daily articles for founders

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

Hangups about making money  

An HN discussion about the benefit of "business guys" in startups gave rise to this interesting article by Sebastian Marshall, on the topic of making money. Sebastian makes a good point that what you want out of a "business guy" is an ability to make money, a knack for it, as he calls it.

Seb's article is a good read, as usual, and he suggests that the key component of a knack for making money, apart from hard work, persistence, and the usual suspects, is to not have any hangups about making money, to be willing to see a money-making opportunity anywhere.

Skills, drive, work hard, start without thinking too much… but especially kill off your hangups about getting money. You look at people with the knack for getting money, they killed off any hangups about getting money.

Entrepreneurs should definitely work to kill off any such hangups (because otherwise, they will kill your business). Or, join forces with someone who will happily exploit every money-making opportunity that lands the business's way. A business with hangups about making money is like a human being with hangups about breathing.

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.

How to become an online influencer  

Being an online influencer is not usually the goal of startup founders, but it is something that can help. Influence is a distribution model, and if you have a working distribution model you can often build some kind of business or startup around this means of delivering value.

Here are some thoughts about becoming an online influencer, courtesy of David Spark:

  1. You must create content
  2. Go after a niche
  3. Create a regular series
  4. Request to interview other influencers
  5. Offer yourself up for interviews too
  6. Contribute, for free, to well-trafficked media outlets
  7. Go after your industry's "whale" publications (i.e. the biggest publishers in your niche)
  8. Connect your story with a current trend
  9. Connect your brand with a much bigger brand
  10. Engage with your audience

There's no reason you can't become an influencer as well as starting a startup. The two definitely play on each other. But you'll have to remember that consistency is key to being a successful content producer (whether a performing artist, a writer, a singer, etc), and that is often difficult to achieve with the hectic schedule of a startup.

Another interesting link around this topic, if you're inclined to read more, is Merlin Mann and John Gruber's panel on obsession + topic + voice (transcribed here).

The salesman and the developer

A salesman and a developer go on a bear hunting trip.

They arrive at the cabin in the woods and start unpacking the car, moving stuff into the cabin, getting things ready for a week of bear hunting in the wilderness. The salesman quickly gets bored of this and says:

"Tell you what, you continue unpacking and getting everything ready, and I'm going to go and find us a bear."

The developer sighs and nods (he's used to salesmen), and continues setting up while the salesman vanishes in the woods.

Half an hour later, as the developer is about three quarters done with getting things ready (the cabin is now all neat and tidy at last), he hears a very loud growl as he comes out of the cabin. Twenty metres away, the bushes start shaking. Out shoots the salesman. Right behind him, a huge, snarling, drooling, roaring monster of a bear. It's twice the size of a normal bear, and it's very, very angry.

As the developer hides behind a chair, the salesman runs right up to the cabin, with the bear on his heels, and just as he's about to go through the door he quickly leaps to the side. The bear crashes past him right into the cabin, and the salesman deftly closes the door right behind, locking the bear in. Loud noises can be heard as the bear begins trashing the inside of the cabin.

The developer emerges from behind the chair. The salesman cheers and says:

"Woohoo! That's the first one. Now, you kill him and skin him, I'll go find us another!"

Two perspectives

There are two ways to understand this story, and which way you favoured largely depends on whether you're a "builder" type or a "sales" type.

If you're a builder type, you see this as a great story that illustrates a common problem with salespeople: they don't seem to care about what happens after they make the sale. Actually delivering the project is hard work, but by then the sales guys have moved on to something else, so they don't care (and, as an additional problem, in some industries the salespeople will sell stuff that can't be realistically delivered).

However, if you're a sales type (like my cofounder, Paulina), you have a different perspective on this story. It's yet another story that makes fun of salespeople while completely discounting just how hard it is to not only find that damn bear, but bring it back and get it through the door.

Who's right, then? Both, of course. In business, you need both to find and sell clients, and the ability to then deliver what you sold them. One without the other is not a business.

Sales is not optional

Many people who "do startups" these days are from a technology background. In other words, they're builders rather than salespeople. And, like all builders, they tend to disregard sales as something that can happen later, something secondary that we'll solve when we get to it.

