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

Don't drink your own kool-aid  

Another great article from 500 Startups, about that nasty little disease which naturally infects every entrepreneur: self-delusion.

Anthony Lee proposes three signs that you're drinking your own Kool-aid:

  1. Illusions of control, for example thinking you control things which you don't control.
  2. Hope, also known as optimism bias, generally signalled by the team talking in terms of what they "hope" will happen rather than more reliable plans.
  3. Spin, which is essential in marketing communications, is deadly when used internally. Internal meetings should be full of facts, not sound like a pitch deck.

How to avoid this detachment from reality?

  1. Metrics: see this earlier Metrics for Social Startups article in case you missed it.
  2. Culture: create a culture that encourages open, fact-based dialogue and dissent. Designate someone on the team to play devil's advocate and poke holes in the plan.
  3. Friends: Suround yourself with advisors who are honest enough to call your bullshit.

Startup gung-ho

Businesses, investors and consumers alike are gregarious. They want to go where everyone else is going. They want to buy success, from successful companies.

This leads to a perversion that affects the startup world as well as the rest of the business world: the need to appear more successful than you are, in order to get business, investment, customers.

This is not entirely artificial. Building a successful business is also about being able to project the right image to appeal to customer, and an appearance of success is part of that. Fake it till you make it, as they say. People don't want to buy from or invest in a dying company, so you've got to look like you're doing great, even if you're an invoice away from technical bankruptcy.

But there's a reverse side to that, which I believe is harmful to some startups: this projection of fake success extends to meetings with other startups and potential mentors at networking events, and because of that, founders who could really use a good dose of advice from a more experienced entrepreneur end up flying blind and making all the same mistakes again.

Startup networking events

When I turned up to my first startup networking event, I didn't know what to expect, so naturally, I turned on the "we're doing great" façade (which, I quickly observed, everyone else did too). Isn't it amazing how, in a high-risk industry where most companies are expected to fizzle out in the next few months or years, everyone is doing great, growing fast, acquiring more users, etc? How often do you meet a new founder and hear "Yeah, well, I've been at this for 9 months and our revenues are still way too small, so I think I'll be throwing in the towel and trying something else soon, because this isn't working."

Another aspect of this problem is that once you start putting up the appearance of success, it becomes very tempting to do so consistently, with everyone. Anyone could refer you to some business, after all, so you have to be on your toes all the time. Otherwise, you might miss out on some great opportunity that would have come your way if only people thought you were doing well. At least, that's how it often feels.

To make matters worse, if you introduce yourself by presenting what's wrong with your business, people will peg you as a negative type, and that's not the kind of founder people think of as being headed for success. No, you have to be an outgoing, friendly, open extrovert with a strong dose of self-confidence and a very slight touch of arrogance.

I'm very lucky that I can genuinely say that at this point, the two businesses that I am involved in are doing very well. But this wasn't always the case.

Missed opportunities

In the times when my companies were not successful, did I get any amazing opportunities by claiming to be successful to my startup peers? I don't think so. Founders have a pretty finely tuned bullshit detector. I doubt anyone was all that fooled. What about investors? With them, faking success is even less useful. VCs will not invest without doing a fair amount of due diligence. Claims that you're doing great when you're going bust will never lead to investment, unless you're a consummate con man.

What opportunities did I really miss, then?

How about opportunities for advice? Entrepreneurs are a helpful lot, but if you don't present your problems clearly, your peers won't be able to help you. Even non-entrepreneurs seem more likely to offer advice and connections if they think you're struggling and they could make a difference. Perhaps the only set of people to whom you might want to project the "appearance of success" are clients, during a pitch. Even that is unclear, though. It really depends on your industry. In some industries, a fledgling startup is more likely to get a foot in the door than a mature, successful company, and expectations will be lower, and therefore easier to beat.

