daily articles for founders

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

Aim for a lifestyle, not a jackpot  

This great Mixergy Interview has sparked an interesting discussion on Hacker News about what startup founders should aim for. Says Patrick McKenzie (aka patio11):

I swing more to lifestyles than jackpots, but a successful (for any definition of "successful") lifestyle business is a great place to try conquering the world from. A recurring theme for folks trying to shoot the moon is how much time fundraising takes up and how conflicts with investors can drive you under. If the rent is covered and salaries are already in the bank, you have a great fallback position. (BATNA is "We go back to where we were before we knew you. Oh, shucks, successful business." versus "We fail to make payroll and the bank repossesses my liver.")

I was having a chat with a serial founder friend this morning, and he made a similar point:

What founders are usually looking to get out of their business, financially, isn't a billion dollars, but simply a significant improvement to their lifestyle.

So, if you're a student fresh out of uni and your online business can allow you to double your yearly budget, that's probably good enough for you (for now). And a business that does that shouldn't be all that hard to build for a student with vast swathes of free time...

If you like this Mixergy talk, see also this classic talk by DHH at Startup School 2008.

Questions asked at YC interviews  

Kevin Gao shares what he believes are key questions asked by the YCombinator team during interviews, with do's and don'ts:

  1. How did you come up with the idea?
  2. How big do you think your market is?
  3. What have you already accomplished?
  4. What is the equity split among your team?
  5. Are you going to work on your startup even if we don't fund you?

Even more interesting than this post (which unfortunately lacks any mention of whether Kevin has been through any YC interviews or has spoken with many alumni) are the comments by Paul Graham himself on the HN thread:

These are all things we care about, but they are probably not the most common questions we ask. E.g. we already know about the equity split because we ask about it on the application form, so we only bring it up during the interview if we noticed something odd about it.

The thing we care most about in interviews (at least of things one can change) is how engaged the founders are with users. How do they know people actually want what they're building? Have they talked to real, live users? What have they learned from them?

We don't care super much how big the initial market is, so long as the startup is making something that (a) some subset of people want a lot, and (b) if that market is not itself huge, there is an easy path into bigger neighboring ones. Basically, we're looking for startups building Altair Basic.

The whole thread is worth reading if you're interviewing at YC, or, in fact, any other incubator (and probably most savvy angels will ask similar questions).

Even if you have no intention to raise funding, some of these points (e.g. how you're building engagement with users) are worth thinking about for yourself.

All content is marketing  

Yet another great article by Des Traynor. This one makes the obvious-once-you've-said it but rather subtle point that all content that you produce is marketing.

The phrase "Content Marketing" describes marketing by attracting potential customers with content that interests them. All content should have that goal however, not just the stuff produced by the "content marketing" project. Blogging, eBooks, and webinars are universally regarded as marketing materials, but other equally important content like FAQs, Docs, Press Releases, Welcome messages, etc. sometimes fall into some other bucket of "Content That Does No Marketingâ„¢".

Bullshit. It's all marketing when you're doing it right.

Des goes on to offer some solid tips for getting your content to be just right so that it does market your product or service. Read more here.

Lumosity spiked active users through complexity, not simplicity  

Sushmita Subramanian - director of product design at Luminosty - finally has some data which support a novel UX pattern:

When Lumosity launched in 2007 to help people strengthen their brains with mental games, it exercised a common theory: The easier your sign-up process, the more users you'll bring in, the faster you'll grow. And for the most part, they were right. But what happened next surprised them: As they made registration more complex, users actually became more valuable.

By adding friction to the on-boarding process, people who complete the registration flow are likely to be aligned with Luminosity's target customer. The flow not only collects data from the user, but educates them how the product is valuable to them. If they don't make it through, they probably didn't want it. It's auto-segmentation.

How to hack the beliefs that are holding you back

We all have beliefs that are holding us back. Sometimes we're aware of them, sometimes not.

One entrepreneur I know, who shall remain nameless, admitted (after quite a lot of wine) that he has a block around sending invoices. He was perhaps exaggerating when he said that before he could send an invoice he had to down a bottle of wine and get drunk so he could hit the send button, but even so, it was clear that he had a serious block around asking people to pay him.

