daily articles for founders

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

A startup escape path

Today, right now, what is the best path out of the corporate world and into startups? What would I advise myself to do, 5 years ago, if 5 years ago was today?

Let's start with some assumptions:

  • I am in a corporate job (for example, Accenture);
  • I am nowhere near ready to be an entrepreneur; when it comes to startups, I have absolutely no fucking clue what I'm doing and by default, I will make every mistake in the book;
  • however, I really should be an entrepreneur; given time, I will be successful; I just don't know the best way to go about it;
  • importantly, I am not based in Silicon Valley, or, for that matter, connected to the startup scene anywhere, since I'm still a lonely corporate drone;
  • maybe I have some technical skills, maybe not; in either case, my technical skills, if any, are geared towards the corporate world (e.g. Java/J2EE, Enterprise .NET, etc.) rather than the startup world (Rails, MySQL, node.js, etc.).

It's a wild guess, but I imagine it covers 90% of the western world's potential entrepreneurs. After all, the default for smart people is to do a degree and then end up working in a bank, law firm, consulting company, etc. So most smart people end up working in large corporations. And yet most smart people would be able to run their own business if they knew how.

What's the default case for a transition from this set of assumptions to "entrepreneur"?

Failure. Dramatic, disastrous failure. The kind that hurts and leaves scars.

Running your own business is an entirely different proposition than working for someone else. There are lots of things you need to learn, hangups you need to get over, habits you need to form, in order to have a chance at being successful. Even then, there's no guarantee of success, but without those key building blocks, you might as well roll some dice and hope for a 12.

So, with that being said, what would I advise someone fitting those starting conditions, in order to smooth the transition and maximise chances of not breaking one's teeth on the first attempt?

This is the "startup escape path".

Where several choices are possible, I've chosen what I believe to be the best one. Others will disagree. For example, some might think that working for someone else's startup is a better learning experience than running your own thing right away. It's their right to do so. I've picked one path that I believe is the best.

The first step into the startup world is to get the hell out of that corporation that's sucking your soul away and grinding it into shareholder dollars. However, most people aren't ready for that transition. So step one is to get ready.

The key at this step is to make up for all those great big blind spots that will kill your fledgling company and send you back to the corporate world with your tail between your legs. This is what these tasks are geared towards. All of this stuff can be done on the side, while holding a full time job. The only parts that are time-consuming are the learning parts.

