swombat.com

daily articles for founders

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

Why it's hard to find technical cofounders  

Much of the reason why it's insanely hard to find a really good technical cofounder is that the best ones really don't need you. Or at least they don't think they need you.

(...)

They are not the code monkey. You are the biz monkey.

Another point: you probably want some assurance (in the form of past achievements) that your technical cofounder will be able to deliver the technology. Technically gifted people will want the same assurance with respect to your business skills. "I sold my previous business for $5m after 2 years" will get even the most independent geek's attention.

Andrew Chen provides a number of other tips for non-technical founders, such as, for example, building a less technological business first to prove your mettle, and understanding and communicating what you will bring to the table.

Asking for a credit card upfront  

Negative Option billing refers to a business practice where a merchant provides a free trial or sample of goods/services, requires a credit card upon sign up and then bills the customer in the future unless they proactively cancel with the merchant.

This is a very common technique to increase conversion. You have to make the sale when the (potential) customer is most excited about the product, and in many cases, that's right at the point where they're signing up. They may still be excited a month later, but initial dreamy-eyed enthusiasm always gives way to the reality that no product is quite perfect.

Negative option billing can quickly turn into a dark pattern if you push it too far, and this dark pattern is very much frowned upon by card providers, because it leads to more chargebacks. To avoid the extra chargebacks, follow these guidelines from the article:

  • Don't create a false expectation that the product is free.
  • Communicate up-front when the first charge will come, and send a reminder 5 days before.
  • Don't require the card information up-front.

The last point is dubious (it will cost you a lot of sales), but the other two should be clear.

Build businesses, not apps  

A point that bears repeating, by Bryan Doll:

I'm not suggesting anyone stop building prototypes. I'm not suggesting we don't explore the idea of an application through its development. However, the next time you have that "aha" moment, think first of the value you can create and the app will follow. The app, it turns out, really is the easy part.

A startup is not a web application. A startup is first and foremost a business, and to be a successful business it needs to fulfill some important function for its customers, so that they will be willing to pay for it.

Of course, this doesn't mean that every startup needs to follow this approach, but Twitters and Facebooks are few and far between.

People will do what they want to do  

In the "what do normal people do with computers?" register (which we already saw some time ago here), here's an jaw-dropping example of how normal people will circumvent limitations of hardware and software to get their jobs done.

And if they can't circumvent them, they'll just not use it.

The headwaiter then picked up what Richard first thought must be some kind of new, electronic touch-pen, and moved it toward the screen. Richard is a tech savvy Internet entrepreneur, and therefore quite curious about what kind of new gadget they used at this restaurant. So he leaned in and looked a little closer ... and suddenly realized that it was a perfectly ordinary whiteboard felt-tip pen. The headwaiter just draw an "X" over their booking, directly on the computer screen!

Drawing X's on the screen and wiping them off at the end of the evening. Genius.

Startup skills vs startup ideas

There's an interesting but damaging perversion in the startup world, around ideas vs execution. Even among those who believe that "ideas are worthless, execution is everything", there is a practical, observable tendency to rate theory over practice.

If you were advising someone about how to build a top quality web application, and they didn't know how to program, you'd tell them that first they need to learn to program, probably spend a year or more practicing the craft, before they have a chance to build even a mediocre quality application. Programming is a highly complex activity that takes skill (built through experience) to do well. You wouldn't simply explain to someone the technical and architectural pitfalls of the application they want to build, give them a process for how to program, and set them off.

The same is true for most technical fields. There is a skill base that takes many months or years to build, and that skill base determines the success of any non-trivial endeavour, rather than the process they follow or the idea they have. Certainly, having a great process and a great idea is a valuable plus, but without the skill base, process, ideas and theories are mostly worthless.

But somehow, despite their renowned complexity, startups seem to be exempt from this rule. A large portion of the advice given to startups focuses on ideas (you should do this, you should do that) rather than practical skill-building (you should practice that until you're good at it).

Lean startup and the scientific method

One flagrant example of that is the Lean Startup methodology. Lean Startup is a process, a plan for how to go about executing your idea. I love it, because it presents a clear approach for applying skills which I've built over the last few years. It's a great distillation of a very rational process for going about building a startup, and I commend Eric Ries for presenting it in such a clear and cohesive manner. However, by itself it is no more useful than the Scientific Method.

Wait a minute, Daniel, the Scientific Method got us all of modern science! Surely that's pretty damn useful! I don't disagree. The Scientific Method, and the Lean Startup Method, are both very useful... when applied correctly, and with the right skill set to back them up.

