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daily articles for founders

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

Meetup's "bet-the-company" moment  

Great, if lengthy, post by Scott Heiferman on the 37signals blog, looking back at the evolution of Meetup, particularly around the critical point where Meetup started charging meeting organisers.

According to Heiferman, the site lost around 95% of its activity. "Now imagine you're the hot startup - people forget we were the hot thing that was on 60 Minutes - and all of a sudden, in a flash, you see 95% of your activity go away. I mean, that's the backlash in its most visceral form. It was like, ‘Oh, man what did you do? What do we do?' We never really wavered seriously, but it's a punch in the gut. It's saying, ‘We were touching this many lives and now we're touching not many lives, and oh, everyone hates us.'

Sticking through this kind of drop in activity takes some balls. And the right metrics:

"[Before, p]eople would be sitting in their underwear starting a Meetup about something. And then 99% of the Meetups weren't any good. They weren't successful. They didn't have enough oomph put into them. The organizer wasn't in to it."

(...)

"Yeah, we lost 95% of our activity but now we have much, much, more going on than we ever did before and half the Meetups are successful, as opposed to 1-2% being successful."

Price is a quality filter. And, as an added bonus, it pays the bills. Starting to charge when your product has previously been free is a hard decision, and can cost you a lot of users or generate great outrage if you mishandle it, but sometimes it can be exactly what you need.

Startup jobs  

Here's a very lengthy, but well thought through article by Michael O. Church advising people who think that working at a startup is their key to wealth or startup success.

I won't attempt to summarise it, and in fact I won't recommend reading the whole thing unless you are one of those naive people who think that working for a startup is going to be your path to riches (if you think that, then do read the article from beginning to end).

If you're reading this blog, though, you probably know that the only way to get there is to start your own startup, and that any job that you may take on the way is just a stepping stone, and that you don't expect to get any more out of it than what's actually paid out, and so on.

Cold calling versus AdWords  

Here's a great article by Robert Graham, where he explains how he developed a cold-calling approach to generate early leads and enable himself to figure out what his intended customers wanted.

Robert takes us through the evolution of his cold call pitch, culminating with a win-win approach that worked out for him:

Sure enough, each and every prospect, skeptical or not, I used this pitch on agreed to have me out. I booked a week of appointments in a handful of calls. I was so successful, I was forced to start telling people I would contact them the following month to set a date. I had too many appointments and too many blog posts to write. Making the pitch a true win for both of us was the magic that generated the 100% conversion to the next step, but each small piece of experience and learning contributed to that success. I learned a lot about my business from each visit. I didn't close 100% to sales, but those relationships have yielded a lot more than a simple close. Many people have contacted me weeks or months after our first conversation and ask if I'm still solving the problems we talked about.

It's worth noting that this specific approach won't necessarily work for all industries. For example, it would be disingenuous for GrantTree to start posting reviews of tech companies and use that as a bait to get companies talking to us. That being said, looking for a genuine win-win is a great idea.

Read the whole article here.

What's the use of stories that aren't even true?

In Salman Rushdie's excellent book Haroun and the Sea of Stories, there's a striking scene near the beginning where Haroun, the child of a famous storyteller, confronts his father by repeating a line that was previously parroted by a narrow-minded neighbour:

What's the use of stories that aren't even true?

Oh boy. What a scene. The question is a slap in the face of his father, of course, and Haroun spends much of the story (which I gather might be imagined rather than true) making up for this mistake, through fantastic adventures in a universe where two factions are at war: those who tell stories, and those who want all stories to end and silence to reign.

So, what's the use?

When it comes to the great written works of humanity, almost all of them are fictional. Whether you look deep into the past, to Gilgamesh, the Mahabharata or the Romance of the Three Kingdoms, or in the less distant past, to authors such as Herman Hesse, Gabriel Garcia Marques, Tolstoi, Dickens, Victor Hugo, and so on (the list is not endless, but is long), fiction dominates any sensible list of the Greatest Written Works of Humanity. Here or there, a work of non-fiction might peep in and even claim a rightful place, but few seem capable of comparison with the "stories that aren't even true" when it comes to telling eternal Truths.

