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

Seed stage valuation guide  

Here's a good post by Jordan Cooper, providing some ballpark of what sort of company valuation you should look for at different stages of your company. Jordan is Brooklyn-based, so not from Silicon Valley, and yet I think it's fair to say that in most places other than SV, the scale shifts at least one notch against the entrepreneur (i.e. pre-product raises nothing and a prototype built and in the market might raise a hundred thousand pounds):

Here then, is a summary of the stages Jordan proposes:

  1. Still at your old job: $0. Quit your job before asking for investment.
  2. Pre-product: $2M. Raise $300-$700k.
  3. Prototype built and in the market: $3-4M. Raise $400k-$1M.
  4. Product in market and shows signs of growth or revenues: $variable, Raise $1-5M.
Appsumo's failed A/B tests  

This article by Noah Kagan once again makes the point that if you cannot fail you cannot learn, and gives up, as examples, some failed A/B tests that AppSumo conducted.

Only 1 out of 8 A/B tests have driven significant change.

(...)

All of these were a huge surprise and a disappointment for me.

How many times have you said, "this experience is 100x better, I can't wait to see how much it beats the original version?"

A/B tests are one of the most effective implementations of actionable metrics, but make sure the measurement boils down to a change in a key performance indicator. Noah finishes with some tips:

  1. Focus on one priority per week, with 1-3 tests focusing on that goal.
  2. Be patient - it may take a few thousand visits or 2 weeks for a test to be conclusive.
  3. Be persistent - most of your tests will fail, but that's ok.
  4. Focus on things which are likely to get you big results.
How to deal with massive technological disruption  

I went to a couple of events, recently. Each had a a very different feel.

Journalism

The first was an even for journalists and hackers. There, the main concern echoed by the journalists in the room was of how they could continue to do what they feel is a valuable thing, despite the major changes that technology has wrought on their industry.

Journalists feel (quite rightly) that they perform a public service. In the words of the respectable speaker at this event, their job, among other things, is to give people the information they need (but don't necessarily want) alongside with the information they want (but which isn't really useful to them). In other words, give people something that will help them vote in the next election alongside their daily dose of football trivia.

This all felt very noble, if a little paternalistic, but my feeling was that they were living in a dream. Let me explain what I mean by mentioning the second event.

Health

Healthcare, particularly in the UK, is hardly a progressive field full of consumer technology innovations. And yet, the event that I went to (MC ThinkCamp mHealth) was surprisingly progressive. The people presenting were, most of them, doctors. And yet they fully, clearly understood that technology is changing the reality of healthcare.

For example, one presenter had built an application that allowed patients to handle their own records. He didn't wait for approval from the NHS, he didn't even seek the approval of other doctors. What this entrepreneur realised was, to put it in his own words, that "history is moving this way", and that people who argue that patients shouldn't control their own records will, in 30 or 40 years, be regarded as incomprehensibly wrong, much as we now regard those who argued, up until the 1970s in Switzerland, that women shouldn't vote. Those people were, and are, on the wrong side of history.

My feeling was that these people "got it". They understood that technology moves inexorably forward and does not care much for the established order. They understood that it will turn the world of healthcare upside down over the next few decades - wether healthcare professionals like it or not - and that if they don't want to be left behind, they'd better join in the change.

They understood that if technology makes possible something clearly desired by many, this thing will happen, and will keep happening, and will be unstoppable - whether that is free movie downloads, patients controlling their records, or, as the linked article discusses, news personalisation.

Journalism, redux

Jeremy Mims, echoing the feelings expressed by journalists at the first event, proposes that:

Part of the purpose of news is to create an educated and engaged citizenry, not merely provide a funnel for our natural predilection for the stuff we like (which the Internet is already stunningly good at).

He continues:

What I'd prefer to see is a service that tracks what everyone reads and shows me results not from people like me, but people who aren't. I'm already great at finding information that confirms my outlook and disposition (on the Internet, it's a Google search away). I need to be reminded that the world is big, opinions are diverse, there are subjects that I'm woefully uneducated about, and that not everyone thinks the way I do.

That's all very nice, but that's not how disruption work. What people want, they will get, and the way forward is not to pine for something that might work as it did in the past (or, even worse, provides something that most people don't want, such as news that they disagree with).

I actually agree with journalism's goals, however paternalistic. People need to get more than a daily dose of X Factor and Football to be functioning citizens - and many people don't get that info-nutrition. But the way to achieve this is to look forward, at things as they will be 10, 20, 30 years from now, and build from there, not from a past that is quickly fading.

This means, for example, accepting that news personalisation is on the way, and that people will read only the news they want to read. This doesn't mean they won't be exposed to different viewpoints, but it means that in order to reach people, you'll have to build something that they actively want to follow - not just piggyback on the local sports news and hope they read the headline printed on the front of the paper before they vote.

It's change, real change, and it requires a different mindset, one that's willing to start from where things are going, rather than whence they came.

Doing more by doing less

An article today from Jeff Atwood bemoans the plethora of todo apps and presents an argument against todo lists:

Here's my challenge. If you can't wake up every day and, using your 100% original equipment God-given organic brain, come up with the three most important things you need to do that day - then you should seriously work on fixing that. I don't mean install another app, or read more productivity blogs and books. You have to figure out what's important to you and what motivates you; ask yourself why that stuff isn't gnawing at you enough to make you get it done. Fix that.