If you handed down the Scientific Method to someone who is not a trained scientist, in theory they should be use it to derive new laws of nature. In practice, though, what would most likely happen is that they would mis-apply this method and come up with all sorts of crackpot theories about perpetual motion machines and life-altering magnetic bracelets. There's a good reason why we force wannabe scientists through 5-10 years of training before allowing them to do anything of consequence: it takes that long to build the skills to know how to do it properly.

In some rare cases, an exceptionally brilliant genius might manage to do "real science" without formal training, but the common case for an untrained scientist trying to apply the scientific method is failure. This is not a failure of the method, it's a failure of the person, a failure of skills.

The same is true for startups. No matter how good your method is, if you don't have the core skills needed to build and run a successful business, the great likelihood is that you will fail - not because you have the wrong method, but simply because you have no idea what you're doing and applying the Lean Startup method (or any other approach to company-building) is hard and takes skills.

Core entrepreneurial skills

The good news is, skills can be learnt and practiced. You can go from zero skill, to moderate skill, to high levels of competence. If you have the right framework and support, you might even do so quite quickly. But like all skills, you will learn them more quickly if you're deliberate about it, rather than waiting for chance to teach you the skills in its world-renowned "school of hard knocks".

I'll cover these skills in more detail in another article, but my initial short-list of what the core entrepreneurial skills are is:

  • communication (written, visual, in-person)
  • programming
  • design
  • financial control
  • organisation
  • management
  • recruitment
  • negotiation
  • sales

Someone (or a cofounding team) who is competent in these 8 key areas will be much more likely to be able to successfully build a startup than someone who has major gaps in several of them. If you look at this list and see something that you have no skill in, you should consider either teaching yourself that skill, or pairing up with someone who is competent in that skill.

One final note: of course, skills vary depending on context. You might be great at giving corporate presentations, designing motorcycles or managing a department of 500 people in an international bank. That doesn't mean those skills will translate to the entrepreneurial context, and so you should be aware of that before ticking them off as "done". However, for each of these areas, there is a commonality between different contexts, which means that some of the skills will carry over, so a corporate salesperson will at least have a good head-start over someone who knows nothing about sales.


The bastards book of Ruby  

The best way, and reason, to learn a programming language is to do something with it. Here's a book that describes itself thus:

The Bastards Book of Ruby is an introduction to programming and its practical uses for journalists, researchers, scientists, analysts, and anyone else whose job is to seek out, make sense from, and show the hard-to-find data.

This does not require being "good at computers", having a background in programming, or the desire (yet) to be a full-fledged hacker/developer. It just takes an eagerness to be challenged.

This practical focus (also mentioned in comments on HN by people who have read/used the book), along with the fact that it's designed for people who don't know how to program, and also along with the fact that Ruby is a delightful language to program in (a completely non-controversial statement!), makes it a great starting point for people who are willing to shun Jeff Atwood's terrible advice and instead follow Sacha Greif's, Zed Shaw's, or even mine.

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.


Why VCs lie  

Fascinating insight, by Josh Breinlinger, about why VCs rarely mention team issues when they reject a startup with a dysfunctional team:

I decided I'd test the waters a bit. I told some founders that it was because of them. I told some founders it was because of their co-founder. And I've lied and said "you just don't have enough traction yet." Here's what happens...

Read the article for his findings. Josh also offers some advice to founders to help change this dynamic:

  • More direct soliciation of feedback. "Do you have any feedback for me personally?"
  • More two-way feedback. VCs should seek feedback from entrepreneurs too. If you pitch me or know me, please give me feedback!
  • Check egos. It's easy to get defensive... just try hard not to.

Tough choices

We all have priorities in our evaluation of different aspects of life and business, whether conscious or subconscious. When we make decisions that respect those priorities, we tend to feel at peace. When we make decisions in conflict with those priorities, we feel that something's wrong. In some cases, being forced (by circumstances, someone, or one's own lack of awareness) into making such a decision can leave one very distraught.

Very often, the right choice can be found by simply "feeling" for it. You can rationalise it all you want, and even come up with elaborate, sophisticated and very convincing arguments for why it's right, but cheating on your partner (to take an obvious example) feels wrong, and that's your subconscious telling you this is not the right choice according to your priorities.

Unfortunately, life also throws much tougher choices at you. Making decisions is (comparatively) easy when there's a right choice and a wrong choice, but in many situations, it feels like there's no right choice - just wrong choices. In those situations, no matter what you do, someone will lose out on something and they'll be pissed off at you for making that choice. These are what I call "tough choices" - they're tough, because all the options feel wrong.