For this is where fiction is so much better: at the telling not of factual truths that anyone can observe, but of greater Truths about life, about what it means, what it's about, how to live it, how to enjoy it and be happy and find a purpose. To observe these Truths, one needs very good eyes indeed, and telling them directly is almost impossible. Instead, a great author must tell a story that illustrates the Truth that they experienced and observed. If they do it extremely well, it becomes a kind of distilled life experience that the reader assimilates and which changes their understanding of life in subtle and important ways.

If you're looking for truth, then non-fiction is great. If you're looking for Truth, however, you have to look into stories that may not be true but are True.

Startup stories

Which brings me nicely to the subject of startup stories. In my writings on swombat.com, I've endeavoured to always be factually true when telling a story. I don't make things up. However, I am also a lover of fiction and, as argued above, I feel there can be more Truth worth telling in fiction than in fact.

So, this is a thought that I'm struggling with, as far as writing for swombat.com goes. Does fiction have a place in business writing?

Experience is very valuable in business, where many crucial decisions are made on hunches, based on incomplete data, and good fiction is very good at distilling experience that normally might take a lifetime to accumulate, and transmitting it in a few hours.

Clearly fiction is not the appropriate mode of writing for all startup advice. A "how to use LinkedIn" written as a suspense novel would most likely be a terrible idea (though rather original), but it seems to me there are many other valuable lessons of business that could be better illustrated by fictional stories than by factual articles. Those are the ones that you might capitalise as Lessons as opposed to lowercase lessons (I do like to play with capitalisation).

I'm very keen to hear what other people have to say about this. Please do let me know your thoughts - by replying to this if you've received this article by email, by emailing me directly, or by posting comments on Hacker News if this does get on HN (Update: here it is).

Some obvious disclaimers:

  • Fictional stories should be clearly advertised as such. Making up stories and presenting them as factual anecdotes is obviously misleading and wrong. Writing short fictional stories to explain business wisdoms, though, seems ethical.
  • Clearly verifiable theories should not be told as fictional stories - they should be verified and told as fact.
  • However, "profound truths" as Niels Bohr called them, which have the characteristic that their opposites are also true, are well suited to fictional story-telling.
  • "What's the point?" To partially transmit experience normally available only to those who have been running businesses for years, to those who haven't.

Test your startup ideas for $20  

In the theme of validating and invalidating your business ideas, here's another approach.

Explain that your brother has a crazy business/product idea, and that he's about to get a 2nd mortgage on his house, raid his 401k and quit his job. His wife is a nervous wreck, afraid that they'll lose their house and retirement fund, and he's hit your parents up for seed money that they really can't afford to lose. Your parents and your sister-in-law have come to you for help to try to talk him out of his hair brained scheme.

Suggesting that it's your brother's idea is a good move, because people will often avoid giving negative feedback in person. With this approach, however, you'll really elicit all the negative feedback they can come up with.

Giving advice  

Advice is a funny thing. When people take your advice, they often feel like they're doing you a favour. And when it doesn't work out, you tend to get the blame.

Moreover, most people don't want advice. One of the most important things I learned in Accenture was that there's a time and place to offer advice. The right advice at the wrong time falls flat, or, even worse, causes irreparable damage to relationships. One should be even more careful dispensing advice than receiving it.

So, one should always be very careful when giving advice. That said, it's also possible to swing too far in the other direction, which I believe Jason Freedman does in this article, when he states:

Don't give bullshit advice. Don't tell an entrepreneur whether you think his idea will work. You don't know. You have absolutely no idea. Entrepreneurs have to see around several corners. They have visions for a future that doesn't currently exist. That vision currently doesn't exist because the product hasn't been made in just the right form and/or because the world is just not ready for it. Yet. And you can't predict how or when the world will change. You may have decent product intuition, but the great achievements in innovation are so massive precisely because everyone else got it wrong at the time. Don't be that guy.

Jason suggests that instead of answering the common "Do you think it's a good idea?" question, one should focus on clarifying hypotheses, advising on process (do they know their lean methods from their elbow?), making introductions to other entrepreneurs, potential customers, and investors, and providing support.

Those are all very good points, but going so far as to suggest you can't offer an opinion as to the validity of the idea is silly. Opinions are just that - opinions. No entrepreneur worth his salt will give up on the next Facebook because someone else (however important) said it was a bad idea. In fact, every entrepreneur working on anything important will be told over and over that their idea stinks and can't possibly work.