I'm a big fan of that idea, and in fact have been toying with it practically for a while now.

It started with the decision to implement a limited size todo list, using my iPad and the Bamboo app to write tasks manually (and manually copy them over onto future days if they don't get done). I started with 10 tasks per day at most, with the idea that if I have to add another task to a day that already has 10 tasks, I have to move one undone task to a future day.

It worked relatively well, but I still felt swamped. So I reduced my task count to 5. And, strangely enough, I felt more productive.

See, the reason why we're not productive most of the time isn't that we're not doing stuff. I spend my whole day doing stuff, but that doesn't make me productive. The reason why we're not productive is that we spend most of our time doing the wrong things.

The pareto rule applies to the task selection as well as to the work itself. In fact, it applies even more harshly: you're an incredibly productive person if 20% of all the tasks you do actually are the right things. But most of the tasks we do are "busywork" - whether that's answering emails, chasing people for unpaid invoices, or, irony of ironies, keeping track of the status of things.

I'm not saying these tasks (e.g. chasing invoices) are not important in some fashion. They need to happen, certainly. But chasing invoices is unlikely to be the most important thing you could do today to achieve your life's goals. And that's assuming you even have life goals. If you don't, then 100% of what you do is aimless busywork.

Jeff's article prompted me to write out my thoughts on this topic, and so I'll finish with this thought that I've been ruminating for a while:

If you can, every week, figure out and do the one most important thing that you can do to achieve your life's goals, you will be one of the most successful people on this planet.

And yes, that's true even if you forget to do some menial tasks like chasing invoices or renewing your driving licence.


Your idea is worthless in finding a cofounder  

Following up on the earlier article about why it's hard to find a technical cofounder, here's another one by Eric Hellman in the same vein with some specific advice for would-be "business guys", namely that they need to show that they can deliver results before looking for a partner:

  • If you really have sales chops, then you already have a customer ready to sign a check.
  • If you have fund-raising chops, then you've already raised a nice pot of money.
  • If you really have marketing chops, then you can make the idea sound irresistible, even though it's worth nothing and you'll change it completely six months into the company!
  • Product management chops are more complicated, and some nice posts by Vinicius Vacanti and Kate Ray are relevant there. Being a good product manager means you have hands-on understanding of many issues, including domain expertise and technology. If you really have product management chops, then you should be able to define a minimum viable product that's so simple even you can implement a demo version, or perhaps a first iteration of the product, if you're willing to put some skin into it. It's not that hard.

In practice, it all boils down to the fact that the person that anyone is most likely to want to join forces with is one who doesn't really need them in order to build a successful business.

Guide to customer growth  

I generally don't like to link to slides, since they miss a lot of substance that is present in a real presentation or in an article, but this one by Sean Johnson is pretty excellent. Click through for a solid guide to customer growth with many useful and actionable tips and bits of information, such as this 90-second guide to Facebook Ads:

Images are the most important factor. Test 50 images. Test orientation (looking right, looking left). Test colour and shape of borders.

Use country targeting when testing conversion. US costs 5-10x other countries. Use Canada, New Zealand, etc.

Focus on conversion, not just on clickthrough rate. It's not uncommon to have 40-60% conversion rates if it's targeted well.

The guide is shallow, but provides a good overview with lots of starting points and links to further information. Worth a read through, and some clicks.

Notes on raising seed money  

Chris Dixon's notes on raising financing. Solid, level-headed tips. Best read in conjunction with this article by Evan Reas, which proposes the following two-step approach:

You are never asking for money nor do you ever need it. You are either meeting with investors to talk about your business or asking them whether they want to be included in the round you are about to close.

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.

People, processes and tools

Some years ago, one of my managers used to repeat this "Accenture truism" (or so he designated it): to fix or improve something, first you need the right people, then you need the right processes to help those people work together, then finally you need the right tools to support those processes. People, processes, and tools - in that order.

This is even more true for tech startups than for corporations. As geeks, whenever we face a problem, we often start by looking for a tool to fix it. "Our team isn't communicating properly - let's set up Campfire." "But I don't like Campfire, why don't we use Yammer?" "Yammer and Campfire are so lame, let's just use good old IRC."

This is the wrong approach. Tools by themselves rarely resolve problems in your business. If your team isn't communicating, you need to solve that problem step by step.

First you need to figure out if that's because of a "people" problem. Maybe one member of your team just doesn't want to talk to the others. If that's the case, no tools or processes are going to fix that. For example, many sales organisations try to get their salespeople to communicate everything they know about every client - but salespeople don't want to do that, because it makes them more easily replaceable. Setting up a CRM tool doesn't solve that problem, until you fix the people, by giving them the right incentives to do what you want (or, if that's impossible, either changing what you want or changing the people).

Then, you need to look at the "processes" part of the problem. For example, assuming your team wants to communicate with each other, maybe they can't because they tend to sleep at random schedules in different parts of the world. That's a process problem that can be fixed by, for example, declaring a certain time each day "team time". For example, you can anoint the period between 2pm and 4pm in some timezone as "team time", and require everyone to be available to chat at that time every weekday.

Finally, once you've got the right people and they have the right processes in place to support them, then you can start looking for tools to support those processes. Depending on what you actually want "team time" to look like, you might choose campfire, GTalk, IRC, or any number of other tools. But by now, you can select the tool based on whether or not it supports your processes, rather than whether or not it's the sexy SaaS app of the month.


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.

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