  1. Register a business: it will come in handy later. Figure out what the law requires you to do to be a business owner, and do it. Make the business active, not dormant, even if it doesn't do much.
  2. Connect to the local startup community: The number of things that can kill your startup is truly astounding. You won't know about them all, but having a good mentor can save you repeatedly. You won't be able to get a mentor right away, until you're someone worth mentoring, but you should at the very least start turning up to local entrepreneurial events so you know what's out there. Don't be a blowhard or a showoff, just be your humble self: you may have just spent 5 years at McKinsey and got a top MBA, but there'll be 19 year olds at those meetups who are a million times better at building cool startups than you'll ever be. Learn to be honest or you won't get honest advice.
  3. Read Hacker News regularly: and subscribe to a few great startup blogs. There's a lot to learn in the startup world, and HN and other key blogs will help you to get up to speed.
  4. Build something someone uses: Learn some basic coding skills in whichever "hot" technology you like (these days: node.js and iOS are the hot shit). Build something, anything, that at least one person other than you finds useful enough to use it at least 5 times. It doesn't have to look good or change someone's life. In fact, it shouldn't. Just find someone with a problem that recurs every once in a while and build something that solves that problem for them. Learn both how easy and how hard that is.
  5. Build something that you will continue to use: Find a problem in your life that recurs regularly, at least once a week (bonus points if it's every day), and build some kind of solution for it that only you will use. The important thing for this step is that you will continue to use it for a long time, so you learn how important it is not to write shitty code that can't be maintained. After you've run this thing for at least a couple of months (not before), do some serious googling and find the 10 solutions that others have come up with for this problem, and compare yours to theirs.
  6. Start a blog: being able to express yourself in writing is not optional. Your blog might suck, and that's ok. You're not trying to become the next John Gruber, you're trying to become an entrepreneur. Post something to your blog every day, no matter how short. Don't worry about people thinking you're stupid: no one will read your blog anyway. At the same time, try to get people (e.g. from the #startups channel on Freenode or from r/startups) to read some of your stuff and give you feedback.
  7. Write something that Hacker News will vote up to the top 5 of the front page: the bar is not as high as you think. Getting over that hurdle will make you more confident about engaging with other entrepreneurs and testing your opinions in public.
  8. Sell something online: create something, or buy something you can resell - whatever. Build a page that sells at least one thing profitably, even at extremely low volumes. You can start unprofitably, but eventually you should make a profit (not counting your time, of course), even if it's only 1 cent.
  9. Sell something intangible in person: even if it's not worth your time, sell something to someone who's not a friend or family member. Being able to convince someone to buy something from you is an essential startup skill. Note: selling a car or other physical item doesn't count. It has to be something that they can't touch, or that you made yourself.
  10. Come up with 10 ideas: break them down into at least one full page of hypotheses. Pick the best 3 that don't require a lot of "blind work" upfront. Blind work is the work that happens before you've validated that there is a market.
  11. Invalidate those 3 ideas: go through the hypotheses until you either realise that they will work, or realise that they won't or aren't worthwhile (or aren't exciting enough to you). There are lots of ways to validate ideas listed on swombat.com.
  12. Repeat 10 and 11 until you have something that sticks: eventually, you'll stumble into something that people actually want, and which is generating recurring revenues, however small. Once you've achieved that, celebrate, and then jump off the corporate mothership.

You may still splat yourself on the ground even after all this. There'll always be risk. The parachute is by no means guaranteed to open, and despite all these steps you will still probably make some really basic and avoidable mistakes (though if you have built a good and honest relationship with a more experienced startup founder by now, you might avoid most of them).

But you'll certainly be head and shoulders above the average "I just quit my job, what do I do?" train wreck.

There's no speed limit on this startup escape path, but I would expect it to take 6-12 months if you're going about it deliberately and with some energy.

I hope this helps someone.

5 reasons to sell your startup  

Previously, Ben Horowitz made the point that if you are early in the market and have a good chance of being number 1, you should not sell your company.

Elad Gil looks at the reverse question: what are good reasons to sell a startup?

  1. You're exhausted and don't want to keep going. In the context of startups, this makes sense. A startup is usually nothing without its founders, so if the founders just can't keep going, it probably makes sense to sell. However, if you're building a more traditional company, it's worth pointing out that there are other ways to "take a break": you can hire someone to be the CEO of your company, for example, and morph yourself into a more passive shareholder. You'll reduce you profits, but you'll also greatly reduce your stress levels.

  2. The founding team is about to blow up. Same argument as above.

  3. The acquirer is willing to "pay ahead" substantially.

  4. You are about to get massively crushed by a competitor.

  5. You need financial security or regular cash flow. As Ben Horowitz pointed out in his article, that's a pretty bad reason to sell the company. If the founders are running out of cash and considering selling the company to pay the rent, perhaps the company should pay them a better salary. If the company can't afford that, then it's probably not going to sell for a good price anyway.

It's also worth reading Elad's thoughts on those five reasons.

Don't build a swiss-army knife product  

Des Traynor on the Swiss Army Knife disease of design:

When you’re drawing the line around your software, make sure you’re not leaving in marginal utility features in an attempt to add more value. These little wannabe-features hang around unloved, bloating your app, hogging the UI and adding to maintenance costs.