In summary

  1. Appearing more successful than you really are will destroy more opportunities than it will create.
  2. Instead, be honest with fellow entrepreneurs. Don't be negative about it, but don't claim to be doing great when you're not.
  3. VCs will not invest based on an appearance of success, so bullshitting them won't work either.
  4. Appearances of success may work with some types of customers in some industries, but think about it for a few minutes instead of simply defaulting to the startup gung-ho attitude.

How to find startup ideas that make money  

Here's another excellent article by Paras Chopra of Visual Website Optimizer. He proposes and describes a "market-driven approach" to finding startup niches that make money:

Find a startup idea that: a) is already making money for someone else in a growing industry; b) interests you; c) aligns with your skill sets. Once you find such an idea, simply carve out a niche within the industry by a) addressing pains of an under-served segment within that industry; b) or, making it much easier to use than existing solutions; c) or, disrupting the market by making your product accessible to masses at a much affordable price. And once you dominate a particular niche, expand from your niche with your eyes set on the largest player in the market.

Startup founders vs Entrepreneurs

There are more than a few falsehoods within the world of startups. Most are not worth worrying about, but some are very damaging. Some have side-effects that can ruin or kill people.

Every once in a while, the debate about "startups vs lifestyle businesses" recurs. It's one of those never-ending debates, with one side, let's call them the "scalable startups", bemoaning the lack of ambition of the "lifestyle businesses", and the other bemoaning the hare-brained, risk-it-all attitude of the startup crowd.

This is not the main contradiction I want to address in this article, but it's related.

The falsehood I want to address is exposed when you look at the terms in the title: startup founders, entrepreneurs. Pretty much all startup founders believe they are entrepreneurs. They consider themselves an exclusive, elite subset of entrepreneurs who start an elite subset of businesses: the scalable tech startup. They therefore naturally look down on the wider world of entrepreneurs, who do business in a less fashionable, sometimes less scalable manner.

However, that belief is a falsehood. Many startup founders are not entrepreneurs.

What is an entrepreneur?

It helps to start with a good definition for entrepreneurs. Here I am not concerned with the dictionary definition, which is based on usage. I want a useful definition.

An entrepreneur is someone who sets out to find business opportunities and create business systems to exploit those opportunities for financial gain.

I have deliberately excluded "internal entrepreneurs" at large corporations, and "social entrepreneurs" who aim for social good rather than financial gain. I believe those should be considered as separate categories. Although many successful businesses lead to social good, making social good the primary objective of a venture makes it a social venture rather than an entrepreneurial venture.

This definition is useful because it is broad enough to include anyone who genuinely tries to create viable businesses, but not so broad as to include anyone who does anything of their own initiative in the vague hope that maybe some day it might make some money, however unlikely. Creating a blog or site which perhaps some day could make you money through advertising does not make you an entrepreneur, neither do owning a good domain name, having ideas for cool products, or registering a dormant business. Those things may lead one to later becoming an entrepreneur, but they are not, of themselves, sufficient.

However, the definition does include anyone who tries to find business opportunities (through pot luck, determined research, personal connections, etc) and do useful work (themselves or via employees) that results in substantial enough amounts of money being made that the enterprise has a chance of becoming profitable at some point.

There are many tens of millions of entrepreneurs in the world, perhaps hundreds of millions, or even more. In poor countries, many people have to be entrepreneurs to survive. They spot business opportunities and exploit them to make a living. Because the opportunities tend to be small and conditions are very uncertain, they are never able to scale those businesses up, but the person who runs their own clothes shop in Liberia under incredibly difficult circumstances is every bit as much an entrepreneur as the one who starts a global fashion brand in New York.

Startup founders

Many startup founders are in fact entrepreneurs. I consider myself to be both, for example, though only since launching GrantTree.

Startup founders are, quite simply, people who found startups. They register a business (maybe) and create something that might turn into a business at some point, or even do turn it into a business successfully. So far, they sound a lot like entrepreneurs.

One difference is the goal. Entrepreneurship always has a financial motive. For startup founders, though, that motive is often secondary. They usually want to change the world, build cool products, become famous, have a big exit - oh, and perhaps, if it's socially acceptable at the time, enjoy the money that they've made as a side-effect of their chosen career. The money motive is often discouraged as a primary driver.

