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

Lean Startup Machine learnings  

Eric Ries, already mentioned earlier today, also posted this retrospective on Lean Startup Machine, a Boston-based "build an MVP in 48 hours" event.

He makes a few really important points:

For example, one team managed to put together a very decent looking minimum viable product, in the form of a landing page with a “click to signup button” that basically did nothing but collect data about who was clicking. And their MVP even had a reasonably high click rate. But is a 25% click rate validation of the idea? That depends on who’s clicking and why. Do they understand the product? Are they eager to try it, or were they just enticed by the shiny button? Unfortunately, the team had no way of answering these questions. They weren’t even collecting contact information from these first customers. They were just counting clicks.

(...)

This is a classic startup fallacy: “ship it and see what happens.” Whenever you use this plan, you are guaranteed to succeed – at seeing what happens. Unfortunately, if you cannot fail, you cannot learn.

One way to organise the MVP-building process to ensure it does answer real questions is, of course, Hypothesis-Driven Development, covered here before.

Startups and growth rate  

Under the guise of providing a new and updated definition of "startup", Paul Graham provides a fascinating insight into the way YCombinator focuses their startup founders. The key is a focus on relentless, week-on-week growth

We usually advise startups to pick a growth rate they think they can hit, and then just try to hit it every week. The key word here is "just." If they decide to grow at 7% a week and they hit that number, they're successful for that week. There's nothing more they need to do. But if they don't hit it, they've failed in the only thing that mattered, and should be correspondingly alarmed.

It's an interesting way to drive activity, to be contrasted with the "Lean Startup" approach that focuses on validated learning. Certainly YCombinator is successful with it, no doubt about that. However, YCombinator startups benefit from the regular input and insight of a set of people who, individually, have broad, deep and long experience building, watching and helping startups in many contexts. Collectively, these people (Paul G, Jessica, Harj, Paul B, Garry, and many others - and let's not forget the network of YC Alumni) represent, by far, the greatest concentration of startup-relevant experience, wisdom and connections in the world.

And even so their success rate is very far from 100%.

Competing incubators, accelerators, and indeed startups, would do well to bear that in mind before they try to emulate this model without the same advantages, and instead of trying to copy the focus on growth, they perhaps should try to reproduce the impressive support system that enables such an approach to work.

How to buy parked domains  

Every day, entrepreneurs with new ideas are discovering that the domains they’d like to build business on have already been registered, most likely by a domain speculator.

(...)

Before you make [the mistake of choosing a misspelling or invented word] for your startup, get familiar with practices you may be able to use to acquire domains with terms acceptable to you. To get you the scoop on what’s worked for the industry, we talked to a number of experienced domain buyers, sellers, and brokers about how they handled their deals.

Solid advice, worth a read to get a better understanding of how to approach domain brokerage as a buyer. Also worth reading alongside this: How to choose a domain name, Keep your domain name by registering it right away, and Tools to find available startup domain names.

Here's also an article on how to grab expiring domains, via Aditya Chadha, and a Fred Wilson article about finding and buying domain names.

On being an early startup employee  

I've never been an employee at a startup, but I wish I had. I spent four years of my life working for Accenture instead. Knowing what I know now, I would have tried much harder to find a role in a promising startup.

As a founder, particularly a technology founder, the picture has been very different. I've only had myself and the mentors I personally attracted to learn from. Back in Accenture, there was a whole hierarchy of managers and senior managers and partners and senior partners that could teach me the tricks of the trade. The startup world feels a lot more solitary.

For example, if I'm stuck on how to architect a certain service, there's no one I can pull in to help make the decision. More problematically, although everyone always has advice about how you should do your pricing, your sales, your marketing, and so on, ultimately they're all just opinions from people who have not spent anywhere near as long as you thinking about the problem. They may be insightful, and true even, but you can't know until you try it, and the decision to try or not try a certain idea rests entirely on your shoulders.

It's an unfortunate truth of the world of startups that the world expert on your startup is yourself.

So, in hindsight, I wish I'd gotten internships and jobs at startups before starting my own, so I could learn how someone else makes decisions about their own startups, see what they were doing wrong, and try to do better on my own.

James Yu, describing his time at Scribd, seems to agree that being an early startup employee is a great place to be:

It's hard to put in words the amount of experience an early employee gets at a fast moving technology startup. My time at Scribd wasn't just another job — it was a kaleidoscopic learning experience spanning all aspects of business and technology. For those of you weighing the benefits of an MBA program: join a startup instead. You'll not only learn about real world business problems, you'll also execute them in the real world with smart and passionate people.

