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daily articles for founders

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

The MicroPreneur Manifesto  

Rob Walling of SoftwareByRob has just published a "MicroPreneur manifesto". In it, he presents some principles for building microbusinesses online - not the kind of business that will sell to Google for $10m or even $1b, the kind that will make a steady income for its owners, and grow slowly and organically, and enable its owners to eventually have a relaxed, pleasant lifestyle with enough time to focus on other things that they also enjoy.

It's a good overview of an online business philosophy, which is different from the typical Silicon Valley approach, but certainly works for some people (and, possibly, it works for more people than the so-called "startup lottery").

I'll list the headings here, but please do have a read to get the full text.

The headings:

  1. It's much harder than it looks.
  2. There is power in working alone.
  3. Focus on your strengths.
  4. Freelancing is dangerous.
  5. Seek leverage.
  6. Stay away from moonshot ideas.
  7. Product last. Market first.
  8. Charge for your product.
  9. Passion isn't all it's cracked up to be.
  10. The pressure of freedom.
  11. Become a black belt internet marketer.
  12. Think human automation.
  13. The more you do in public, the faster things will move.
  14. Failure is an option.
  15. Live like a pauper, treat your business like a king.
  16. Reject growth.

What sort of entrepreneur are you anyway?

From my father's blog about wisdom:

The trouble with values is that they are all good.

Most people will swiftly agree with most of the high values of humankind: freedom, happiness, truth, respect, justice, equality, prudence, compassion, courage, modesty, patience, moderation, harmony, industry and so on; but ask them which is the most important and prevailing. You will suddenly find in the pattern the striking differences that tell fascists apart from communists and religious fanatics from tolerant free thinkers.

Bad people have no problem with good values. Irreconcilable opposites are made from the same handful of values representing goodness. It is the weight of each that differs.

The same is true for entrepreneurial values. Everyone but the most psychopathic entrepreneur will agree that a business should treat its employees well, shouldn't waste money, should create value, should generate returns for its shareholders, shouldn't kill people or make them ill, and so on.

And, more specifically in the tech startup world, a great many entrepreneurs will agree that startups should hire the best people they can, should iterate, should keep an eye on relevant metrics, should have automated test suites, should have automated deployments, should have backups of valuable user data, should be running on secure, well-administered servers, and so on. For B2B startups, everyone agrees that making sales, creating a good brand and building strong customer relationships are good things.

At the very least in public, very few entrepreneur will disagree with those values. But, as with the more generic human values, there is a world of difference in how each entrepreneur orders those values. Are backups more important than automated tests? Is saving money more important than implementing good metrics measurements? Is it ok to treat your employees harshly in the name of shareholder returns?

If you're going to work in someone else's business, it is wise to try and determine how they have ordered their values before doing so - this is why interviewing with people who work there already can be so important for the job seeker.

And, similarly, for yourself! What sort of entrepreneur are you (or will you be when you start your own business)?

To be aware of your values and to examine their worth with your own mind is yet another subtle source of freedom. Keep Nietzsche's hammer at hand to gently tap on each value and to judge the sound. Depending on the place where they are hung, some of those bells may give an empty ding of hypocrisy. We tend to forget that values are man-made axioms agreed as beneficial. There is nothing God-given about them. You do have a right to examine them freely - in your head - to chose your own choices. This is not theory: your own chime, your arrangement of personal values chants who you are.


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.

Coding isn’t easy, but it is learnable  

Pamela Fox, from Khan Academy:

These campaigns are telling students that "coding is easy," and then they're trying it, and now not only are they struggling to learn something new, but they're feeling bad about themselves because hey, "coding is easy", they shouldn't be struggling.

Nobody should feel bad for struggling to learn something new. They should be commended for trying to learn something new at all.

It's interesting that most founders are brazen and keen to tackle a load of business challenges, figuring things out and learning new skills - but we often put "the technical stuff" in another category. Then, the only solution seems to be finding a tech cofounder.

I was introducing JavaScript to a few Roma kids the other day, and they asked "will this be easy or hard?" I had to fight my first instinct to make say easy, but I still wanted it to feel achievable. " My answer: "It's gonna be hard, but you're smart." They got mentally prepared-one step closer to being self-educating hackers, rather than "learning to code."

Coding is getting easier to teach and learn, due to recent pedagogical advances. It's still not easy though - the question is, why is this stopping you?

How to fire an executive  

Here's a very informative article by Ben Horowitz, about how to go about the complicated and painful task of firing an executive. Some key points:

While it's possible to fire an executive for bad behavior, incompetence or laziness, those cases are rare and relatively easy. Unfortunately, unless you have a horrible hiring process, those are probably not the reasons why you got to this point. At this level, almost every company screens for the proper skill set, motivation, and track record. Yes, the reason that you have to fire your head of marketing is not because they suck; it's because you suck.

(...)

But keep in mind that your choices are: a) alarm the board or b) enable an ineffective executive to remain in her position. While choice (a) is not great, it's a heck of a lot better than choice (b). Leaving a failing leader in place will cause an entire department in your company to slowly rot. Let that happen and the board will be more than alarmed.

Worth reading the whole article carefully, and hoping that you won't need the information inside too often.