The even bigger difference comes when considering the concept of closing the loop. A business is not viable until the loop between creating value, delivering it to customers, and being paid for it, is closed. For entrepreneurs, closing the loop is essential, the main task on their task list until it is done. There is no business until the loop is closed. For startup founders, closing the loop is often secondary, perhaps even toxic (since if the loop does not generate large profits as soon as it's closed, funding will often dry up).

This is not to say that closing the loop is the only way to build a business. Erstwhile startups like Facebook, Google and Twitter, show that it is possible to build huge businesses, some of them very viable, without worrying about making money for years. Success stories like Instagram, Tumblr or Youtube show that it is possible to achieve a billion-dollar exit without having ever closed any viable loop whatsoever.

In Silicon Valley, it is even plausible to make "the loop" be the creation and acquihire of the startup itself. That is a valid model for investors, and even for some founders, though it presents a lot of downsides that I believe most first-time entrepreneurs wouldn't accept if they were fully aware of the alternatives.

The downside of being a startup founder

As I mentioned earlier, most startup founders believe they are entrepreneurs, even if their startups are completely divorced from the financial reality of business. Cushioned under a blanket of (relatively) easy VC money, surrounded by the hype bubble, drenched in startup articles from Hacker News, one could be forgiven for thinking this is the only way to do business in the 21st Century. Meanwhile, the rest of the entrepreneurial world looks on at this incredible machine that takes unviable businesses, pumps them full of venture money, and sells them on for stratospheric valuations.

It's a wonderful system for the savvy investors who know how to play it, but what about the founders?

The downside of this system for the founders is pretty simple: the risk and pressure are enormous. In order to succeed at this game, the game usually requires the founder to tie the startup to his identity. The failure of the startup and the founder's fate become closely tied. Importantly, the outcome, success or failure, is only known years into the venture. Youtube succeeded in a lightning-fast 1-2 years, but they are the exception, and even they must have been under enormous stresses approaching the exit event (Youtube was, I recall, being sued by content holders when Google acquired them). It could have gone very badly very quickly for them. Tumblr was running for 6 years before being acquired, and had, from the sound of it, a failing business model. Imagine the stresses David Karp was under.

Any startup where you're going to have to raise lots of money, make lots of promises, hire lots of people and generally tie your fate to the startup very publicly, for years, before you can find out if you're successful, is going to be a pressure cooker for the founders.

The result of such a game is tragedies like Jody Sherman and Ecomom. While tying the two together remains speculative since Jody left no note, it is fairly credible that the two were strongly linked.

Even if the outcome is not so dramatic as a suicide, such stresses take their toll. Binary outcomes that can change your life from heaven to (subjective) hell are always extremely stressful.

A funded startup always carries with it the possibility that you will exit as broke as you came in.

An alternative

Despite its apparent anti-startup stance, this article is actually not an attack on startups and startup founders. I believe that the startup game can be a valid way to create businesses. Some day, I will probably venture down that road too.

However, it should not be painted as the default or superior option. Choose the startup founder path if you want to, but choose it in full knowledge of what you're doing.

The alternative is to do business the way it's been successfully done for millenia: find business opportunities and exploit them to make money.

There is much less risk in this approach (you know whether the business is working out within months, if not sooner), and it is more rewarding emotionally and financially. The skills are also more transferrable. You can apply the skills of the entrepreneur anywhere in the world, whether there's war (Milo from Catch 22 and Oskar Schindler come to mind) or peace. The startup founder path is only truly viable in a few places in the world right now - most of them in or near Silicon Valley. It could close up quickly if the historically rare, 60+ year long period of peace we're experiencing comes to an end.

And lest someone thinks entrepreneurship is destined to create only smaller businesses, there are many giant companies out there that started as level-headed entrepreneurial ventures - including such Tech household names as Apple, Microsoft, HP and Cisco. There was no guarantee that any of those would become the behemoths they are today without additional capital, but even if they had ultimately failed, their founders would have retired wealthy.

