daily articles for founders

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

Process cults  

Alex Payne writes an insightful attack on the idea that dutifully following a process will get you a successful startup:

Process Cults form around a set of business practices that, when judiciously applied, are supposed to yield a profitable, successful business run by shiny, happy people. The startup segment of the business book market has its favorites:

  • Eric Reis's lean startup and associated book.
  • Steve Blank's customer development and associated book.
  • 37signals' methodology, as expressed in the books Getting Real and REWORK.

I have read all of the above. I don't necessarily agree or disagree with their contents. What I disagree with is the notion that anyone should start or operate a business in the explicit mold of someone else's experience, as reduced to a couple hundred pages padded with illustrations and diagrams.

I believe processes are in fact helpful, but only when supported by a solid set of skills backed by painfully earned experience.

Importantly, a process can help you avoid some common mistakes. Processes are like recipes, but they are not recipes - they are much more open-ended. Yes, every business is different, but most businesses fail in common and avoidable ways and following a well-tested process will at least reduce the chance you fail in a boring way (though it may not increase the chance you succeed).

Appsumo's failed A/B tests  

This article by Noah Kagan once again makes the point that if you cannot fail you cannot learn, and gives up, as examples, some failed A/B tests that AppSumo conducted.

Only 1 out of 8 A/B tests have driven significant change.


All of these were a huge surprise and a disappointment for me.

How many times have you said, "this experience is 100x better, I can't wait to see how much it beats the original version?"

A/B tests are one of the most effective implementations of actionable metrics, but make sure the measurement boils down to a change in a key performance indicator. Noah finishes with some tips:

  1. Focus on one priority per week, with 1-3 tests focusing on that goal.
  2. Be patient - it may take a few thousand visits or 2 weeks for a test to be conclusive.
  3. Be persistent - most of your tests will fail, but that's ok.
  4. Focus on things which are likely to get you big results.
Perspective on the billion-dollar exit  

Adam Siegel:

Instagram sells for $1B. Evernote is now valued at $1B. Pinterest at $1.5B. 3 month old companies coming out of YCombinator are getting investments based on $10M+ valuations. And today will be the Facebook IPO which will likely put a market cap on the company north of $100B.


As the founder of a small company in Chicago who only took $17k from YCombinator 6 years ago (YC-W06) and now runs a classic "lifestyle" business that support myself and a small team from client revenues, I find myself wavering between being fairly satisfied with the state of my business life to mild depression and jealousy that I'm not in a situation to be cashing in myself.

Adam goes on to offer numerous tips for maintaining perspective while working on a "lifestyle business":

  • Spend time with friends who are not in tech or startups
  • Read the newspaper
  • Go for a lot of walks
  • Go visit some of your customers in person
  • Maintain a healthy relationship with parents
  • Keep a journal (not a blog)
  • Find a therapist, life coach or mentor
  • Appreciate your time more

Those seem like good things to do whether or not you run a billion-dollar startup.

However, addressing the point of billion-dollar-depression head on, it seems to me that the problem is more to do with a fundamentally incorrect perspective than with specific daily habits.

Generally, people looking to build those mega wealth successes are either insanely obsessed with money/control/power/etc (I'm not addressing this post to them), or just wish to have a great impact on the world - to make a dent in the universe, in other words.

It's a commonly repeated fact that the difference to your lifestyle from having $10m (or revenues that provide an equivalent lifestyle, e.g. $500k-1m/year of revenues) versus having $100m is much smaller than the difference between $0 and $10m. There's a very strong law of diminishing returns in application to the value of money. So as far as money goes, having a "lifestyle business" that provides you great but not headline-grabbing returns seems like a perfectly fine deal.

The depression can then only come from the lack of impact. It seems perfectly reasonable to me that people should wish to have a great impact on the world, to make a lot of people's lives better, to be a force for good and improvement and progress. So far, so good (though not everyone feels like that - some people are happy to simply enjoy their lives and be good people).

It's well-known that luck plays a huge part in mega-successes like Facebook, Instagram, and so on. There's a good reason why this merry game is called the "startup lottery". The chances that you will pull a billion-dollar business from the magic hat are very slim. Obviously, if you do, great - but you can never count on such an outcome.

The fallacy in that depression is the implicit assumption that your current business is the only or greatest thing you'll ever do with your life. This may be true for someone like Mark Zuckerberg. Topping Facebook is going to be a struggle. To an extent, it's Mark who should be depressed. How will he top what he's already achieved? How can he give his life a meaningful direction upwards?

For most of us, though, we have not only the current business we're working on, but the rest of our lives (short or long) to make an impact and change the world. That your current business will not change the world doesn't mean that your next one won't. If you want to change the world, you are even more likely to be able to do so from a base of wealth and competence (after running a successful business for a few years and becoming a millionaire in the process) than when you're broke and fresh out of uni.

Keep in mind that changing the world takes time, and that you don't have to hit the ball out of the park first time. Changing the world in your twenties is a lottery ticket, not a plan. Viewed through this lens, the "billion-dollar depression" seems, well, absurd.

