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daily articles for founders

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

The one-minute entrepreneur

"So figure it out," Harry said. "I have confidence in you. Not total confidence, but if you can't do it, tell me that, and I'll try someone else, or do it myself. If you have a really good idea - for both the ridiculous story, and how to convince Rita Skeeter and her editors to print it - then you can go ahead and do it. But don't go with something mediocre. If you can't come up with something awesome, just say so."

Fred and George exchanged worried glances.

"I can't think of anything," said George.

"Neither can I," said Fred. "Sorry."

Harry stared at them.

And then Harry began to explain how you went about thinking of things.

It had been known to take longer than two seconds, said Harry.

(awesome source)

The book "The One Minute Manager", despite its facetious title, had a positive impact. This is not because one minute is enough to spend with the people you're managing (I'm sure not even the author believed that), but because a great many managers don't even spend one minute doing it. Explicitly spending just one minute telling someone they did a good job is a hell of a lot better than just making a mental note and saying nothing.

Most entrepreneurs that I know are can-do, action-driven types. They need to be like that in order to overcome the humongous inertial barriers that get in the way of getting anything done. If you're the kind of person who prefers to sit back and think about stuff, entrepreneurship will be quite a challenge. The default in the world of... humans... is that nothing happens. It takes hard work, energy, focus, determination, impatience, in short, an urge to make things happen right now, to make anything at all happen.

There's a reverse side to this, though: it causes problems; two in particular.

The first is a tendency to make decisions that are half-baked. Now, I'm not an advocate of spending too long making decisions. Entrepreneurs succeed by getting things right 70% of the time, while making all those decisions quickly, when other people might spend days, weeks, or even longer searching for the perfect answer. But that's not to say that every decision needs to be instantaneous and gut-driven, or that every decision should be made hastily.

First, some decisions are actually worth getting right. Knowing which ones those are is half the battle of becoming an experienced entrepreneur, but a good general guidance is how easily reversible the decision is, how long you'll have to live with it, how much work is attached to it, and how much it influences the shape of your business. Generally, if you're going to be stuck with your decision for the next 6 months at least, and it will swallow up two months of coding time, it's worth spending a few hours gathering data and thinking to raise that 70% a bit higher.

Even if the decision is nowhere near that important, if there's any work at all attached to it, try to spend at least a minute thinking about it, rather than deciding instantly, with no thought whatsoever. One minute is not that much. Don' be a zero-minute entrepreneur.

The second problem caused by making decisions very quickly is that when we need to make a quick choice, we tend to only consider solutions that we know already. A programmer will fix every problem with more code. A manager will create more processes. A designer will fix the design to eliminate the problem.

However, the best solution is not always the one you know. Every problem may look like a nail at first, but if you spend a minute thinking about it, and consider other possible types of solutions, you may realise that a screwdriver may be better suited.

A good set of questions to ask yourself during that one minute is:

  • Do I actually know what the problem is?
  • Do I know the extent and impact of the problem?
  • Who is the best person to fix this problem?
  • Does this problem actually need to be fixed?

Most of the time, you'll know the answers to these questions, and they'll help you to make the right decision. If you simply can't answer one of those basic questions, however, maybe you need to spend one more minute (or even a little longer) figuring it out before making the decision.


Even Steve Jobs does it  

Jesse Maddox on why CEOs should answer support emails:

Reason #1: Direct Feedback From Customers

Answering support emails and chats is the best way to get direct feedback from customers. As someone responsible for guiding the product vision, this feedback is invaluable to understanding what your users expect and how you're meeting those expectations.

Jesse goes on to list some other reasons:

  • Reason 2: you aren't shielded from product issues
  • Reason 3: your engineers' time is more valuable than yours
  • Reason 4: it forces you to be up-to-speed on technical issues
  • Reason 5: customers appreciate
  • Bonus reason: it's the right thing to do

While I'm not necessarily convinced about all the arguments in the article, I do think it makes a lot of sense for everyone who's building the product - including the CEO and the developers - to be answering support queries. Everyone wins when that happens - especially the users.

Ultimately, the more layers there are between the product people (technical or not) and the users, the worse things go for both the product and the users.

When do you kill your startup?  

