daily articles for founders

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

Services vs Product business  

A strong, lengthy article from Mark Suster, explaining that successful services businesses should not all try to become product businesses just because of all they read on TechCrunch about hot product startups:

Firstly, they don't realize how hard product businesses are. They mistake their successes in selling services as a competency in selling products. This is a huge mistake. Secondly, they often ramp up their cost base to accommodate these costs, which when a down market hits they are more effed than those that stay focused. Finally, the focus on the product (envy) means that they take their eye off of their core business, which is services. So the core business suffers.

Products businesses definitely have some advantages over services businesses, at least at a small scale. Running a website that sells a product like this one is the only way to create a business that will earn you money while you're sleeping or sitting on the beach. But, as Mark points out, building a successful product requires very different business skills than building a successful services business (though the technical skills may be roughly the same).

But at scale, both types of businesses take immense amounts of hard work and luck to grow huge and sustain. Very few products businesses scale up without requiring a lot of staff. So I agree with Mark that, if you're aiming to create a large business, you shouldn't discount services as a way to get there.

Startups need a strong vision  

Des Traynor:

Setting a vision lets everyone know what direction they're going, even in small teams. It helps you understand what activities are beneficial and which ones are valueless distractions. It tells you when to say no, and when to say Hell Yeah. As Michael Porter wrote in "What is Strategy", "Overall advantage or disadvantage results from all a company's activities, not only a few.". A vision let's you define those activities.

When you see all activities as being useful, no activities are useful. The problem with a plan like "Let's keep adding good features", is that it's hard for people to agree what's a useful thing to spend time on. This is fine during exploratory days when you're fishing around for a niche or an angle, but when you're specifically trying to achieve something you need a common vision to help you define what you should be doing. When you don't know where you're going, any road looks good.

This matches with my experience working with a fair number of technology companies over the last year at GrantTree. Once you're past the initial phase where you're figuring out whether you have a business that can make money, vision really ties things together. My observation is that there seem to be two types of business out there: those with vision and those without.

Those with vision seem to move deliberately and aggressively towards and objective, and their progress is often very impressive. Those without just react to opportunities that come their way and plod along. One could say that the true definition of a "lifestyle business" is that it lacks vision.

When do you kill your startup?  

Ryan Carson:

After a lot of soul searching I decided to take Option #6 and kill the product. I could've figured out a way to make options 1-5 work if I truly believed in the product and it's mission. Deep down though, sending large files wasn't something I was truly passionate about.

Founder-product fit is a bitch. If you're not enthusiastic (and I mean really enthusiastic) about some fundamental aspect of the product you're delivering, it's not a good product for you.

However, to answer the title question, when should you kill your startup? Probably a lot sooner than you think. Some entrepreneurs give up too early, but they are rare. Most tend to give up far too late - and when they finally throw in the towel and start something new (which is a lot more exciting and fun than flogging a moribund horse), they usually feel relief that they finally made the decision, and regret that they didn't make it sooner.

If you're asking yourself whether you should kill your startup, you probably should kill your startup.

True ecosystems  

I somehow missed posting this last year, when it was published. An excellent article by our very own Salim Virani, on the topic of ecosystems.

Sal and the rest of the FounderCentric team spend a lot of time working with incubators, accelerators, governments, outreach teams at large companies, etc, and helping them develop their startup scenes. Their mission comes from the heart (they really care about helping startup founders), and they are, as far as I know, the best at it at this point, in Europe.

So their thoughts on the topic of how European ecosystems should develop are worth paying attention to. Here's one of the points that particularly stood out for me:

He leaves us with the final takeaway "Support only the best people who have set the objective of being the 1 in 50,000". So, only support the hugest successes - and leave the others stranded?

From a broad ecosystem perspective, investors are often stumps we have to ignore and grow around to get to the next level. "Like a rotting treestump in the forest, they've established themselves from a past leadership position, still get all the attention, but get in the way of progress." They do what works for them, but we have to see the broader picture to grow a successful ecosystem.

Investors aren't bad guys; most work in the best interests of startups from their point-of-view.

The problem is when they perpetuate the idea that the "best" startups for them are the best startups for everyone.

Taking the Silicon Valley definition of a "successful startup" and requiring that everywhere in the world as a bar to entry is short-sighted for people who want to bootstrap a startup ecosystem in a city where there is none. There are many ways to build successful businesses, and the "funded mega-high-growth startup" way, the unicorn chasing approach, is simply not a smart approach for most parts of the world.

If you're interested in startup ecosystems, read the full article here.

Four misconceptions about Lean startup  

The Lean Startup methodology is frequently misunderstood, unfortunately. This article by Jim Kalbach is one more attempt to clear up some of the more common misconceptions, namely:

  • Lean startup is not an engineering process, it's a method for building startup, so it won't make your developers happy.
  • Lean startup doesn't mean "let's just shoot from the hip without overanalysing things."
  • An MVP is not a lightweight version of the product, it's the answer to a question, the resolution of your next most pressing uncertainty. More on this here.
  • User testing will not "slow you down" - it's the heart of the Lean Startup method: do stuff only to learn about what your customers need before they can give you money.

Read the whole article here.

Signup page conversions 101  

This article by Brett Cooper might seem a little basic for those who have been following the startup world for a while, but for newcomers, it outlines a number of mistakes that are all too common, such as over-complex freemium models, too much text, complex incentives, etc. The fundamental principle, as always, is to keep things simple and clear.

Worth a read if signup page conversions are a new topic you want to learn about.

No risk to startups?  

Ben Yoskovitz seems to agree with my earlier thesis about entrepreneurship being the safest career:

"Don't think of starting a company as a risk. There's no risk. You're a talented developer, you're insanely employable, you can find work any time you'd like. Even if your startup fails miserably, you'll learn a ton, it'll be a great experience and you'll be better for it. Think of it as an investment in you, not a risk."