Conclusion

Either path is viable, and if you're determined to go down one path or the other, no article is ever going to stop you.

But if the thoughts in this article are news to you, I urge you to consider which option is more suitable to you at this point of your life, and to remember that you don't have to restrict yourself to just one of those. You can be an entrepreneur today and a startup founder tomorrow, or both at the same time, or just a startup founder. Which of those three you pick will make a huge difference to the risks you take and the pressures you face.

My personal opinion is that if you're starting off from a position of weakness (i.e. you're poor and not famous), and especially if you're not in a startup hub like Silicon Valley, it makes a lot more sense to go down the entrepreneurial route than to go via the startup route.

And if you do, don't let anyone who's chosen the startup route tell you that your business is somehow less worthy than theirs. Both are viable approaches with different risk and pressure profiles.


Dangerous data: three kinds of lies  

Data is a dangerous tool in making decisions. You need to understand the different ways in which it can fail you before you can make good use of it. Otherwise, you might make completely wrong data-driven decisions.

And then, of course, there's also some decisions (for example, high-level design decisions) which must be made based on something other than data.

This article outlines three possible failure modes of data-driven decisions, with Digg's catastrophic failure earlier this year as the backdrop for the points.

  1. Ask boring or loaded questions which can lead to self-fulfilling results;
  2. Get lazy and sample something too small or too favorable to the answers you hope to find;
  3. See patterns and correlations where there are none.
The SaaS market in Japan  

Jason Winder:

Japan is a notoriously difficult market to crack. Successful, established businesses entering Japan from overseas that do not bother to tailor their marketing and product for Japan regularly fail here.

Notably however, Japan’s SaaS market is bigger than every other SaaS market in Asia combined. If you put in the time and effort to battle through the adversity, there is a wide range of fantastic opportunities here generated by criminally under-served market segments.

Whether you're looking to expand your existing product to this large potential market, or simply looking to target it directly (hopefully after moving there and spending a few years absorbing the culture), this article will come in handy.

The article covers things like how to get feedback, how Japanese consumers make decisions, how to deal with Japanese people's sensitivity to "Japanese-ness", and how to provide the levels of customer service that Japanese consumers expect.

Unintentional plagiarism - your ideas belong to everyone

"Ideas are worthless, execution is everything!" It's the mantra of the modern entrepreneur. And yet we all do feel quite possessive of our ideas - at least of our best ideas.

Great ideas do seem to float around. Sometimes, they seem to do so magically, bridging gaps that seem uncrossable. But the reason why it looks magical is not because other people are telepathically stealing your thoughts, but because they weren't your ideas to begin with - at least not in the way we usually think of the concept.

Allow me to illustrate with two examples.

Stealing an article without knowing it

Accusations of plagiarism fly around every once in a while on the web. Sometimes they are warranted, sometimes not, but they are always emotional. And sometimes, things look like one party is clearly culpable, even though that's not actually the truth!

On Friday afternoon, Dan Shipper tweeted me the following message:

@swombat I really admire your blog and I wrote a post I think you might like. Would love your thoughts: http://bit.ly/wiyxaj :)

It was Friday afternoon, I was busy, out and about. I clicked on the link, had a quick glance through the article, and mentally filed it "to read later". Sometimes I get back to these articles, sometimes I don't (but my intention is actually to reply to people who tweet me!). It went out of my mind, I went about my day.

In the evening, I was trying to think up of an inspiring topic for the following Tuesday (my current plan is to structure my postings so that Mondays are practical advice, Tuesdays are inspiring, etc.). I wracked my brains. I thought about it while falling asleep... a title emerged... "Write your own story".

This morning, as I thought more about it, I liked the title. I saw a direct connection with this Paul Graham article, which states:

This leads us to the last and probably most powerful reason people get regular jobs: it's the default thing to do. Defaults are enormously powerful, precisely because they operate without any conscious choice.