This happens particularly often in business. Tough business decisions are inevitable. Whether it's dealing with a fallout between cofounders, firing an employee that's not performing, negotiating a tough deal, or even assigning shares in a new business, businesses seem to have an almost magical way of providing an endless series of tough choices. To make matters worse, many startups are like pressure cookers that heighten emotions and drama and make all those decisions seem even more important and personal to those involved.

I've had my share of these tough choices (though there are no doubt many more to come), and I've come to realise that there are some very fundamental principles that can help with those situations.

1. Be aware of (all) your options

Most of the "tough choices" in life are artificially limited. "You have no other choice," says the authority figure in the famous Milgram experiment. "Oh, I have a lot of choices", replies one of the very few subjects who resisted this artificial narrowing of possibilities. Watch it for yourself here. It's inspiring.

Life and business throw many real "tough choices" at you, but the first thing you should do when faced with one is not to make a decision, but to see if the landscape of choices can be expanded. Many times, it can. In particular, it is always worth being suspicious of the menu of choices on offer, when it is offered by someone else. Chances are, consciously or not, the choices on that menu will be crafted to lead you to make the choice that someone else wants you to make. That is one of the most common ways that you can end up making decisions that conflict with your internal compass, and which you end up regretting.

Another factor that often limits our choices is our own axioms of behaviour. "I won't break my word" is a common one, which is easily discarded in extreme circumstances, but which we hesitate to disregard in normal situations. I am an honest and sincere person, but if I was in Nazi Germany, and an SS was asking where the Jews are hiding (and they happened to be in my neighbour's cellar), I would lie to them without hesitation and not feel bad about it. In more mundane situations, we tend to ignore this option of evading our own behavioural axioms.

Now, I'm not suggesting that breaking your word should become a routine, daily maneuver (though I'm sure some people will misunderstand this... this is the internet, after all). However, when you have really tough choices to make, I believe it's important to consider all options - including those that involve behaviours that you would not normally condone.

So, the first tool at our disposal is to reject externally and internally dictated set of choices and explore the full landscape of choice. This should be an automatic reaction to a situation where a tough choice presents itself.

2. Be aware of your priorities

The second principle is to be aware of what your priorities are. I'm not talking about your business priorities, or your priorities as an entrepreneur, though both of those matter and you should be very aware of them. Ultimately, however, you will have to live with your choices as a person, as a human being. So what are your priorities on a personal level?

Everyone will have a different set of priorities there, and the point is not to judge whether your priorities are what they should be (that's a whole different exercise), but simply to be clearly aware of what they are.

Are friends more important than business? That's an important bit of internal compass to be aware of when you start businesses with friends, because you will probably end up being faced with a decision that hinges on this question, some day.

Is creating value for customers more important than making profits? Are employees' livelihoods (if you hire any) more important than your own financial outcome from the business? Is your family more important than your employees? Is being entirely honest more important than closing the sale, or is it ok to be mostly honest? Is your health more or less important than your achievements as an entrepreneur? Would you sacrifice your life to make that dent in the universe?

There are many such questions that you can ask yourself. They're tough questions, whose answers will often determine your decisions when faced with a tough choice. Yes, they seem more personal than business-driven, but that simply reflects the fact that business is (for now) conducted by human beings, not by impersonal processes. You have to live with your decisions on a personal level, no matter how you may try to justify them as "just business".

Many may look at these questions and say "well, I don't want to make that choice - I value both family and employees", or "friends are just as important as business, I don't want to screw up either". Fine, tell yourself that if you want to, but that's just denial (similar to a product manager ranking all of 50 items on the development plan as "highest priority"). Some day, you'll be faced with a choice where either your employees or your family will be disappointed with you, where you'll either hamstring your business or your friendship, and then you'll have to choose one of the two.

That the choices will come is inevitable. What I'm suggesting is that by spending the time now, when you're not facing a crisis, to clarify what your priorities are, you will find it much easier to deal with the tough choices calmly, without panic, and correctly, when they do come.

A worthwhile exercise, then, is to try and figure out what are your top three or five priorities in life. What are the things that trump all others, and in what order do you place them? Having done this homework (and redoing it when you sense that your priorities have changed) helps in both personal and business life.

This is the second tool to deal with tough choices: be aware of your priorities in life, so that you can use them when making tough choices.