As an entrepreneur, that's obviously a deadly flaw. In terms of "holding you back", struggling to ask people for money for work that you've done is like wearing blocks of cement as boots. It won't just slow you down, it will probably stop you dead in your tracks.

Myself, I have - or used to have - similar blocks. Generally, many geeks early in their entrepreneurial career tend to have a general dislike of things like marketing and sales, that, in my opinion, often are rooted not only in fear of an unknown activity, but also in beliefs about money. For example, I used to believe (subconsciously) that money was bad. I would spend money as quickly as (or more quickly than) I earned it. If your first thought when you're given £10,000 is how to spend it (rather than how it adds to your wealth), you probably have a similar belief that money is something to be gotten rid of, to push away - that's not a belief that's conducive to making money and becoming comfortably well off, because you have to have a saving, wealth-building mindset for that.

Another would-be entrepreneur I spoke to recently was afraid to quit his job. He hated the work passionately. His wife supported his decision to quit, and he was fairly confident that he'd find something else (he had previously been a successful freelance developer), and yet he couldn't bring himself to actually quit, because he couldn't quite make the leap to believe in himself, even though he knew he should. Despite the evidence and arguments being stacked in favour of quitting, he felt he couldn't.

Now, perhaps the beliefs holding you back are of a different nature, but even if the "money thing" or the "quitting thing" don't apply to you, don't disregard this article. Chances are there are other beliefs rooted deep inside you that are holding you back, even if they have nothing to do with money.

So, if you're aware of such a belief and want to "fix" it, what can you do to hack your brain?

Having gone through the process, here are the handful of techniques I've found that really help in a tangible way.

1. Self-affirmations

This feels really cheesy and weird when you start doing it, but it's probably the most effective in the list. Many of the beliefs that we might want to get rid of manifest themselves as "internal monologue" - they're things that your subconscious is telling your conscious throughout the day.

For example, some people have an internal monologue that constantly repeats "you're a failure" to them. By repeating it over and over again, the message becomes true. Some people precondition themselves to fail - they draw the failure to them by accepting this message over and over during the day.

Self-affirmations hack around this by overriding the negative message with a positive one. The way that it's worked for me is:

  1. Craft a brief, positive message (phrase it in positive terms) that overrides the internal message that's bothering you. For example, if "you're a failure" is the message that's bothering you, a positive override might be "I will succeed in many things that make a difference." It doesn't need to be exactly true, but it needs to be something you can stand by, that you can believe in, however briefly.
  2. Write this message on a post-it note or a piece of cardboard, and stick it on your mirror - the one that you dress yourself in front of every morning.
  3. Every morning (and as many times during the day as you can), stand in front of your mirror and, looking yourself straight in the eyes, repeat, loudly, with all the confidence you can muster in your voice, "I will succeed in many things that make a difference" (or whatever the affirmation is). Repeat it 10 times. Repeat it 50 times. However many times you can.

Three things will happen from this. First, you will feel very silly. That's ok, don't worry about it. It won't pass (you'll still feel silly the 20th time you do this), but it really doesn't matter. The second thing is, you'll feel a good buzz. I haven't quite figured out why that happens. I guess it's a sense that you're taking things into your own hands, taking action. That feels good.

Most importantly, over time (surprisingly quickly), the internal message in your head will change. As it changes, you will feel the need for the affirmations lessen. Obviously, if the message you're overriding is deeply ingrained, it will take longer, but for me, typically, I haven't needed to do this for more than a few weeks at most before the new message had sunk in.

This is an extremely effective method. You can also do variants of this, like recording a video or audio for yourself, or writing it out by hand fifty times, but in my experience, speaking to yourself while looking into your own eyes is brutally effective.

2. Brainwashing yourself

When you read stuff and you don't take notes, you're effectively just brainwashing yourself. Most people read whatever comes their way, or whatever they feel like, without much care in the selection, but you can choose what you brainwash yourself with.

If you know that you have, for example, a problem with pushing away money, then there are books that repeat the opposite message over and over again. If you spend a few weeks reading a bunch of those books, chances are you'll come out the other end with an altered outlook. In my experience, it doesn't stick as much as self-affirmation, so if you do this you'll probably want to find a steady source of relevant books so you can keep re-brainwashing yourself until it really sticks.