Well, sales isn't secondary. Speaking as a builder type myself, and having experienced businesses both with competent sales and without, I now believe that having someone whose job it is to go and find clients willing to give you money from day one is so important, that I would not start any company without such a person.

Sales don't happen without someone energetically pushing the product, service, or whatever it is you're intending to sell. Some may dream of products that sell themselves, like Dropbox or the original Apple II, but even awesome products like those took serious sales effort to get off the ground. Apple had Steve Jobs, one of the master salesmen of his generation, pushing the product everywhere he could and striking bold deals to get the company off the ground. Dropbox endlessly tweaked their referral scheme before they went viral.

Some few businesses like Google or Facebook or Instagram get to figure out the business model later. They can do without sales, perhaps. But this model only works in one place in the world, and unless you're starting up in the Silicon Valley bubble, your business is not a business without sales.

Don't let me know how I can help  

Robert Williams from letsworkshop.com:

The single phrase (and every variation of it) that time and time again repels clients away from us and hurts our credibility in more ways than one:

“Let me know how I can help.”

When I said this I honestly thought I was being helpful.

Read on for Robert's explanation of what to do instead.

It's amazing how many little quirks of language can have a pretty significant influence on conversation. Two "power tricks" that I like are the use of the words "reasonable" and "fair".

When ending an email about a suggestion that you're not sure will be accepted, it helps to end the email with "Does this sound reasonable?" - because this question somewhat demands a yes. Even the recipient disagrees, they will typically start the answer with "Yes, that sounds reasonable, but I disagree because of XYZ". Saying "no, that doesn't sound reasonable" would force them to escalate the conversation in an unpleasant direction.

This is not a trick to be abused, but it can act as a tiny little nudge in the right circumstances, to help someone who would otherwise hesitate forever to actually make a move. "If it sounds reasonable," their internal monologue hopefully goes, "then let's do it."

"Fair" (and her evil twin brother "unfair") is an even more powerful word. Despite the fact that everyone knows "the world is unfair", people have a strong desire to be perceived as fair (whether or not they are). So, for example, when I feel like a sales situation is drifting out of control, and I'm tempted to simply end the sale completely, instead I give it a firm chance to get back on track by bringing "fair" into the mix. "I believe we're not being treated fairly in this discussion, and I'm not willing to do business on terms that I perceive to be unfair. I'm happy to start the conversation again if we can agree on terms that will be fair on both of us."

I wonder if there's a collection of these conversational power tools (and their brethren, the conversational limp handshakes like "Let me know if I can help") somewhere.

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.

Time management for startups  

HackFwd offers some essential tips for time management when you're a startup founder:

  1. Know the difference between busy and productive: it doesn't matter if you're working hard, if that works won't be delivering results for your business.
  2. Know the value of your time: as an entrepreneur, you have the freedom to outsource time-consuming work that needs to be done but doesn't bring much value to your business. Use that freedom.
  3. Organise your contacts and calendar: this seems like the weaker advice on the list. I can't think of many cases where spending time organising your contacts is time well spent for a startup founder!
  4. Recognise your rhythms: Instead of assuming that every hour is equal, be aware that you have daily rhythms which mean that some hours each day will be more productive than others. Spend the productive, clear-minded hours on things that need them, and keep mindless tasks for mindless hours.
  5. "Scheduled maintenance": Everyone needs to recharge from time to time! Take holidays. I'd expand that to weekends, too - working 7 days a week every week will eventually burn you out.

Apart from number 3, those are all great tips. Full article here.

Where does the customer's story actually begin?  

Des Traynor at Intercom, wrote a great guide about how to onboard users with stories and addresses a common problem in customer interviews, misunderstanding the customer's true motivation.

When conducting your interviews, try to keep the participants focused on their actual actions and feelings when making the switch [into an active user of your product]. People are notoriously unreliable at predicting their future behavior and attitudes, so framing everything around what really happened (not what usually happens, or could have happened) during their onboarding experience keeps your emerging story tethered to the realm of reality.

Asking for specifics also helps transport people back into the actual moment, which brings up lots of super valuable accessory details. Rather than asking them if they had an easy time with setup or not, get to specifics by asking which part was the trickiest, and deeply explore that moment. By way of a real-world example, while someone might not have a lot to add to “are you a safe driver?”, asking them to specifically recall the last time they were pulled over would immediately thrust them into a story rich with emotional details.