One key insight before working at a startup, however, is to realise that you are an employee, not a cofounder. You need to be even more sure than founders that you will get something out of it even if the startup tanks. For example, don't work for a startup at a wage where you're losing money every month (though being paid less is ok). You need to be able to save for your own startup, right?

Even founders shouldn't sacrifice everything for a startup, as argued yesterday. For an employee, that should be completely out of the question.

It's one (bad) thing if your girlfriend dumps you because you work too hard on your startup. It's an order of magnitude worse if she dumps you because you're working too hard on someone else's startup!

Whatever works, works  

Here's a 2008 article by Paul Buchheit making several excellent points:

You can take the smartest, most experienced, most connected, most brilliant people in the world and have them build the most stunningly designed and technically advanced product in the world, but if people don't want it, then you will fail.

(...)

Even if you aren't the smartest person around, and your product is kind of ugly and broken, you can still be very successful, if you just build the right product.

Where "the right product" is a combination of your product idea, paying close attention to what the market is telling you, and having a market that's worth serving.

The key take-away is summarised near the end of the article:

So what's the right attitude? Humility. It doesn't matter how smart and successful and qualified you are, you simply don't know what you're doing. The good news is that nobody else does either, though some are foolish enough to think that they do (and that's why you can beat them).

What is the humble approach to product design? Pay attention. Notice which things are working and which aren't. Experiment and iterate. Question your assumptions. Remember that you are wrong about a lot of things. Watch for the signals. Lose your technical and design snobbery. Whatever works, works.

If you hadn't yet read this post when, go read it now.

How to survive a due diligence  

It's often easier to start things than it is to finish them. Selling a company is not that unusual, especially in the tech startup world. What few people realise is that often, when you sell your company to any kind of decent acquirer, they won't just take your word about what's going on in the company and "open the package later" when you're out of sight.

Before you sell your company (and even, sometimes, before you take VC investment, which is a form of limited selling), there will be what's called a Due Diligence:

(...) due diligence is all about verification and risk assessment.

(...)

During a due diligence you'll likely be visited by a lawyer for the legal affairs, an accountant for the financial portion, and if you're a technology company someone that looks at the tech side of things.

This excellent blog post by Jacques Mattheij, who has conducted numerous technical due diligences himself, is full of useful information and will come in very handy if you're about to go through this process.

Power blogging hour: an approach to startup blogs  

Robert Laing proposes a method for encouraging people at a startup to blog regularly:

Every week on Tuesday morning at 11am, all permanent staff pick their blogging topic from a list and complete a blog post on that topic within the hour. We then post the output staggered throughout the week.

That's a great approach, and Robert is right that an active blog is an invaluable asset to a budding startup, in terms of generating visibility and opportunities.

Robert also proposes some key elements to make the blog posts successful:

  • Write as yourself
  • Avoid regurgitating news
  • Have an opinion
  • Stay relevant
  • Keep the rhythm
  • Finish on time (if doing the power-blogging hour)

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.


Focus and myopia  

Here's a really excellent article by Dharmesh Shah that deconstructs the glib advice that "focus is key":

So, here's my point: Talking about focus is useless unless you consider the level of abstraction you're talking about. If you squint just right, any activity you're looking at seems de-focused. In the iPod example above, I could argue that Apple showed considerable restraint and focus by not going out and building a Hollywood production studio and creating content. Or, I could argue the flip-side and say they lost focus from their core.

I agree that focus is about saying no. But that's not all of it. By saying no repeatedly, what you're buying yourself is the ability to say yes to something much, much better. You're not freeing up resources just to hoard them away. You're freeing them up so you can apply them better — either by saying “yes” to something new or doubling-down on bets you've already made. So, the benefit of saying no to a bunch of wrong things is only realized when you find a way to say yes to the right thing. Important note: I'm primarily talking here about high-level company strategy. If we were talking about focus as it applies to product management, saying “no” to new features has intrinsic value by just keeping things simple.

Advice is always highly contextual, and most people don't take the time to figure out whether their context is right for the advice they're looking to apply. This type of article is very useful in that it takes an apparent truism and shows how variable it is.

After all, the opposite of every profound truth is another profound truth (Niels Bohr), so unless you know how to apply profound truths usefully, they can hurt you as much as help you.

Read the whole article here.

Case studies of successful cash cow business  

Three different products, launched in 3 different ways. Not too much insight on how to go about doing it, but then that's largely covered in the 4-hour workweek book.

If you're not looking to make millions, there are a lot of interesting niche businesses worth looking into.

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