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daily articles for founders

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

Visual dashboards for startups  

If you have an office and several people on your startup, having an "always on" dashboard that shows the state of the business can be a great tool to motivate people to work on the right things (although, don't mistake it for actionable metrics - unless, that is, you put up the results of your ongoing tests on your dashboard.

I think it’s vital to have a visible, clearly accessible (and always-on) display machine in your office so that all members of the team can see metrics. We have a Mac Mini running two 24” displays constantly, and I’d like us to go bigger soon. Total cost, about $1,000 (and it functions as our stereo via AirFoil). The reason it’s important to share visibly is that you should be seeing the data not just when you’re thinking of it, but all the time.

This solid article by Robert Laing of MyGengo oulines a number of approaches, tools, pieces of advice, and other miscellanies of use when putting together a visual dashboard for your startup team.

How to find a technical cofounder  

Jeffrey Talajic discusses how to find a technical cofounder. In short, go to the relevant networking events, talk to people, discuss your project, let them self-select, and bring them on slowly while testing out the relationship. Oh, and be picky about who you select.

Decent advice, apart from one thing: I believe that if you've started your business already, it's probably too late to find a technical cofounder for this one (though you can find a good CTO-for-hire). But you can find a tech cofounder for your next business.

You shouldn't start a business with someone you've just met. Let the relationship evolve, grow, and solidify, and then consider starting a business with them.

Shorten your viral cycle time  

[An] often overlooked viral loop concept is cycle time. That's the average time it takes to complete one loop, e.g. the cycle from sending out an invite to the person who was invited sending out an invite.

(...)

Cycle time is important because along with the k-factor, cycle time determines growth trajectory. You can be exponential, but still grow really really slowly. A decent analogy would be radioactive material with a really long half life. It could take you a while to double...

A brief but helpful article with some tips about how to reduce that cycle time, namely:

  • Send out reminders at various opportune times
  • Create a sense of urgency
  • Shorten the time between sign up and invite
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.

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.
Eleven compelling startup pitch archetypes  

Reinventing the wheel is often the worst choice. When choosing how to present your startup pitch, this list is extremely useful to get some ideas of how to present your startup, depending on its stage, type, market, and so on.

Each archetype is broken down into a description, an example of what it sounds like, known companies that might have used it, and a brief section on how and when to use it.

The pitch archetypes listed are:

  • Traction
  • X for Y
  • Personal Story
  • Pivot/offshoot
  • Evolution next
  • Painting the future
  • Service at scale
  • Wouldn't it be cool if
  • Insane tech
  • The dream team
  • Consumerification of enterprise

Great stuff, be sure to read it and bookmark it.

Silence  

From my father's blog on wisdom:

If you have a gift with words, learn to keep your mouth shut; when you speak, punctuate with pause; and when you have nothing to say, say nothing.

(...)

Your silence passes many messages; one is that you are somebody, not nobody, a person able to face a crowd and to wait. This is an almost biological power of the big secure animal looking at harmless ones. People understand or better said they feel. After this, you have a better chance to be listened to.

Silence has tremendous applications in the business world too, of course.

For me, the "aha" moment about silence came when I was working on my first startup, while still working full time as a consultant in Accenture. I was sleeping about 4 hours a night for 9 months, and so I was constantly tired. At the time I was managing a small team of people who often did not get along. So, every once in a while, I would have to set up meetings with me and two other people to resolve their conflict and keep the project moving forward.

Because I was so tired, I spent most of my time in the meetings quiet, minimising even physical movement. I would sit and listen and let the meeting go its way until I came to a moment where I felt that if I did not say something - the right thing - just at that moment, with just the right body language to support it, things would go wrong sooner or later and I would have to pay with even more tiresome activity.

I wasn't scared of being "found out" for doing the bare minimum in meetings. I was starting my first business and I believed I would be out of the corporate world soon (and I was). But I noticed something very strange. Because I talked so rarely, every time I spoke, people stopped talking and took the time to listen to me. By doing much, much less, I had somehow given the little that I did do a lot more weight.

Since then, I've used silence in many other contexts. It can be a very useful tool for sales, for example: when you're trying to close a sale, at one point you need to state your pitch, with the price, and then just shut up. If you keep talking, you will only distract the customer from evaluating the pitch and coming to a decision.

In person-to-person conversations, few people can stand a prolonged silence, particularly when it follows a certain kind of statement. "I don't know what I can do to solve X," followed by silence, will often pull suggestions for solving X out of someone who would not have volunteered them for "how should I solve X?"

Learn to use silence. It is a powerful tool in many contexts.

Advice for a young entrepreneur  

Tony Stubblebine starts with the following (well presented) advice:

  1. Surround yourself with interesting people;
  2. Focus on the right things (which means, ironically, figuring out what the right things are);
  3. Be useful.

He ends on a little zinger:

There’s basically two ways to be financially successful as a company. One, you could rely on time-tested business fundamentals. I call this the Warren Buffet model.

Two, you could rely on the greater fool theory, which is that with enough hype, smoke, and mirrors you can find a buyer who is an even greater fool than your investors.

(...)

So much of the startup world is arrayed around the greater fool theory that I felt like my best chance was to build a company that was independent of that system. I think of bootstrapping as a very slow form of raising money. But now that we’ve done it, I have a reliable stream of income and never have to raise money again. It’s really just at this moment in time that we can switch from doing whatever it takes to survive to actually testing our ability to make a major impact.

To be fair, there are situations where you do need the extra money to grow extra fast, or else you lose. Groupon is a good example - had they not executed so brilliantly and quickly, they would have been eaten alive by the dozens of clones which emerged everywhere.

I'm a big fan of getting profitable early, but it is neither the only way, nor the universal best way.

Why pitches fail  

Here's a great article from a few years back, by Eric Ries. It breaks down pitches into several types, and examines the key questions that need to be answered by each type of pitch. Worth reading alongside this article, posted a couple of weeks, ago, about startup itch archetypes.

Eric outlines the following pitch types with their relevant "key questions":

  1. Printing money
  2. Promising results
  3. Micro-scale results
  4. Working product
  5. Prototype product
  6. Breakthrough technology
  7. All-star team
  8. Good product idea
The CEO should personally email the first 1000 signups  

Here's another good article by Rob Fitzpatrick. This one suggests a practical approach to getting priceless feedback and connecting to your early users: email them personally.

First, it ferrets out earlyvangelists. They’ll respond to your one line email with a book of suggestions and use cases. Treasure them.

Second, a non-negligible percent of your otherwise silent cancellations will get in touch with dealbreaker feature requests and support crises.

Third, your users with sales-potential will identify themselves by reaching out. If you email all your trial users, the ones who are seriously considering a purchase will jump at the chance to talk directly to the CEO or founder.

We used this approach in the early days of Woobius, and it certainly helped. As discussed previously, early on, metrics (and even A/B testing) don't make sense because you don't have much data. These types of approaches help you get some kind of insight at the point in time where statistical significance is still a long, long way away.

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