I felt I could write a good, solid and at the same time inspiring article around this theme, of figuring out what your own "defaults" are, and changing them, and achieving improvement in your life patterns this way. Bingo. I started writing. I felt inspired. The idea was powerful, good, worth sharing.

Then my how to register a company in the UK article suddenly took off, and I took a break as someone called Oliver Cross engaged me with useful feedback about that article. While I was looking at my Twitter replies, I reopened Dan Shipper's article. My jaw dropped. Let me quote you an extract from his (rather good) article:

Default settings are all around us. Why do we go into work at 9 AM instead of 8 AM? Why do sales people work on commission? Why do we have an 8-hour work day?

The fact is that very often there are no good answers for why these default settings exist, they just do. And not only does that create a great deal of waste in a business environment, it also leads people to certain misconceptions about what is and isn’t possible that are simply false.

Given the existence of our default settings, one of the most important questions in our lives then is: Why do we do the things that we do?

Holy shit.

If I'd gone on and written this article, and published it, then by today I would have been accused of plagiarising his article (that I hadn't even read all that carefully). And it would have looked very much like I was completely guilty - even though I was completely unaware of it. I read something like 50 articles a day (including the quick skims). There is absolutely no way for me to track every idea in my subconscious and where it came from.

Obviously, knowing that now, I won't finish writing it. Instead, I warmly encourage you to check out Dan's article, titled Why we do startups.

Subconscious pick-up

I watched a second example of this on TV a few days ago. Derren Brown, the famous hypno-showman who likes to play with out minds, gave a striking example of how actively our brains suck clues from our environment.

He took two advertising professionals, and asked them to draw up an advert, in half an hour, for his idea to start a chain of taxidermy (aka stuffed animals) stores. Before leaving, he placed an envelope containing "his ideas" under a stuffed cat, then let the pros get to work.

In half an hour, the pair wracked their brains and came up with a clever concept involving a bear playing a harp, with a logo of angel wings, the name "Animal Heaven" and the strap line "The best place for dead animals". Derren then pulled out his own "ideas", and they were, of course, strikingly similar.

How did two creative professionals do something so predictable? Well, it turns out Derren had peppered their environment, particularly on the cab journey to the shoot, with repeated cues that ended up in the advertising concept. He had basically primed their subconscious to generate those ideas. Since they are competent creative professionals, their subconscious is probably very efficient at picking up all the best ideas from their environment, and using those in their work.

Critically, the two victims were completely unaware that they had been so duped. If you'd asked them, they certainly would have claimed they came up with the ideas on the spot - and they did. The interesting experiment that Derren Brown didn't do would have been to take two pairs of creatives through the process simultaneously, and see how they reacted to finding out that they had come up with the same ideas. Would they have accused each other of plagiarism?

Your ideas

Of course, not all the ideas in your head are similarly arising in other people's heads.

However, the best ideas in your head, the ones that have the best potential for making a great startup, or project, or other venture, are probably there because your environment contains cues that lead to those ideas. And since you're not alone in that environment, they're not going to be just in your head, but in the heads of a great many people.

There are two takeaways from this.

First, if you see someone with an idea that's uncannily similar to yours, don't automatically assume they actively stole it from you. They may have been working from the same set of cues, or even have glanced at your idea and forgotten about it, and later imagined it again "on their own". Chances are, you did exactly that, too - so you have no moral right over there, even if they were inspired by your idea.

The second is, if you have a great idea, an idea whose time has come, chances are there's a million people who have had the same idea, a thousand who are actively planning how to implement it, and a dozen who have started the project already. This doesn't mean the idea is worthless, but it does mean that any great idea will face stiff competition. So don't worry about "keeping your idea secret". It was never a secret to begin with.


Investment as a cushion or a springboard

I believe new entrepreneurs should not take investment. Here's why.

There are two primary types of investment that I've observed being taken: investment as a cushion, to protect the company from having to focus on short-term revenue generation right away, and investment as a springboard, to help the company grow faster or enable a cash-intensive business model. These can be loosely matched with the Seed and Series A stages of funding, though some Series A are cushion funding, and some Seed funding is used as a springboard.