So far so good. However, I'm not convinced by the two-dimensional evaluation graph that Des proposes to decide which features to build. By reducing features to two questions (who will use it and how often), it reminds me of the Pritchard method for evaluating poetry, discussed in Dead Poets Society (script), where poetry is also reduced to two dimensions: the perfection/form of the poem, and the importance of its subject.

Deciding which features to include is not quite as much of an Art as poetry, but it's still complex, multi-faceted, and can be fairly subtle.

As a simple counter-example, Woobius's commercial model means that only a small proportion of users (project managers and company owners) will want to use the account upgrade feature, and they will do so very rarely (probably just once during their lifetime as a customer). This would place the "upgrade" feature down in the bottom left corner of Des's graph - and yet upgrading is obviously an essential functionality if Woobius is to make money.

So, my suggestion is to use Des's model as one data point in evaluating feature, but not as the only one. Products are complex creatures.

Three kinds of games

This is just an arbitrary categorisation, but I find it useful. Obviously there are other ways to categorise games, and startups.

I love games. I have played games since I was a child. Computer games, board games, team sports (a bit less than the others), card games, dice games - any kind of game I could get my hands on. I am not Iain M Banks' mythical Player of Games, by far, but I do love the challenge that games pose.

And life itself is a game, as is business. These days I play less of the overly complex strategy game type (such as Civilization, of which I played every version except V), because I have come to the conclusion that those games feel too much like work, and I already have a game that feels like work, with the difference that when I earn gold coins in this game (my business) I actually get to trade them for Macs and summer hats in the appropriate shops.

Different games stretch you in different ways. With some thinking back over the long list of games I have played, these are the three ways they stretch you, and how they map to the entrepreneur's journey.

1. Games of mechanics

The first and most popular kind of game is the game of mechanics. This is a game where you win by application of your intelligence and insight. Most single-player computer games fall solely in this category, because that's all a computer can offer.

Games like the early, single-player Civilization games, or Dune 2, the original C&C, The Loom, Pinball, King's Quest, Trine or Super Mario, Donkey Kong and Battle Isle, most of the Black Isle Studios RPGs, Solitaire (physical or on the computer) or Backgammon are solely in this corner of the ring. Due to their very nature, they can only offer mechanics and so that's all they offer.

This is not to put their offering down. Games of mechanics are great fun. I still play them, though I tend to limit myself to the easy-to-pick-up-and-put-down iPad offerings, these days, due to lack of time.

What defines a game of mechanics is that it is won by analysing the situation "on the battlefield" and playing the right moves. Arguably, that's true of every game, but in a pure mechanical game, the battlefield is limited to the game.

Most startups start off as mechanical games. First, before anything else comes into it, you have to crack the mechanics of building something that makes money. This is a game where the battlefield is the product and the market, and I'm willing to go on a thick limb and say that if you're good at mechanical games, you will eventually figure out this game too. It might be the hardest mechanical game you've ever played, but it is just step 1 on the business journey.

2. Games of people

The second category of games, which some will argue is more interesting, but which is really just a matter of preference on the moment, is the game of people. In this game, the battlefield shifts from the board to the people around it.

To me, these have always been fascinating, because I used to be really bad at them, and therefore they were a constant challenge, something to learn and get better at. I don't like losing, but luckily for me that is coupled with a habit of, when I lose, trying again, and again, and again, until I win.

Most multiplayer games and board games touch on this dimension. Games like Warcraft 2-3, Settlers of Catan, Dominion or Dominant Species, look like they're people game (because, well, they involve people) but the game is not won by playing the people, so they're still fairly mechanical in the end.

Better examples of people games are No Limit Texas Hold'em Poker, some types of tabletop Role Playing Games (at least for the DM) and Diplomacy. In both cases, the game on the table in front of you is just an excuse for the game going on between your head and your opponents' heads. As the saying goes in Poker, don't play the cards, play the people.

