't accept any management tools as gospel, but be knowledgeable about what's out there, and pick and choose bits that suit your startup and context.

William makes a number of worthwhile points and links to a number of further insightful articles. Here's one that stands out for me, though:

Each startup CEO who has scaled their company ends up developing their own style or management framework.

As MD of a growing company, I am hoovering up information from every possible source - but it is abundantly clear that the GrantTree way, while taking its cues from many sources, will be fairly unique.

I'm beginning to think that this is a characteristic of interesting businesses: they're unique, different, in the specific combination of features they present, whereas most businesses are similarly uninspiring and unpleasant places to work, mostly in similar ways, all doing more or less the same things.

This is an interesting reversal of the Anna Karenina principle.

Your product is not the product  

Ash Maurya, entrepreneur and author of Running Lean, makes the point that your business model is the product that you're building, and follows with a systematic method for developing a business model.

More than just a method, which may or may not work for you today, there's a deep insight at the end of this article:

As entrepreneurs we view the world with a strong solution bias. Once we acknowledge that the solution is not the whole product and that we don't need to pretend to believe our made up answers, we shift from pitching to learning - from other people.

I believe the true benefit of creating a business model/plan is only realized when it facilitates learning from other people.

The things that are most likely to kill your startup are not the things you include in your business plan/model. They're the things you entirely forget to account for because you don't even realise they will be a problem.

Using your business plan or model as a source of ideas to discuss with more experienced entrepreneurs sounds like a great idea.

Quick and dirty application of Hypothesis Driven Development  

John Wedgwood published this piece proposing a quick and dirty application of Hypothesis Driven Development:

  • Meet weekly (or more often if you can manage it)
  • Identify the single most important question facing the business
  • Break it down into parts that feel answerable
  • Figure out how you can get answers (or partial answers) quickly
  • Get those answers before your next meeting, then repeat

A key point he notes is that most of the answers did not need any coding or product development. That is true in my experience too, though it can be, for some reason, a counter-intuitive pill to swallow for someone with a builder mindset.

Why code something we won't end up wanting? It would take longer, and we can make phone calls today.

Using advisors to raise money  

Very interesting article by VC Nic Brisbourne, examining the usefulness of advisors in raising startup money. Some interesting numbers:

Advisors are typically small partnerships, or individuals, who help startups raise money from venture capitalists. They usually charge some form of retainer, and then a success fee of a percentage of funds raised and perhaps some options. Retainers normally range from £5,000 to £10,000 a month, the percentage of funds raised between three and five per cent, and options up to 0.5 per cent of the business.

These retainers sound expensive, but, as Nic later points out, if using an advisor is right for you, and you're dealing with an experienced advisor with a close-to-100% success rate, this can certainly be worth the money.

Nic also advises startups who are considering this route not to bother with unknown advisors:

If you are going to use an advisor, then for heaven's sake go for one who is well respected, well known, and has a wide network. Otherwise you might as well email the VCs yourself.

More in the article.

Startup failure and startup mediocrity  

Dharmesh Shah:

One of the great things about software startups today is that it's very possible to reach "ramen profitability". That's also one of the bad things. Once you get to "ramen profitability", running out of cash is no longer a way to know that you should be starting afresh and trying something new. You can run a startup like that indefinitely — and many entrepreneurs will do just that, instead of building the next Dropbox and becoming legendary.

I'm of the opinion that people who are really driven to build great companies will use their "mediocre" companies as springboards to bigger and better things, and only those who don't care so much about how big their company is will remain "stuck in a dead end statup", so to speak (and they will be happy about it, because they will get their sense of fulfilment from somewhere else).

Building a startup that pays your salary and enables you to spend your time on whatever you want is no mean feat. Of course, if instead you build a startup that sucks all your time and energy in exchange for a meagre amount of money and success, then that's not a great deal, but then, surely, people stuck in this situation will not be any happier with it than they would be with a job that provided the same results, and they will act accordingly.

Count me firmly on the side that's very pleased that it's cheaper than ever to build a profitable startup.

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.

I don't know  

Mark Suster:

She reminded us that in the world we live in we are often expected to be experts. We are expected to know everything and many people rush to conclusions given a limited set of information.

(...)

Learning comes from starting with a point-of-view that says, "I don't know." I said I learned this 15 years ago because that is when I stopped being a consultant.

Mark explains how the "here's an answer/solution" posture can hurt your business and your investments. This is an essential lesson for all founders, particularly since we are frequently thrown into situations where posturing seems to be the right choice (even if it's not), so it's easy to fall into the trap of thinking that it's always the right choice!

Worth reading if only for the Jewish story at the beginning.

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