"The only question is whether you want to invest in yourself or not. The truth is, you'll lose money at the outset. You can't pay yourself as much as you make in a regular job and you'll have to be comfortable watching your savings dwindle."

Saying there is no risk seems a little overstated, but I do believe there is less risk in an entrepreneurial career than in a corporate career. This isn't to say that an entrepreneurial "job" (i.e. a specific startup) isn't risky. It is. The career, however, is not.

Taking notes to supercharge your learning

I've written before that you should take notes while reading advice articles. The more I've practiced this, the more I've come to believe that this is an essential learning tool (and one that I haven't been using properly for many years). This will probably seem obvious to those who already have a habit of taking notes from what they read, but for anyone else, please pay attention.

Note-taking as teaching

Taking notes, as I outlined almost a year ago, forces you to internalise the message you're absorbing, and synthesize it. There's no better way to learn something than to teach it, and taking notes is a private form of teaching.

Although in practice this will never happen, in theory, someone should be able to take your notes and figure out the gist of what the original author was trying to say. In order to explain that clearly and concisely, you need to carefully read, think about, understand, and internalise the book or article's message. You can't just skim through it while watching TV. You need to focus.

Note-taking as a quality filter

But notes do more than that. Note-taking also helps you quickly identify when the piece you're reading provides no value. If you're reading page after page and not writing anything down, it means that what you're reading is either empty, entertainment, or Art.

Some non-fiction books seem to ramble on forever without saying anything new. Malcolm Gladwell, for example, seems to have mastered the art of repeating the same point 200 times in a book while making you feel you're learning something. Blink has basically just one point: "Some of our thinking happens subconsciously and very quickly, and is surprisingly accurate". There, I just saved you ten hours of reading. This is still better than some abysmal non-fiction books which have zero point (and which shall remain nameless), but it's not great when compared to, say, Seven Habits, which is full of interesting, actionable ideas.

There's nothing wrong with reading books for entertainment (and Gladwell could be considered entertainment), but you should do so knowingly. As Paul Graham pointed out, the most insidious time-wasters look like they're productive work. If you identify books like Gladwell's as entertainment and accept them as such, fine. Just don't fool yourself into thinking you're learning something useful. Many fiction books are also obviously entertainment, and as a huge fan of fiction, I love and read them.

Finally, Art (primarily found in fiction rather than non-fiction) is a different kind of area altogether. I believe that the best books of mankind provide us with truly invaluable, deep insights into the meaning of life. Those are by definition so subtle and slippery that it is impossible to put them into short form. You have to live through them, personally or vicariously via a great writer's work.

For everything else, though, if there's nothing to write down, you're almost certainly not learning anything.

Notes as a repetition learning tool

One of the more awesome side-effects of taking notes is that it enables you to basically perform spaced repetition practice on yourself. It's well known that we learn through repetition. However, you can't keep re-reading a book every couple of weeks until it sinks in. That just takes too long.

I believe you need to read a book at least once to really understand the author's points. Derek Sivers' book notes are a great resource to get ideas for books to read, and to figure out whether you'll like a certain book or not, but you can't really learn properly from someone else's notes.

However, you can very well learn from your own notes.

This means that, for example, as you make your way through books like Cialdini's Influence, which can take a few weeks to absorb properly, you can refresh your memory regularly with your notes, and make sure that by the time you finish the said book, you haven't just read it. You've absorbed it. That's pretty much unachievable without notes.

Weeks after finishing a book, you can also spend 20 minutes or so re-reading your notes, and help settle the knowledge into your brain. The difference in terms of how much you actually retain is enormous.

If you're not taking notes, you're not learning

This leads me to a practical conclusion. The difference in learning between taking notes and not taking them feels, intuitively, like it's at least tenfold, maybe a hundredfold. If you don't take notes while reading a non-fiction, "teaching" book, you might as well not have bothered reading it.

Taking notes increases the time it takes to read that book, but it provides so much benefit that over the past few months, I've gotten into the habit of not reading any kind of non-fiction unless I have a way to take notes.

I warmly recommend that approach to you too. If you're not doing it yet, it's probably one of the most effective ways you can increase the rate at which you're learning and growing.

Dealing with conflicts in your business  

Would you believe it, startup founders are human beings, and face the same kinds of difficult human issues that the rest of the world faces.

The techniques that Dr. Jared Scherz outlines work for situations other than those found in startups. They work, in fact, for many difficult situations. In particular, stepping outside your immediate situation to look at it objectively is a powerful technique for dealing with conflicts.

So take a moment and step back before reacting to people or situations. Ask yourself what is going on inside you to trigger your feelings. Consider what is driving the actions or inactions of others around you. Scan the team to see how people are working together and what the underlying causes are for problems. Base your responses on what emerges through your awareness to prevent impulsive decision making. As the CEO you are responsible for attending to the processes of your startup, not simply executing a wonderful product or service.

Worth a read if you feel you could use a primer in how to deal with conflicts in your business.

How to become a must-have  

Great article by Mark Richards, proposing a technique for identifying tough, valuable problems that could make you a lot of money:

The value of a problem directly correlates to the time people will take to tell you about it.

Time and time again we find that if busy people, who fit your target customer profile, are willing to give you valuable time simply to discuss a particular problem, with no clear promise (yet) of a viable solution, then you have an important problem. The kind of problem a startup, with limited resources, no brand, an incomplete product and a small team can actually sell into.

Worth reading the whole article. I'll keep an eye out for more good stuff from Mark, he seemed to be planning a follow-up to this, though it hasn't been posted yet (the article is from September 20th).