You don't have to stick to books. Videos, podcasts, blogs, or even meetups can achieve the same thing. The key is to keep exposing yourself to information that contradicts the belief you're trying to get rid of.

Of course, you can use this in conjunction with self-affirmation to enhance the effect.

3. Who you hang out with

Another strong influence on your internal message is, sadly, who you hang out with. People have certain expectations and perceptions of you, and it's very hard to shake them off if they are one of the sources of the negative messages you're struggling with.

Obviously, if your parents or your friends constantly tell you you're a failure, that's going to work just as well as positive self-affirmations in convincing you that you are indeed a failure. If they expect you to fail, and you spend a lot of time with them, you will probably fail.

This is a tricky one, since these sources of negative influence are often not deliberate. Your parents or friends probably don't want you to fail or be poor or whatever, and if confronted, they'll almost certainly agree to change their ways - but they won't. Changing habits is very, very hard, and if people have got into the habit of perceiving you in a certain way, the change of perception has to come from you.

Sadly, I think the only thing that can be done there is to spend less time with people who project their negative perceptions on you, at least until you've properly dealt with the negative message so that it's no longer holding you back. But even then, be aware that exposing yourself to that external, repeated message again could bring it back.

4. Digging to the root

Finally, one last technique which also helps, especially when combined with all the others, is to truly examine your beliefs, and figure out where they come from, how they grew in you over time, what role they've played in your life, etc.

Now, I'm fully aware that our memory of these sorts of things is often very hazy, and most likely the "explanation" or "history" that you come up with will be, in many ways, a fabrication. But despite that, this somehow still works.

For example, through this type of introspection, I realised that my lack of interest in accumulating money was something that had been with me since childhood, that had been encouraged by my parents, and that was one of the components of why I'm generally a "happy person". Through this insight, I also realised that one of the reasons why I found it hard to bring myself to care about money was that I associated caring about money, and accumulating it, with unhappiness. The belief there was not so much that "money is bad", but that "people who care about making money are unhappy, sharks, obsessive people who live empty lives".

Once I discovered this reasoning in my subconscious, I was able to target it directly with self-affirmations like "I want to make more money so that I can do more good" - which replace the link between money and unhappiness with one between money and capacity to do good.


These techniques may not work at all for you. Or you may think that they're hocus pocus. However, they worked for me and have helped me, and I've discussed them with enough people to come to the conclusion that many people don't know or haven't thought about these types of tools, and most people are not using them. Some of them (e.g. self-affirmations) are standard tools that therapists use to help people, so there's some validation for these things working in a wide range of cases.

The main thing holding you back from achieving what you want is often yourself. These tools give you a means to fix that. If they don't work for you, you won't have lost anything, except perhaps for the terrible experience of feeling mildly silly while talking to yourself in front of a mirror.

If they do work, then you can gain a lot - specifically, you can give yourself the ability to achieve what you want in life. That's pretty valuable, I reckon.

Good luck with it all!

Cheapium instead of Freemium  

Under the moniker "cheapium", Jared Brown proposes a simple and useful idea:

Freemium is the most popular business model among web startups and it's broken. Freemium is a money burning business model (...)

Cheapium works by offering basic features for a nominal cost, usually a dollar or less, while charging a premium for advanced features. This can be in the form of a one-time or recurring fee. Cheapium creates a low, but not trivial, barrier to entry. All users in the system are paying. It might sound like a small difference but this has several advantages over freemium.

It's a very good point. As Jared points out later, price is not just a signal, but also a selector. The people who are willing to pay even $1 for your app are often a different set of people from those who are willing to pay nothing.

Case in point (as anecdotal as it might be), when browsing the App Store, I tend to look mostly for paying apps. I'm willing to pay for the right app and unwilling to spend my time on an app that probably isn't right for me.

Be sure to read through the whole article for Jared's other thoughts.

Setting up your accounting system  

Brad Feld:

To be successful, you need to know about a wide range of issues affecting your business. However, you do not have to become an expert on each and the degree to which you need to understand various issues evolves along with your business. It is easy to get caught up in all the administrivia of of forming a company, building a business plan, and developing financial forecasts that you fail to spend time building your product.