Ryan Carson:

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

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

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

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

How to develop disruptive ideas  

Great article from Luke Williams, the author of Disrupt, about how to develop disruptive ideas:

Most people in business are trained to focus only on problems: things that don't work and need fixing. It's more effective to start by identifying something in your business or industry that's not necessarily a problem, and then go about methodically breaking it down using the following steps.

Luke proposes 3 steps:

  1. Define the domain you want to disrupt; this should be a domain where things have been stagnant for some time.
  2. Find the business clichés; figure out the assumptions that everyone in the industry makes.
  3. Start overturning those assumptions: ask "What would happen if we _ _ _ _ _ _ ?" where _ _ _ _ _ _ is something that the industry takes for granted.

Luke provides examples too:

Let's look at the soda industry. Inverting "soda is inexpensive," gives you "soda is expensive." Reversing "tastes good" gives you "tastes terrible," both of which sound completely ridiculous. But, you can't break the clichés without going through this step, which is exactly what Red Bull did. It placed absolutely no importance on taste, the product is double the price of Coca-Cola, and it dispensed with marketing aspirational images. The message was that Red Bull may not necessarily make you feel happy, but it'll definitely give you a shot of energy when you need it.

The article is worth a read (and maybe the book too).

Play/life balance  

Greg Bayer:

Working for a startup usually means putting in more hours than others.  Recently, I spent two days on less than 3 hours of sleep in order to push out our new Pulse.me release.  This doesn't seem strange to me and didn't make me unhappy.  In fact, it was one of the most exciting and fun things I've done in a while.

Chasing after dreams is an essential part of my life.  The feeling of fulfillment I get from doing so makes me a much happier / more content person, and this in turn positively affects my relationships.

I've argued before that hours are not a measure of productivity, but that's not Greg's claim in this post. He's saying, quite rightly, that working on your startup is not work, it's play - and so, unlike working stupid hours on a job, working stupid hours on a startup is a blessing, not a curse.

I'm reminded of an old saying:

Why work for someone else from nine to five for a daily wage, when you can work twenty-four hours a day for yourself for free?

So which view is right? Neither, really. If you feel like working, work. If you feel like resting, rest. If you feel like playing, play. Working for yourself, chasing your own dreams, is worth pursuing with far more energy than the typical job - but life is what happens while you're busy working on your startup.

I'll finish with an observation: I feel most happy, most rested, and most productive when I have had a solid 8 hours of sleep, starting and ending at the same time each day. This plus a good task list has more effect on my productivity than anything else - other than, perhaps, the pressure of an immediate deadline. But that type of intense work under pressure usually has a cost the following days.

Using advisors to raise money  

Very interesting article by VC Nic Brisbourne, examining the usefulness of advisors in raising startup money. Some interesting numbers:

Advisors are typically small partnerships, or individuals, who help startups raise money from venture capitalists. They usually charge some form of retainer, and then a success fee of a percentage of funds raised and perhaps some options. Retainers normally range from £5,000 to £10,000 a month, the percentage of funds raised between three and five per cent, and options up to 0.5 per cent of the business.

These retainers sound expensive, but, as Nic later points out, if using an advisor is right for you, and you're dealing with an experienced advisor with a close-to-100% success rate, this can certainly be worth the money.

Nic also advises startups who are considering this route not to bother with unknown advisors:

If you are going to use an advisor, then for heaven's sake go for one who is well respected, well known, and has a wide network. Otherwise you might as well email the VCs yourself.

More in the article.

The (un)importance of design  

Is design an important part of a startup's offering? If it is, how can we explain the fairly large numbers of companies who are making a killing while harbouring less-than-stellar, or even frankly horrible looking websites?

Jason Cohen nails it, as usual:

I think you can go either way, but you must decide whether or not you're going to value design as core to your startup's identity, and then act consistently.

(...)

...it is useful to decide where you come down on the question of design in your startup, because if it's important you'd better work on that right now and develop a consistent culture of valuing design through-and-through, and if it's not important you'd better decide what is important and nail those things all the harder, because you'll be competing with people who are using superior design to cover up their lack of competency in those same areas.