One might expect me to launch into a tirade about how one is better than the other, but that's not really the case. Both uses are valid. However, cushion funding is dangerous for inexperienced founders.

A cushion from reality

Starting a business with zero revenues and zero funds, you have to do what's called "bootstrapping". As UK entrepreneur Iqbal Gandham (who contributed this swombat.com article) argued on TechCrunch, bootstrapping from zero funds is impossible:

The harsh reality for startups is that you need someone somewhere to pick up a tab for around £50k, which of course could be split over two people, i.e £25k a piece, but still that is just £300 or so pounds less than the average salary in the UK.

However, many people commonly raise this initial £50k (though it's often much less) from their own savings (saving £50k is hard, but hardly impossible, when you're an IT contractor earning £50-100k/year). Bootstrapping, then, is creating a business without taking external investment. When it's your own savings dripping through the hourglass, when every expense matters, you end up, hopefully, being very focused on reaching revenues as soon as possible. Lack of funds creates an extreme awareness of the need for more funds.

However, if you have a nice £100-200k cushion provided by someone else, you don't feel the bite quite so much. Sure, you still have a runway, and it is diminishing, and it is something you need to "think about", but it is far more theoretical than seeing the biggest number in your bank account steadily approaching zero.

One of the biggest things that new entrepreneurs (at least in most of the world outside of Silicon Valley) need to learn is not how to build a product or deliver technical work, but how to run a business profitably. It's all these ancillary tasks, from sales to accounting, finance, legal, marketing, and general business management, that take three years to learn (give or take). That learning is one of the most important forms of progress for the new entrepreneur.

In that context, any cushion which slows down the learning, which delays it, makes it more distant and theoretical, is potentially harmful. Most successful entrepreneurs are the kind of people who thrive in sink-or-swim situations, and investment-as-a-cushion can turn this into a delayed sink-or-swim, and even set things up for a sink: having funds makes you more likely to take on fixed expenses start relying on your ability to spend, which you shouldn't - not until you have a functioning business and/or know what you're doing.

So, my advice to new entrepreneurs is: don't take funding, and if you do, take a minimal amount and spend as little of it as humanly possible.

A cushion from short-term focus

The proposition is considerably different for experienced entrepreneurs. Managing your cash flow, your runway, your fixed expenses, etc, is a very hard lesson to forget. Once you learn how to sell a product that doesn't exist based on a reputation that's only in your head, that's a skill acquired for life.

Many experienced entrepreneurs who could fund themselves take seed funding anyway. However, they don't take it "because they couldn't afford to do a startup otherwise", they take the seed funding because it enables them to put aside the short-term revenue focus for a little while and aim for something bigger and riskier. Once you've learned how much the short-term focus matters to your survival, it's very hard to ignore it. The cushion of external investment enables an experienced entrepreneur to temporarily ignore that pressure.

In this situation, I think it makes a lot of sense to take external investment as a cushion.

A springboard to greatness

Finally, the third case almost exclusively applies to experienced entrepreneurs, since, at least in the sane world outside of the Valley, VCs will pretty much never invest in a business that doesn't have either a proven founder or proven revenues (both of which add up to an experienced entrepreneur).

In this case, funding is required to enable the business to grow much faster than by organic growth alone. This is particularly important in winner-takes-all and first-mover-advantage types of markets. Paypal and eBay are great examples of the first: most people will have only one online payment account, and they'll pick whoever has the most popular platform. This winner-takes-all advantage paradigm is so strong that even with all their misbehaviours, both of those players are still firmly lodged at the top of their respective markets. Worth taking investment to get there first? You bet.

For the second case, looking in the enterprise market, many pieces of software like SAP have huge installation costs. A large SAP installation might cost $200m: $20m in software licences, and $180m in consulting fees to set it up. In a market like this, being the first to make the sale is pretty important, because customers are very rarely going to change platform if it costs that much.