Skill at the mechanics of the game is obviously necessary to play this. If you can't move your troops correctly (in Diplomacy), you will probably get eliminated no matter how well you play the people, simply because being weak paints a target on you that's hard to ignore. Same for Poker if you don't know the ranking and probabilities of various card combinations. But it is perfectly possible to get the mechanics of Diplomacy or Poker right and still lose over, and over, and over again, because they're people games.

In startups, people games become essential once you shift from building a product to building a company. Once you've got the basic machine that turns $1 of effort into $2 of revenues pinned down, the next step becomes to scale that up. No matter how technological your product might be, in the end, that will always end up involving other people. Maybe not hundreds of people, but at least dozens. And once you have people around, you have to play people games (avoiding office politics is a very tricky people game).

Much like playing mechanical games can teach you to play this second game, taking the time to play people games will improve your ability to play this part of the game, yet those games are much more rare than the mechanical type, so you have (in my experience, at least) to actively seek them out.

3. Games of self

The third type of game is the rarest and the commonest at the same time. This time, the battlefield is not on the board in front of you. It's not in the people around you. These are games where the battlefield is inside of you. It's you and your personal limitations. Arguably, all games have some element of this in them, at least at the very beginning, but I have yet to encounter an artificial game that is all or even mostly about the self. Perhaps the only such game we have at the moment is life itself.

What I mean by the battlefield being the self is that these games are about finding the limits inside of you and pushing against them. Games of the self open up new perspectives and unlock new skills that make you a better person.

I don't know of any artificial games that are purely of this kind, though many of the aforementioned games have some element of this, for at least a little while, but they abound in real life. I've argued before that successful people are successful, but the better way to phrase it might be that successful people make themselves successful, by winning at this game of self. They constantly find limitations within themselves and push against those.

The game of self becomes more visible as my business succeeds. Sure, success at the mechanics and the people aspects of the game of business is essential to even get there, and credit needs to be given to those games, but as the system that is GrantTree comes together, I find that many of the limitations of GrantTree's growth are not with either the people or the product, but with my own ability to observe and remove barriers.

The game of self is the meta-game. No one ever wins it fully, but every bit of progress you make on it increases your chance of success in all the other games. As such, it is always worth playing.

The only way I can think of to deliberately play this game is to play all games. Try many games, and pay attention to games that frustrate you, games which make you feel like a loser, games which force you to face uncomfortable truths. If you consistently lose at a game, it's a good sign that focusing on this game will make you progress in the game of self. If you're consistently winning, you're probably not learning as much.

Chess is perhaps the ultimate example of a game that rates highly on all three scales. No matter how much you play it and how good you are, you can always find someone who will beat you in novel and interesting ways and force you to think, and learn, and grow.

Life is a game of mechanics, people and self, and the multitude of artificial games humanity has concocted over the centuries can help teach you how to be better at all three dimensions.

Kapil Kale's underground guide to PR for startups  

The six keys, by Kapil Kale from GiftRocket:

  • Have a story
  • If you don't have a story, engineer one
  • Pitch your story to journalists (via warm intros or cold calls)
  • Change your story for different types of blogs
  • Use press to get more press
  • Be determined

Having a story is definitely essential. If you're pitching news bloggers, I'd add that you need to create some kind of event. News bloggers only report on stuff that's up to about 12 hours old. After that, it's stale. If you launched yesterday, don't bother talking to news bloggers. If you're launching in a week, though, they'll be interested.

Don't forget to read this article too.

Startup risks

Reading this article earlier today spurred me to write down my thoughts about startup risk.

One of the questions in the TSB grants application is about risk. In that question, TSB (a UK government funding body aimed at technologically risky projects) like to see a variety of risks covering the business's key risk areas.

In my opinion, it's largely a filler question. You can't win or lose the application based on this one only. Part of this is because every business has multiple risks in many areas. Having written quite a number of applications over the last year, I have developed the skill of coming up with a wide variety of risks to list, describe, rate and mitigate, for almost any technological business. It's not very hard, because almost every new business is full of risks, and technology businesses doubly so.

