daily articles for founders

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

Stop looking for a cofounder  

Sacha Greif offers some tips about why you shouldn't look for a cofounder, and try using freelancers instead. Pull quote:

Hiring a freelancer is not that expensive. You can hire someone for a month for a couple thousands dollars, and a month is plenty of time to build a prototype if that's all you're doing.

If you say that you can't manage to come up with even $3000 or $4000, that tells me two things: first, you don't have any monetizable skills, so you don't sound like a very good person to build a startup with.

Second, you're not very resourceful, and that doesn't play in your favor as a startup co-founder either.

Sacha also goes into several reasons why freelancers are a better thing to look for, if you need help, rather than cofounders.

I think Sacha is spot on about those reasons, but he's missed one that trumps them all:

I don't think it's actually possible to "look for a cofounder", especially not if you already have a project under way. As I've pointed out before:

...networking to find a cofounder is like going to a party to find a wife. You might meet lots of interesting, and potentially eligible, partners while out networking/partying, but those who respond favourably when you mention what you're looking for on the first "date" are probably not the ones you want to marry.

Hanging around places where you might meet potential cofounders is great. Building relationships is great. Working on projects that you're both passionate about together is great. But going out networking explicitly to try and find a cofounder is misguided and will probably cause you trouble.

If you've settled on the idea already, it's time to get early employees, not cofounders. They should be paid. If you can't do it without getting other people's help and you have no money to hire others, then this is not the right idea for you - find one that's more within your reach, or build relationships with potential cofounders and find ideas together.

What you should almost never say is "I have an idea, I should now look for a cofounder".

Update: Also relevant, via Slimy:

A co-founder is not what you need, unless you already have one, and you have as good a relationship with them as the best relationship you've ever had with anyone in your life. If you KNOW you're not going to have a problem, then great.

Giving discounts impacts your brand  

James Nichols makes the case against giving discounts willy-nilly:

At its core, a brand's value is represented by the premium a company can charge versus its competitors. If I can get millions of people to pay $5.99 for Kellogg's Corn Flakes versus $2.99 for generic corn flakes, that's a strong brand. If I have to pass out $2.50 coupons to get folks to buy them, that's a weak brand. And if people get used to receiving $2.50 coupons all the time, they'll ultimately think less of the coupons.

It's a fair point, although this later statement doesn't ring true:

(...) he told me that they were in the business of giving consumers what they want. OK fine, but the consumers aren't actually paying his salary. Brands are.

Excuse my cynicism, but what the consumer wants is everything for free.

Even consumers don't want everything for free (in the B2B world, that's even more the case). They want good value, certainly, but they're willing to pay for quality, convenience, etc.

Some consumers do want everything for free - these are the people that get marketed expensive financial products like credit cards that give a sign-on bonus, payday loans, lotteries, and other similar dubious products. See for yourself (look at the adverts on the right hand side).

If you build a product specifically for that crowd, though, you've got bigger problems than giving away too many coupons.

Tools to find available startup domain names  

Duane Jackson of UK online accounting software KashFlow, lists some useful tools for finding a good domain name:

A useful list to keep bookmarked for next time you need to do this.

Running a business vs building a product  

Elad Gil writes:

As the CEO, you need to keep your eye on the underlying product and business fundamentals of what you are doing. If you can not keep focused on the business side you must hire someone who will. Otherwise there is a reasonable chance your company will die. The two most common ways for a startup to die are founder conflicts and running out of cash. Running out of cash is often avoidable.

This is why I often advise people who want to play the startup lottery but have no business experience to try building a profitable bootstrapped business first. You learn a lot from running such a business that is just as essential when running a funded business.

Failing in an interesting way is hard. If you fail at the basics of running a business, you've not failed in an interesting way. If you fail because of some predictable startup issue like a founder conflict or building something nobody wants, you've not failed in an interesting way.

Failing in an interesting way means avoiding all those obvious traps and failing for some reason that is actually challenging and unforeseeable - for example, a smarter, more aggressive competitor stole your lunch, or if a political event simply made your product unsellable - those are interesting ways to fail.

How to hire a programmer  

Jeff Atwood outlines a solid process for hiring programmers:

  1. First pass a few simple "Hello World" online tests.
  2. Ask to see their portfolio.
  3. Hire for cultural fit.
  4. Do a detailed, structured phone screen.
  5. Give them an audition project.
  6. Interview in person.

Jeff rightly emphasis the "cultural fit" test. We may all bemoan HR departments and their psychometric nonsense, but poor cultural fit does, in practice, seem to always lead to trouble down the line.

Habits of effective startup mentors  

I've argued before that mentors are essential to startup success, but who trains the mentors? Can you get a mentorship mentor? As it happens, you can, and much like most coaches are themselves being coached, mentors usually have their own mentors.

That said, it's interesting to try and write down what a good mentor should do. Here's a list, by LeanStartupMachine mentor Giff Constable, of ten best practices for being a startup mentor. The habits are:

  1. Always start by defining the fundamental idea behind a product or service
  2. Prioritize the startup's biggest risks
  3. Get practical on the tactics to empirically mitigate risks
  4. Use your network to find them potential customers
  5. Challenge, play devil's advocate, and poke holes in arguments
  6. Let the team come to its own conclusions
  7. Less mentorship may be better
  8. Don't spoon feed, keep feedback crisp
  9. Collaborate with other mentors
  10. Be a mentor, not a CEO

Get the details here.