The reason you shouldn't declare assertively that such-and-such idea has no chance is really because you'll look like a complete idiot when it does turns out to be the next Facebook, after the other guy/gal ignores you (like the other 500 people who said it couldn't work) and goes ahead anyway. Save yourself the trouble, and instead, offer a tempered opinion: "Well, I can't say for sure, but I think you may have a lot of trouble with X, Y, and Z, but at the end of the day, that's just a high-level guess".

Hair of the dog  

Lucas Rayala:

And I'm closing down my startup.

I need to go for a run. I need to clean up my desktop and emails. I need to hire a tax attorney to straighten the jumble of receipts and ticket sales, so the government understands that Altsie was definitely a net loss.

I need to send my last checks to my last distributors and thank them for their trust. I need to throw a party and tell my friends I appreciate their support. I need to find my friends again and thank them for sticking by me. I need to call my filmmakers and thank them for taking a chance with me. I need to take my wife to dinner and thank her for her love.

This is what you do when you close down your business on a Thursday night.

Speaking from personal experience, the end of a startup is tough. It's not just the mechanical act of winding a company down. Throwing away your dreams is painful. For some, if they really invested everything into that one venture, and have nothing left to take the next swing, then it can be the end of the road.

However, I really do believe that entrepreneurship is a career, not a one-shot thing. If you play your cards right and don't throw everything at your first idea (especially since it's very likely not to work out), you can just keep taking swings at it until you get it.

And, with businesses as with many other things in life, there's no better cure for a heart-broken ending than a fresh beginning.

Working smarter in a startup  

Elliot Loh:

There's this misconception that everyone needs to kill themselves at a startup. Certainly you're working by a countdown clock that is usually wound by funding. But you're not trying to do "whatever it takes" as much as you're trying to do "only what it takes".

Elliot provides a number of approaches to work smart instead of working hard:

  1. Devote time to meta-work; spend some time thinking about the bigger picture.
  2. Cut to the chase; keep the goal in mind so you can sidestep issues on the way.
  3. See if someone has already done what you want to do, and if so, use what they've learnt.
  4. Measure things so you can identify and shut down failed attempts.
Dealing with micro-burn-out  

Noah Kagan of AppSumo:

Then it hits me around 2pm, I feel like shit. I can barely push myself to work, I have zero interest in doing anything AppSumo related, my teammates are chatting in our group chat and I want to be doing anything but this.

(...)

Have you ever felt that way? Unmotivated to do anything in your business.

It may be called "burn-out" but burn-out is solved with time, relaxation, hiring and pacing yourself. This was different — an immediate, uncontrollable feeling.

For the record, I feel like this at least once a week. Most people seem to go through this with varying frequencies. My approach to dealing with this is very similar to Noah's:

  • Step away from work for a bit.
  • Try to do one small thing at a time.
  • Write out a list of what you want or need to do.
  • Find the one "blocking" task that you're stuck on and just get it done.
  • Get a life coach.
  • Try and figure out what causes your motivation to wax and wane.

The one thing I'd add is that what's most important (to me) is to not feel guilty about having this ebb and flow of motivation (and productivity). If you let yourself feel guilty about it, you're just compounding the problem, and possibly causing yourself some even worse long-term issues.

It's ok to not be super-motivated 100% of the time. Just make sure you manage this and don't let it last for weeks or longer.

Another tip that I've given before is to have several cool things that you're involved in, so that when you burn out on one, you can switch to another. For example, for me, I've got swombat.com (both coding and writing), GrantTree, Woobius, Cocoa coding (learning in progress...), whatever book(s) I'm reading - all of which I can switch to without feeling guilty about "not being productive".

Hypothesis testing for startups  

A new startup is a series of unresolved hypotheses. This article makes the point that the goal of a startup (explicitly via the Lean Startup, Minimum Viable Product route, or implicitly) is to test whether those hypotheses are true.

The goal of the Minimum Viable Product should be to test the founding vision or initial hypothesis. You need to be open to different answers - the answer might be a yes, a qualified yes, or a no. By framing the founding vision like a hypothesis, you remain open to multiple answers.

One approach I've found helpful to evaluate a new startup idea is to break the idea down into hypotheses, for example "there is demand for this type of product", "we can access that demand", "the product is technically feasible". Sort them by a combination of risk and uncertainty (often roughly in this order), and then work your way down the list, updating it as you go along.

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