On my first two startups, being the technology cofounder, I didn't care about the accounting system, what transactions were going through, how they were classified, what the tax implications were...

I started a consulting company to handle some of the work that was coming my way, and even there, I thought that deeply understanding the accounting was below me.

That was a mistake (and in the case of the consulting company, it cost me cold, hard cash).

On GrantTree, I've made sure to be entirely on top of the accounts, to know every transaction, how it should be classified, how it will be taxed, etc. I supported this without hesitation by investing in a product like FreeAgent (note: this link includes a referral code; this one doesn't...) to make it a bearable and organised task.

As Brad states in this article, it's important not to get bogged down in things that don't matter (e.g. spending a week creating a spreadsheet model of your finances instead of selling or building the product). But the basic accounting stuff is the beating pulse of your company. Having a firm grip on that is, in my opinion, essential.

You can't even delegate that to an accountant. Make sure you understand at least the basics yourself. Otherwise, it's not really your business.

Faking initial user interest  

This very interesting article from a couple of months ago comes via this almost equally interesting "AMA" ("Ask Me Anything") post on Reddit, about how to build a social entertainment website.

The key point is that some businesses need to solve a chicken-and-egg problem of getting significant numbers of users before more users will join. One solution to this, which sites like Reddit or the new darling Quora have used, is to fake the initial activity, to present a higher level than would otherwise be apparent.

Of course, this doesn't mean put up false testimonials ("Great app; use daily! - Barack Obama), create fake real-time activity (extremely easy to spot), and fake your numbers (though I know plenty of startups that do, and it works).

Rather, you can engineer your appearance to give off a sense of size.

Worth a quick read.

Positioning and differentiation  

Mikko Järvenpää, marketing geek, on positioning and differentiation:

Differentiation and positioning are strongly related. Differentiation is what makes you unique, it is your edge, how you differ (obviously). You can differentiate based on your technology, your experience, your niche market or your location. Features, benefits, quality, distribution can all be sources of differentiation. While it can be obvious to you how you are different from others, you still need to communicate your difference in order for it to work.

And how do you make it work? You need to position your difference in the mind of your target user or customer. This is a fancy way of saying that whoever you are marketing to must understand and remember your differentiation. And this the crux of the matter.

Excellent stuff, read the whole thing here. Here's another gem, in case you're not convinced yet:

Positioning can be explained in terms of psychology. We think in terms of representation. What is that person or company about? This is the most important thing in any elevator pitch. It has to stick. You want the person hearing it being able to recite it exactly the next day, regardless of how many they'd heard.

Three modern organisational structures  

I found this gem by Aaron Dignan linked via this previous article. While the general theme is around "what to do with a 10,000 person stagnant organisation" (and it offers some concrete advice towards that), the really interesting part is the overview of three modern ways to structure a business, namely:

  • Holacracy (Medium, Zappos): "authority should be distributed, everyone should be able to sense and process (solve) the tensions (ideas/problems) they perceive, roles and employees are not one-to-one, and that the organization can and should evolve toward its "requisite structure" (the ultimate structure for its current environment)"
  • Agile squads (Spotify): "Instead of an engineering department, a design department, and a marketing department that each collaborate on products with dubious ownership, they organize vertically around products (or more specifically pieces of products) and traditional disciplines are loosely held horizontally."
  • Self-organising (Valve, Github): "Unlike the examples above, they accomplish this by essentially having no structure. Employees are encouraged to work on whatever they want-to find the projects that engage them and do the best work of their lives."

GrantTree is somewhere in between Holacracy and Self-organising - but I'd never heard those terms before today, so perhaps that's the case for many people who will read this article.

Agile Squads is the only one that doesn't seem all that new - cross-functional teams are hardly ground-breaking - but perhaps the meat of the newness is somewhere else than in the cross-functional element.

Key quote:

The defining characteristics of these models are fairly straightforward. They aim to distribute authority and autonomy to individuals and teams. They let the changing nature of the work (expansion/contraction/shifting) impact the structure of roles and teams in a fluid way.

I firmly believe that if you're starting a business in today's ever-changing environment and not making any effort to make the business more adaptable to rapid change ("anti-fragile", as the article calls it), you're setting up your business for failure a few years down the line. Getting big won't protect you, either. See Blackberry as a warning.