In other words, "it depends". In some businesses, design is crucial. In others, it doesn't matter. Make sure you figure out which business you're in and then act accordingly.

Friends, Family and Fools: the worst investors

"If you're struggling to raise investment from angel investors, the next fallback is FFF funding - Friends, Family and Fools. You can always raise a few tens of thousands of pounds from this source no matter how early you are."

The above is a fairly standard bit of startup wisdom, dished out to all and sundry. It seems pretty sensible on the surface. If your idea is any good, if you're a smart person who can convince others that you'll do well, it ought to be possible to convince someone, anyone, to invest a few tens of thousands of pounds to help get you started.

And since your idea is really good and you are a brilliant new entrepreneur, this may be the best investment decision that those people make in their life. It could be their chance to become rich, piggy-backing on your hard work - but you don't mind that, after all, they're friends and family. And fools, but we'll leave those to later.

Yonder dark clouds

Unfortunately, it's a huge understatement to say that when it comes to startups, things don't always go as planned. In fact, as a first-time entrepreneur, there's a very high chance that your business will go tits-up. Entrepreneurship is a career, you see, and you're just taking your first steps up that ladder. You have no idea what you're doing, even if you wake up every day filled with the confidence to take on the world.

There are ways to decrease that risk, of course. Seeking revenues right away… Keeping costs low… Getting advice from experienced mentors… All those things will help reduce the risk of your first business, but still, chances are against you.

That's alright, in a way, because as long as you don't do anything really stupid and, for example, triple-mortgage your family house to fund your first business, you'll survive the demise of your first venture, and be in a position to take another, better swing at the magical piñata of startup success.

This is where FFF funding screws you over, though.

When can I have that money back?

You see, if you take investment from professional investors, or even other entrepreneurs, they know that it's risky. They know that there's a fair chance you'll screw up and lose the money. Of course, they want to convince themselves that you're different, but professional investors only invest money they can afford to lose, so if they do lose it, they won't cry a river over it. They'll draw a line and move on to the next thing - perhaps even invest in your next venture, who knows. Investors are, largely, rational beings who understand risk.

Friends and Family? Not so much. Friends and Family will often get very upset when they find out you lost their money. You might find yourself highly embarrassed as the story of how you pissed away £20k of Uncle George's retirement funds makes the rounds over, and over, and over again for the next two decades. Not only that, but since they're your friends and your family, you may well feel somewhat obligated to repay the money somehow, sometime, once you've made some more money. It's like a lifelong debt that you can never truly shrug off, unless you're the sort of ungrateful git who probably wouldn't be invited to family reunions anyway.

Friends and Family investments are like the reverse of a convertible note. If everything goes well, they remain an expensive, low-valuation share investment. If things go badly, they turn into a loan securitised by that most valuable of assets: your personal relationships.

One would do well to stay away from such dangerously sharp-edged financial instruments.

Fools

Who's the greater fool? The fool who invests or the fool who takes the fool's money?

"Fool" investment basically means taking investment from people who are not friends or family, and who are also not professional investors or entrepreneurs of any sort. In short, they know nothing about startups, but they buy your sweet talk and decide to invest their hard-earned cash anyway.

The problem with this sort of investment is similar but different to the Friends and Family sort. Fools will not impose an eternal personal debt on you. However, experience shows that when the business turns south, they too will suddenly consider that the money invested should now be withdrawn from the business as soon as possible, and remain deaf and dumb to your declaration that the money has been spent and cannot be recovered.

Unfortunately, this sort of behaviour seems to be the rule rather than the exception. In the midst of a startup failure, which is a depressing enough event to begin with, Fools will drag you down and drag it all out endlessly, until you finally break all communications with them, under unpleasant circumstances.

Whilst a Friends & Family investment is likely to turn into a lifelong debt, a Fool investment will probably turn into a lifelong enemy, someone who will curse you under their breath every time they think of you and all the money you lost them.

Who should you take investment from, then?

There are only two categories of people that I'd consider taking investment from - and this is true at any stage of any business.

The first is professional investors, in which I include people who make regular angel investments, as well as wealthy people who have invested in things that lost them a big chunk of cash before, and who therefore will be fairly rational about the whole process.