3. Erring on the right side

Sometimes, even though you're aware of your priorities and the full landscape of your choices, you might be confused about which choice best supports them. It might seem that all the options disregard your priorities equally.

When priorities fail, you can still fall back on universally accepted human values. Generosity, mercy, freedom, love, peace, life - those values (and many others) are universally accepted as good, and, should all other methods fail, falling back to them is a final safety net to make decisions that you can live with.

This might seem melodramatic, but it is a powerful tool when faced with the really tough choices.

If all the choices seem to contradict your priorities equally, which of the options is more generous, more merciful? If every decision is a mistake anyway, we can at least try to choose so that our mistakes lead us towards a better world rather than a worse one.

That is the final line of defence: if every choice is an error, we still have the choice to err towards good rather than evil.

In conclusion

I've proposed three principles to deal with the tough choices that come with every business. All of them start by accepting that we live with our decisions as human beings. "It's just business, it's not personal" is a fallacy. Everything is always personal to both the decider and the ones impacted by the decision, and recognising that leads to a framework that enables people to make decisions that they can live with.

The three principles are:

  1. Reject externally and internally dictated sets of choices and explore the landscape of choices on your own.
  2. Be aware of your own priorities in life, so that you can use them to guide your tough decisions.
  3. If every choice still feels like a mistake, err on the side of good, universal human values.

I hope you find this useful the next time you are faced with tough choices.


Entreporn: learning vs doing vs wasting time

One comment thread on my Mixergy Premium article yesterday made a number of interesting (if flawed, in my opinion) points.

One of the key points was an attack on the practice of sitting around watching screencasts, reading articles, and doing basically anything except building a business, and hoping to somehow attain success by that method. The point is interesting enough to deserve a brief article.

Entreporn: mental masturbation

There is a category of advice articles, and a way of consuming those articles (as well as better ones) which is wholly unproductive. We all know it. We've all been there, and we've done it over and over again because, well, it's addictive. It gives you the buzz of learning stuff, absorbing new information, adding to your growing skill set. It's a bit like grinding in MMOs - killing wild boar after wild boar, accumulating XP until you're finally ready to make it to the next level.

Unfortunately, the real world doesn't work like that. There's no speed limit. There's not even a speed meter. There's no destination, there are no road markers, there is just purposeful movement vs going round in circle. There is no levelling system in the real world, and no one in the entire universe is going to give a shit whether you read a million startup advice articles, ever. Probably not even you.

Reading business books and articles, watching screencasts and interviews, is utterly useless beyond the first few weeks where you're actually learning a rough map of what stuff there is available for you to draw from. If you know nothing about startups, spending a week randomly reading all sorts of articles in the Founder's Library makes sense. It's like an accelerated brainwashing programme to fill your mind with the awareness of what's there for you to draw from.

But beyond that initial sip on the firehose, the rest is mental masturbation. Unless you have something practical that you need to do, reading about startups, business, and so on, is a waste of time.

Learning and doing

However, there is a context within which "startup advice" articles and other materials (to categorise them with this giant brush) are priceless and invaluable: that's when you actually have something specific that you want to do.

If you want to figure out how to advertise on Facebook successfully, reading articles about the topic, by people who have done it successfully, is so immensely valuable that anyone who doesn't do it must be an idiot.

If you want to fix your business's broken customer service process, watching an interview of an expert who has seen your issues a hundred times and explains exactly what works to fix them is great use of your time. It has concrete and obvious value to you.

In short, if you have a specific problem to solve or opportunity to address, and you want to acquire a specific skill to address that opportunity or problem, then spending time learning rather than just jumping into doing is a no-brainer.

Another way to look at it: if you would consider paying someone to solve this problem for you, then learning about the problem is valuable. You wouldn't pay someone to talk to you about startups in general, so don't waste your time on it.

Qualifying my advice

Daniel B Markham rightly criticised the world of entreporn. That stuff is a waste of time. And I deserve some criticism for not specifying this in my article. Here, then, is the correction, or addition:

If you don't have specific problems that you're trying to solve, don't sign up to Mixergy Premium - or, in fact, any kind of source of "startup advice".

Instead, stop reading this article (it's a waste of your time too), get out of your chair, and go and find some concrete problems and opportunities to measure yourself against.

Once you've found them, then you can go back and make use of the treasure trove of advice on this site, on Mixergy, on HN, and on many other sites that I've linked to here.

You'll no doubt discover that masturbation simply isn't as good as the real thing. Go forth and do stuff, for real.


more