Freemium: make the cheapskates pay  

Here's an excellent article by Andy Singleton that covers a lot of insights he has gathered over years of selling freemium products. There are too many points to summarise the whole article, but here are a few key points:

  • Customers have a price they're willing to pay ($0, $X, or more) before they ever even sign up. The key to selling a freemium product right isn't to turn $0 customers into paying customers. That's very hard to do. Instead, you need to make sure that those willing to pay you are paying you, and that they're paying as much as they're willing to pay.
  • Metered pricing is a disaster in most cases. It encourages people to use your service less so that they can save $2 per user per month. It works against your product and creates uncertainty that makes customers uncomfortable.
  • Bundles should be sized in such a way that "the effort to move to a smaller bundle should be big enough that it is not worth a subscriber's time to figure out how to reduce usage to the next lowest package".
  • Customers will compare you to the nearest similar commodity. You need to manage how the price anchoring affects you when you're being compared to something that has one tenth the features, and a proportionate price.

There are many other points in the article. It's worth a careful read and some note-taking. Andy doesn't offer conclusive solutions to all the issues he raises, but he offers enough for this to be essential reading for those thinking of building a b2b SaaS product with freemium.

Updated: corrected author, thanks Tim Freeman.

Let the acquirer name a price  

A good piece of advice from an unlikely source (the Globe and Mail) by John Warrillow:

One of the most basic rules of negotiation is to never be the first to name a starting price. If you do, you could leave money on the table, or turn off a prospect before you even start the dance.

Fortunately, there is a formal document you can request from would-be suitors that forces them to put their number - or at least a range - on the table first.

So, what to do if someone is trying to figure out how much you value your company?

There is no need to be the first to name a price. If you find yourself being asked for your number over a quiet lunch, don't feel obligated to react.

Just let your suitor know you'd be happy to review an IOI or LOI. A serious professional buyer will know what you're looking for, and will be happy to oblige.

Non-violent communication  

First Round Capital's written a thought-provoking guide to internal startup communication:

When startups experience conflict — particularly between leaders — efforts quickly become uncoordinated, motivations get misunderstood, and results fall short of expectations. You simply can't produce an incredible product if the team building it won't agree on fundamentals.

Avoiding problems only allows them to fester and impact more people, while hasty, non-strategic communication can turn a small fire into a blaze.

It centralises around a commmon mistake:

Watch out, because the jump from observation to judgment happens almost immediately,

Which is often surfaced in unhelpful questions:

A. Will you get your work done this week?

rather than

B. What do you need to hit your deadline this week?

Open-ended questions ... acknowledge the level of effort you're already putting in and offers to help. It asks for more than a one-word reply — it seeks valuable input.

While a lot of startups aim for modern team structures, they're still riddled with old-fashioned communication norms. A common one is assuming your perspective is complete enough that your assessment is accurate. Then, you start asking for things without communicating the context; you remove the others' ability to assess for themselves. The conflicting assessments are the root of more visible conflict, but those remain unaddressed.

A lesson can be drawn from large design firms that have become effective with functional silos - they make sure they communicate the options they're considering and the trade-offs between them, so others throughout the company can share relevant factors.

Mehl advises preparing constructive statements ahead of time before heading into any confrontational discussion. Doing this will help you stay focused and minimize incoherent or incomplete explanations. Preparing also sends the signal that you're invested in doing the right thing. It demonstrates good will.

Separate the person you're in conflict with from that problem.

The post shares a few in-depth explanations of how to do this well, but it basically means assuming positive intent from the other person, respecting their time and sovereignty, sharing your feelings and needs, separating those from the outcome you'd like - and offering constructive suggestions.

They also share techniques for when team communication breaks down.

"It's incredibly helpful to talk about the early days — the inside jokes, the long nights, what brought everyone together in the first place."

"It's like a game of tennis — the longer you keep the ball in play, the more you learn from each other." And, just as tennis players are happy winning best out of three or five sets, colleagues may need to go multiple rounds before a solution is reached.

If you're a startup founder, you probably have a big ego and a strong sense of direction. If you're co-founders, its' communication skills and empathy with your partners that'll manifest the multipliers between you.

Make money from your web apps by starting with the market  

Here's another interesting article by Paras Chopra, proposing that building a cool application and then trying to make some money from it is not the best approach to making money. Instead:

If making money is the objective, I suggest going with the market-first approach (as opposed to idea-first approach).

Paras then provides some steps for this market-first approach:

  1. Pick and industry where people are making money
  2. Find a differentiator which will allow you to wedge in
  3. Make a web app, market, refine, monetise
  4. Slowly build up to being a market leader

As I proposed in this earlier article about how to evaluate startup ideas, if you're honest about your areas of uncertainty, as a builder/developer, market uncertainty will be at the top of your "hypotheses to resolve".

Another point, though: even better than starting with a market is starting with the set of markets which you have some access to. If you have some delivery channels already, building a startup around those is the path of least resistance.

Bootstrapping on the side  

Joel Gascoigne proposes a method for working on a startup while busy doing something else (a full-time job to pay the bills, for example). He doesn't mention too many details of actual method, but one of his methods seems to be to do something every day to push the startup forward, no matter how small.

This is definitely a good method to build your startup if you have no other choices (which is the case for most), and I agree with Joel that it is better than his previously described "working in waves" method.

However, he is too quick to discard the potential for losing to faster competition:

On top of that, let yourself succumb to the myth that you can be killed by your competition and you're in for a tough ride.

This really depends on what kind of product you're building. It's sound advice only in the sense that if you're building a winner-takes-all, high profile product, you shouldn't be bootstrapping anyway.

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