The second category is other entrepreneurs, particularly those who have both failed and succeeded, as they know what it takes, they know it's very hard, and they know that if the business is going down the drain, the best thing to do is to let it.

Another key point about investments is you should only ever take money from someone who can afford to lose it. If my advice above falls on deaf ears, at least never take money from someone who simply can't afford the failure. Be very careful about that: you don't want someone's personal ruin on your conscience.

It's worth noting that with the recent advent of SEIS in the UK, investment by both professional investors and successful entrepreneurs is now much less risky than it used to be.

As I hope I've made the case above, taking investment from other types of investors, in particular FFF investors, will only result in trouble and pain further down the line, if the business doesn't succeed as easily as you might have expected.

If you can't raise the investment you need from proper investors, and you find yourself thinking of resorting to FFFs, I suggest you instead consider the idea to be out of your reach. It's better to work on another idea than to end up with the sort of nightmarish scenario that is all too common near the end of an FFF-funded startup.


The value of time, or not  

Here's an interesting article by Jack Groetzinger, making a relatively elaborate argument for how to value one's time.

Every person at every company has an implicit hourly rate of value they create for the business. Perhaps Bob, our traveling salesman, provides $150 of value for every hour that he's working [1]. If Bob catches the flu and is forced to spend a day hunched over a toilet rather on the road selling, then the DCF of future SeatGeek earnings decreases by $1,500 [2].

However, Jack then rightly undermines this point later (though doesn't go far enough in getting rid of it):

The rate at which you value your time value your time is not static; it's constantly changing. If I'm stuck on a plane with no internet, the rate at which I'm creating value for SeatGeek is low. On the other hand, suppose it's 3am in the morning and I'm feverishly working on a presentation for a massive client. The presentation will take place in five hours. Here, the rate at which I'm creating value quite high. If two hours magically disappeared from the clock, it could destroy a meaningful amount of SeatGeek's enterprise value. So I feel justified in, say, asking my girlfriend to get me a Diet Coke so that I don't have to break my concentration (thankfully she's an economics student, so she understands).

Jack then continues with a comparison of the value of someone's time to the company and their wage, but I'll stop here for an important tangent to a point which I think is crucial to the discussion.

Time is worthless

Time is the most valuable thing in the world, and yet by itself it is worthless. Time well used is valuable. As John Gruber said of Jobs in this article:

Late last night, long hours after the news broke that he was gone, my thoughts returned to those grass stains on his shoes back in June. I realize only now why they caught my eye. Those grass stained sneakers were the product of limited time, well spent.

We all have limited time, and we can't buy more of it, so philosophically, we might say it's all priceless. So why do I say it's worthless? Because unless you spend it well, that time does not have any intrinsic value to your business (though it is probably still worth something to you personally).

I believe and have believed for a while that time is not the right thing to measure or preserve. Buying a $700 computer instead of spending an hour searching for an equivalent $640 computer (the example Jack uses) is a valid trade-off, but not because of the time being saved.

What makes the trade-off valid is the energy, the attention that's being saved.

We each have a limited amount of attention and energy (two sides of the same coin) to spend on a vast number of potential attention sinks each day. We can only care about so many different things each day, every day, before our very ability to give a damn gives up and we just don't care anymore and can't bring ourselves to care.

Spending energy caring about saving $60 on the purchase of a new computer is not worth Jack's limited supply of energy.

Whenever you're about to engage in chasing down some rabbit-hole distraction, think of this - if there are only 10 things that you have space to properly care about today, should this be one of them?

The Noun Project: Large collection of free symbols  

Symbols are exceedingly useful when designing web applications and other things. Large collections of visually consistent symbols, like the Silk icon set or the Fugue icon set, are very rare.

From the Kickstarter page:

The Noun Project's mission is to share, celebrate, and enhance the world's visual language. Our goal is to collect and organize all the symbols that form our language into one easy-to-use online library that can be accessed by anyone. All the symbols on our site are completely free to download, and can be used for design projects, architecture presentations, art pieces - just about anything.

One can only hope that they will soon provide an easy way to "download all" and search, rather than having to scroll through the page endlessly to find what you want. According to the video on their Kickstarter page, they will add more such features soon.

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