In short, it's become a personal habit (if it wasn't already), given a proposed business, to be able to identify the most interesting and relevant risks and how they can be mitigated.

However, inexperienced founders seem to take one of two views.

The first one is to believe that their business isn't risky. They have the great idea and put together a team that can build it (those were the difficult part). The rest is just execution. If you push them, these types of founders might agree that there are some risks in execution (after all, building products and shipping them to customers is not so easy), but they feel that everything else is fairly well understood. Don't laugh at them - you were probably one of them some time ago, maybe you still are. I was in this category for my first two startups.

The second type is aware that there are risks, but lumps them all together as one big "startups are hard" risk. They embrace the risk and see it as a badge of honour that they're doing something immensely risky and which is clearly impossible to make less risky because that's the way startups are, and if you can't take it you're clearly not cut out for this great work, so go back to your day job. I'm being slightly mean here, but that's the general idea.

Both are touchingly naive, of course, and equally wrong.

The experienced view

I am lucky to have a number of friends who are entrepreneurs, as well as a variety of clients, some very experienced and some less so. I am also lucky to be an entrepreneur myself, which gives me direct insight into the progression of my own thinking about risk.

The more experienced an entrepreneur is (and, related to that, the better they are at executing), the more sensitive they seem to be to risk. They are neither naive about risks, nor seeking to embrace risk.

In fact, successful entrepreneurs seem to be keenly aware of risks of all kinds. They abhor them and do their damnedest to mitigate them in every way possible. They will take calculated risks (that's part of doing business) but not before figuring out how to make that risk as unlikely and as painless as possible.

An important competence that is developed through experience is the ability to prioritise risks, to figure out which ones are the big ones. If any startup basically has hundreds of risks, then there's no way you can address all of them. Everything that humans do contains some degree of risk, but some of the risks might kill you, others might kill your business, and others you won't even notice. Some are very likely to occur, and some much less so. The point of risk mitigation is to make sure that there are no risks which are both very high impact and very likely, and to reduce whatever big impact risks you must take down to their minimum likelihood.

This is the insight that people try to convey when you meet them at a networking event and pitch your business, and they respond with something like "Oh, you want to make sure to think about X". Their spidey sense (built, perhaps, over years or decades of experience) is tingling and telling them "uh oh, there's a big risk there worth paying attention to".

The usual response to such a suggestion, unfortunately, is to brush it off and try to appear in control. It's a shame: it seems like a missed learning opportunity. When people tell me this, my reaction these days is to ask them "really? why do you think that?" Who knows, I might learn something important.

Risk mitigation for startups

Most properly organised corporate projects have some kind of risk management system in place. This often takes the place of a simple risk log which is reviewed regularly, with risks (and their likelihoods, impacts and mitigations) updated to reflect the evolving reality.

I used to think that this was overkill for startups, and I still think so. Such logs have a tendency to grow in size until they are effectively useless. Everyone wants to add their brick to the wall, and soon the team is drowning in risks and, if people have any sense, they start ignoring the risk log.

However, there is a much more natural method of risk management which I (and other entrepreneurs I know) use, which is to assess and reduce risk at the point where it has most impact and is most relevant: when making decisions and deals.

Everyone thinks they do this, but most people don't. Try this process for the next few important decisions and deals that you make:

  1. Scribble down the potential downsides of this decision
  2. Come up with one to three ways that each of these downsides can be reduced in impact or likelihood
  3. If there is a counterparty, try to convince them to adopt one of these changes (you can even tell them it's to reduce your risk, they'll usually understand). If this is a decision you're making by yourself, implement those changes and reduce your risk (if the reduction is worth the effort)!

The point of this process is not to stop making decisions because they're risky. I once heard a would-be entrepreneur declare "I don't make any decisions with an up-front cost and a risky outcome". That's taking risk-aversion way too far. You have to take risks sometimes. The point, however, is to keep those risks as low as possible.