Also, be sure to track every story’s breadcrumb trail as far back as you can get your interviewee to remember. The narratives that lead up to our decisions can be surprisingly long — much longer than the surface would show. A journey to a car dealership may at first seem to begin with seeing a newspaper ad, but after even a little bit of digging it could turn out to have really started with a funny noise in the engine two months before. Onboarding always begins with the motivation to change, which always takes place before the user ever pulls up your site.

In customer interviews, it's helpful to look for particular triggers in their life. Des describes a motivational trigger here, but there are others like:

  • awareness triggers: when and how they became aware of new, possible alternatives
  • decision triggers: what happened in their life that actually got them to start shopping

Together, these provide you with key landmarks in the users journey toward being a customer. With this knowledge, it's much easier to figure out how to attract, onboard and keep customers.

In addition to Des' post, Mckinsey's Customer Decision Journey elaborates on this, and it's relationship to your brand and competitors, and Rob Fitzpatrick's The Mom Test elaborates on customer interview techniques.

Startup failure and startup mediocrity  

Dharmesh Shah:

One of the great things about software startups today is that it's very possible to reach “ramen profitability”. That's also one of the bad things. Once you get to “ramen profitability”, running out of cash is no longer a way to know that you should be starting afresh and trying something new. You can run a startup like that indefinitely — and many entrepreneurs will do just that, instead of building the next Dropbox and becoming legendary.

I'm of the opinion that people who are really driven to build great companies will use their "mediocre" companies as springboards to bigger and better things, and only those who don't care so much about how big their company is will remain "stuck in a dead end statup", so to speak (and they will be happy about it, because they will get their sense of fulfilment from somewhere else).

Building a startup that pays your salary and enables you to spend your time on whatever you want is no mean feat. Of course, if instead you build a startup that sucks all your time and energy in exchange for a meagre amount of money and success, then that's not a great deal, but then, surely, people stuck in this situation will not be any happier with it than they would be with a job that provided the same results, and they will act accordingly.

Count me firmly on the side that's very pleased that it's cheaper than ever to build a profitable startup.

The fatal pinch  

Paul Graham explains how startups that are burning through their first round of funding often don't realise they're about to die, and need to either make more money or cut expenses:

There may be nothing founders are so prone to delude themselves about as how interested investors will be in giving them additional funding. It's hard to convince investors the first time too, but founders expect that. What bites them the second time is a confluence of three forces:

  1. The company is spending more now than it did the first time it raised money.

  2. Investors have much higher standards for companies that have already raised money.

  3. The company is now starting to read as a failure. The first time it raised money, it was neither a success nor a failure; it was too early to ask. Now it's possible to ask that question, and the default answer is failure, because that is at this point the default outcome.

What is most interesting to me, though, is this paragraph:

Whereas if you only have a handful of people, it may be better to focus on trying to make more money. It may seem facile to suggest a startup make more money, as if that could be done for the asking. Usually a startup is already trying as hard as it can to sell whatever it sells. What I'm suggesting here is not so much to try harder to make money but to try to make money in a different way. For example, if you have only one person selling while the rest are writing code, consider having everyone work on selling. What good will more code do you when you're out of business? If you have to write code to close a certain deal, go ahead; that follows from everyone working on selling. But only work on whatever will get you the most revenue the soonest.

The bit in bold applies to every startup, funded or not. Which brings me to the obvious conclusion, that won't be very surprising to regular readers of this blog... why not skip the funding and go straight towards having "everyone working on sales"?

The answer is, that's not possible for some businesses. But it is possible for most businesses, despite the apparent, loud popularity of the Valley model of "raise funds first, figure out how to make money later". And, from the above sentence, I deduce that it is also possible for most Valley startups.

So the next question is, which one is better? I guess they both have pros and cons. As I've argued before, investment is a springboard, not a cushion. If you're an experienced entrepreneur, who knows how to build a business, and you want to do it faster, raising investment makes a lot of sense even if you could bootstrap the business. If you're a new entrepreneur, though, I still recommend going without, and learning the basics of how to build and run businesses before hitting the "boost" button.

What's clear is that even amongst the Valley model startups, those companies that can afford to neglect sales and other "proper" business topics are few and far between.

Google Analytics Alternative