Bait and switch acquisition offers  

Ouch. Here's an anonymous story from a founder who got screwed during an acquisition. Killer quote:

He tells me, "I'm sorry, but the CEO changed his mind. We're not moving forward with you guys." What? I was furious and trying not to panic. "Why not?" He gave me several reasons, including uncertainty about how our product would integrate into their suite of offerings (shouldn't that decision have been made back in October?) and disagreement on the roadmap we presented (remember that chaotic three hours on the second day of due diligence? Also, he's the CEO, if he wants it, he gets it, right?). The one that stuck with me the most was "Our engineers looked at what you showed us during due diligence and told our CEO ‘It doesn't look so hard, we can build it ourselves.'" Information that we had shared under NDA.

If you're getting serious about selling your company, read this first. It will save you from these kinds of mistakes - mistakes which are not only costly, but also infuriating.

Taking responsibility

Some time ago, I read an excellent historical novel about a character called Sinuhe. Set in ancient Egypt, it charted the life story of a talented doctor who travelled through Syria, Minoan Crete, the Hittite Empire, and other similarly exotic locations. Sinuhe got involved in intrigues, wars, mysteries, and all kinds of fascinating adventures, masterfully narrated in an autobiographical style.

It was an incredibly infuriating book, probably one of the most frustrating that I've ever read.

Sinuhe takes the concept of the doctor's oath of non-intervention to the extreme. Through this monumental example, Mika Waltari shows how remaining passive and uninvolved can lead to great evils. Time and time again in the book, Sinuhe finds himself in exactly the right time and the right place to take actions that will change the course of events, of history, even. And yet he consistently fails to act until it is too late. Through this passivity, he loses both of the great loves of his life, as well as his only child, to stupid and avoidable deaths. Throughout the book, Sinuhe only ever acts when the evil has become manifest, obvious, immediate and urgently needs a cure - which, in most cases, is too late. And then he proceeds to rant about the evils of men, gods, delusions, and other forces of the universe, forever failing to see that every mysery that befell him was a direct result of his own actions, or lack thereof.

There's a point in there about both startups and life in general.

Taking responsibility

I've argued before that the ability to take responsibility is an essential trait of the successful entrepreneur. Sinuhe is the quintessential example of someone who would consistently fail at business (much as he fails at life), because of his inability to accept that he is responsible for what happens to him, and that he can make a difference to those events.

To paraphrase Stephen Covey, until I accept that who and where I am is a product of the choices I've made (conscious or not), I cannot take the next step, which is to say: "Today, I choose otherwise."

It's easy to blame external factors for playing a part in your startup's failures. "It was too hard to raise funding", "the industry was in recession", "people just weren't ready for our product" - I've used those excuses myself. But that's what they are, they're excuses. Ultimately, successful entrepreneurs make things work despite the barriers standing in their way, by focusing on what they can do, and then doing it.

Accepting the results

Which brings me to the final point of this article, one which most of the self-help books out there fail to cover: taking responsibility, getting involved, throwing yourself into the thick of things and making decisions, all that is really, really hard (for most people). Sinuhe, in fact, deserves our pity more than our anger.

Psychologically, it can be very daunting to realise that taking action makes us responsible for the outcomes of those actions. If we get involved in making something complicated better, and we fail, we have no escape from the reality that we personally brought about a result that we did not want. We can't blame it on circumstances, on external factors, competition, general human stupidity, and so on. It's our own lack of competence that brought about our failure. If I take responsibility for things that affect others (like running a business or helping someone who needs emotional help), and I fail, I also accept responsibility for hurting others, maybe directly. Some people are so afraid of accepting this possible consequence that they shy away from making any decisions that impact other people.

Unfortunately, such decisions get made with or without our input. When we refuse to take responsibility, we let others take those decisions for us, or, even worse, we let the decisions be taken by the faceless system of default behaviours that composes the world. This is disastrous both in business and personal life. The default outcome for any startup is death. The default outcome for life in the western world is being normal, unremarkable, unnoticeable. If you are unhappy with either of those results, you need to take responsibility and take action.

Had Sinuhe acted, perhaps he would have brought about his and his friends' downfall. But perhaps not. By his inaction in times when he had the opportunity to do something, he achieved failure anyway.

How to use PR firms at startups  

Mark Suster offers some good advice about how and when to deal with PR in startups. Some key points are:

  1. PR is something ongoing, not something you do around specific events and then stop until the next event.
  2. PR is something that the key founding team needs to handle, and shouldn't be delegated to a junior person.
  3. A a startup, even a funded one, you should not hire a PR firm, because you won't have the budget to get the right amount of attention from them.
  4. Even if you do have the budget, it is often better to hire someone inside your firm, or have someone inside your firm as well as retaining a PR firm.
  5. Once you have the budget, a good PR firm is worth its weight in gold.

And some additional tips:

  1. Be authentic. Talk like a human, not a press release.
  2. Have a point of view about things, not aggressive but opinionated.
  3. Don't constantly make pointless announcements or they will be ignored.
Use your competitors' marketing budget for your campaigns  

This article by Ilya Lichtenstein proposes a method for competing against bigger, better-funded companies:

  • You can learn from their experimentations what works best in terms of marketing message, demographics, etc, which saves you from having to run your own expensive A/B tests.
  • You can find the keywords which they're not managing well and target those.

It's worth pointing out that this is an evolving pattern. Five years ago, most companies had no clue about SEO/SEM. These days, they will hire competent firms to do this for them, and so the result will be a lot of money spent on optimising ads, often with some skill.

As a smaller competitor, you need all the help you can get. Learning from your larger competitors is a no-brainer.