Spend 10-15 minutes evaluating the risks before making an important decision or entering an important deal. It's very much worth your time.

How to ask for introductions  

Elad Gil on how to ask for intros:

One of the key things you learn when building a consumer product is to make things as easy, streamlined, and friction free as possible for your users. When asking an angel, advisor, or other person to make an introduction for you, the same rule applies. The structure below saves a lot of pain & back and forth for you, as well as for the person being asked to make an introduction on your behalf.


By spending a little bit of time up front you can make life dramatically easier for the person doing you a favor / offering an introduction. It also increases the likelihood dramatically that an introduction will actually occur and yield a follow-on conversation.

Elad rips into a couple of templates (good and bad intros) to show how it should be done. As someone who has frequently both been asked to make intros, and asked others for intros, I can only agree with his approach.

Make it easy for people to help you, and they're much more likely to do so! Worth also consulting this article, this presentation from Founder-Centric, and the "Reaching Out" section of this article for additional perspective (thanks Sal for the suggestions!).

Put together effective designs quickly  

Sandeep Ghael provides some clear and directly usable ground rules to put together an effective, decent-looking design quickly when aiming to develop a website quickly (for example during a StartupWeekend.

It's a solid set of tools and rules. Have a read, practice them, and use them when you create your next MVP.

Product vs Business vs Company  

Fred Wilson makes an interesting point about the distinction between products, businesses and companies:

...most of our portfolio companies build the product first, then the business, then the company. And building a company is often difficult for founders because they are so focused on the product.

Roelof Botha, a leading VC with Sequoia, once gave me a great piece of advice in helping founders start to focus on company building. He said founders should think of their company as a product and build it and shape it with the same passion and care. I've taken that to heart and passed it on a few times.

It's worth restating the distinction.

A product is something that you can build and sell, directly or indirectly. It is the "thing" (though it can be a service) that you could make money from via a business. By itself, though, it won't make money, typically.

A business is a set of people, processes and tools that have been structured around a product to enable it to make money. Ideally, a business is profitable, but it may not be. Ideally, a business doesn't depend on any one specific person being a part of it (including the founders), but it may rely on some exceptional people.

A company is an organisation of people that's designed to run one or more businesses successfully, and to create new businesses to respond to opportunities in the marketplace. This must be, ultimately, independent of any specific employee, since companies, unlike products and businesses, are (or should be) built to last for decades.

A business is worth much more than the product that it sells. A company is worth much more than the business that keeps it alive.

This is one good rationale for why some startups (e.g. Facebook, Twitter), operating in environments where it's easy to raise money, have bypassed the "build a business" step to go straight to building a company. The danger with that is that if you don't first build a business, you might end up building a company that's incapable of building new businesses - and that's not worth a whole lot.

Conversely, entrepreneurs operating in conditions where there is much less cash to be raised (e.g. Europe) tend to focus on building a business first - even, in some cases, before building a product.

Terrifying uncertainty  

Jason Cohen:

So how do you tell the difference between the chaos that leads to unthinkable success and that which leads nowhere at all?

I’m not sure you can.


The fact that you’re in over your head, that you almost cannot will yourself to continue, that you’re completely in the dark, that you’re working yourself to an early grave, that you seem to slide two steps back for every one forward, that nothing’s ever good enough, that that your friends and family can’t understand why you’re turning yourself inside out with no apparent progress, that you yourself doubt whether you’re even capable of this…

These things don’t mean you’re failing. It’s always like this, until it isn’t.

This is one of the concerns that Eric Ries tries to address with his principles of Innovation Accounting and Validated Learning, which make the learning more tangible so that even if the graph is flat, you have some way to measure progress. That said, it's true that there will always be strong elements of terrifying uncertainty in any startup.

Being able to sleep at night despite all this uncertainty is one of the founder characteristics that is very hard to train up. Either you're comfortable operating with minimal information, or it drives you nuts. If it's the latter, stick to a job.

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