In these contexts, taking growth investment makes sense, because otherwise a competitor who does take that investment will beat you to the post. This type of investment is not at all a cushion - in fact, it makes the fall much harder if you miss, turning a moderate success into a complete failure - it is a springboard, an amplifier of your efforts.

If you know what you're doing and are willing to take the risk, springboard investment does of course make sense.

Conclusion

So, in summary, taking investment can be seen as either a cushion from reality (often the case with new entrepreneurs), a cushion from short-term focus, or a springboard to greatness.

Only the latter two are good uses for investment. If you don't yet know what you're doing, if you feel you need the cushion just to survive, then you probably should not take it.

To conclude, it's worth noting that these arguments apply mostly to the 99% of the world outside of Silicon Valley, where spending tens of millions to build a company with zero revenues for years is not an option.


Working for a no-shot startup  

Randall Bennett suggests, among other things, that you should not feel bad about working for what he calls a "no-shot startup" (one where inexperience meets enthusiasm and results in some kind of startup disaster), because you will still learn from those, and:

Crucially, the biggest advantage of working lower down the spectrum is that mistakes don’t stick with you. In general, mistakes don’t typically stick with you, but the further up the spectrum you go, the tighter knit the community. Make a mistake at the bottom of the spectrum, and there’s enough people making mistakes that it’s unlikely your mistakes will give you a bad reputation. On the other hand, screw up a company with $41mm in funding, and those mistakes are more likely to follow you.

That's a fair point. Conversely, I expect that most investors with $41m to swing around won't invest in a team that hasn't cut their teeth on previous ventures. And in fact, they didn't, since the colors.com team, to take the example Randall presents, is actually pretty solid and experienced.

Randall adds that after starting at the bottom, once your first hopeless venture dies out, you should work at moving up the ladder, into more and more successful startups.

I think there's a very valuable further point to make.

Startup MBA

Once upon a time, MBAs used to be designed for people who had 5, 10, or more years of business experience, to enable them to formalise and structure their knowledge of what makes a business tick. This was before the trend became to do an MBA 2-3 years out of university, or, god forbid, right afterwards.

The key point there is that until you have some of your own experience to drawn on, most of the things taught in an MBA won't stick, because deeply, viscerally, you won't understand why they're important.

The same is true for startups, but in reverse. Until you've worked (either as a founder or as a very early employee) in a broken startup, you won't know, deeply and viscerally, why the things that successful startups do matter. There are many lessons that you can only understand by contrasting them with the failure case. That's when the insights happen... "Aha! That's how you're supposed to do that."

In short, breaking your teeth on a "no-shot startup" before joining a successful one will help you make the most out of your time at the latter.

Motivating your (technical) cofounder  

I asked my technical cofounder to set up a simple email opt-in form for people to sign up as beta users for our startup. Whenever anyone submitted their information, an email would be sent to both my tech cofounder and I to alert us of a new sign-up.

Although all we had was a simple coming soon page and a video, I began spreading the message far and wide. We both received our first “You have a new signup (beta user)!” email that day. Hundreds more piled in the next few days.

Signups were my new form of “motivation” currency. Every user that signed up made developing and launching the project more and more urgent. Whereas before we were the only two people excited to launch our startup, now hundreds of other people were excited and waiting for us to launch.

It's a good start, but...

“Other things” is my way of saying: I felt useless. I could whip up a design and could dabble with simple HTML and CSS, but was too much of a novice to contribute to the back-end code. And unfortunately, at this point, most of the work that needed to be done heavily relied on the back-end.

If you think all the work that needs to be done is coding, you've probably not planned your startup right. Go back and list the hypotheses and order them by uncertainty/risk. Unless you're doing rocket science, "can we build this thing?" should be somewhere near the bottom, and is the only question that may require a long, uninterrupted stretch of coding.

In pretty much every case, there will be more non-coding work to do than coding work. In a tech startup, there will certainly be a number of coding sprints, but those should be interspersed with feedback gathering and other customer development exercises, even in a B2C startup. And you don't need to be technical to do customer development.

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