The messy art of UX sketching  

Excellent stuff, with videos. You could do worth with your time than learn to communicate visually. Many people have a phobia of grabbing a pen and sketching something, when in reality, it's all a matter of practice, and most people can learn to make basically useful sketches.

This is not to say that we can all become supremely talented at it (like the author of this article, Peiter Buick), but basic drawing skills are within anyone's reach.

Read more about sketching and watch a cool video here.

True ecosystems  

I somehow missed posting this last year, when it was published. An excellent article by our very own Salim Virani, on the topic of ecosystems.

Sal and the rest of the FounderCentric team spend a lot of time working with incubators, accelerators, governments, outreach teams at large companies, etc, and helping them develop their startup scenes. Their mission comes from the heart (they really care about helping startup founders), and they are, as far as I know, the best at it at this point, in Europe.

So their thoughts on the topic of how European ecosystems should develop are worth paying attention to. Here's one of the points that particularly stood out for me:

He leaves us with the final takeaway "Support only the best people who have set the objective of being the 1 in 50,000". So, only support the hugest successes - and leave the others stranded?

From a broad ecosystem perspective, investors are often stumps we have to ignore and grow around to get to the next level. "Like a rotting treestump in the forest, they've established themselves from a past leadership position, still get all the attention, but get in the way of progress." They do what works for them, but we have to see the broader picture to grow a successful ecosystem.

Investors aren't bad guys; most work in the best interests of startups from their point-of-view.

The problem is when they perpetuate the idea that the "best" startups for them are the best startups for everyone.

Taking the Silicon Valley definition of a "successful startup" and requiring that everywhere in the world as a bar to entry is short-sighted for people who want to bootstrap a startup ecosystem in a city where there is none. There are many ways to build successful businesses, and the "funded mega-high-growth startup" way, the unicorn chasing approach, is simply not a smart approach for most parts of the world.

If you're interested in startup ecosystems, read the full article here.

Choosing a Minimum Viable Cofounder  

Under this catchy title, here's a great article by Dharmesh Shah from earlier this month, about the criteria for selecting a cofounder. Dharmesh presents them as minimum criteria - i.e. they all need to be present to make a great cofounder.

I'd qualify that slightly by adding that yes, they should all be present, but they may not all be present right away. This is not to say that you should start a startup with someone if they lack one or more of those attributes - after all, they may never develop those attributes. But be aware not only of the state of your cofounder today, as well as of their future path.

Without further ado, here are Dharmesh's criteria:

  1. You trust them and they deserve to be trusted.
  2. They have to be brilliant at building or selling.
  3. They're committed to the company, not just the current idea.
  4. They are likable. You and others enjoy spending time with them.
  5. They do stuff, not just think about stuff.
  6. They crank and grind.
  7. They're reasonable, rational and realistic.
Understanding your competitors  

In GrantTree, I've lost count of the number of times when, upon being asked about competitors, the client declares that "we don't have any competitors, what we do is unique".

Unfortunately, this mindset is wrong. Here's Des Traynor's take on it:

McDonalds and Weight Watchers are selling wildly different products, but they're competing for the same customers. This is what we call indirect competition. Note that this is different to competing on outcomes. Video Conferencing & Business class flights compete on outcomes. In that case, they're both hired for the same job (business meetings).

Spot on. The rest of the article explains how to make use of this insight in practice, with a real-life example. Read it now.

Idea stagnation  

Noah Smith points out that the startup bubble can lead to stagnation of ideas:

I wonder if the Entrepreneurship Subculture isn't creating some unwarranted adverse effects. By putting entrepreneurs in such close and constant contact with each other, does the Subculture ferment creativity and cross-collaboration? Probably. But it also may inadvertently stifle creativity, by exactly the process that Steven Smith's research describes.

Noah suggests a solution: go on breaks, to the countryside or wherever is different from where you are. In his words, engineer a "change of context".

I can't disagree with that. Some of my best business ideas have occurred to me while floating about in the ocean or lying on a sunny beach. I wonder if that means I can claim my holidays as business expenses...

If you're stuck on a problem, going on a break is generally a good idea, but it's also a good idea if you're trying to generate ideas.

Dark patterns: good for business?  

The link is a good presentation about Dark Patterns, only 20 minutes long, so worth a watch.

"Dark patterns" are defined as marketing anti-patterns that may bring you a direct return (more users, more money, etc) but risk your brand along the way. Examples include bait and switch, sneaking things into your shopping basket, disguised ads, hidden costs, etc.

Should you use dark patterns? I guess it depends. Facebook notoriously used the Friend Spam to fuel its explosive growth. And, of course, they are by definition guilty of Privacy Zuckering. However, it doesn't seem to have hurt their brand all that much.

This is a controversial point, but I would say that depending on your market, dark patterns may be essential survival tricks that will make or break your business. Could you compete in the highly competitive domain registrar market without dark patterns?

Taking a leaf from the "real world", supermarkets like Walmart or Tesco use many tricks to help increase their sales, including laying out the store in a way that will be likely to increase your spend, and this may have been controversial at some point in the past, but it is now accepted as standard business practice.

Perhaps the smart move is not to discard dark patterns entirely, but to become more savvy at knowing which ones work for your industry, and how to implement them in a way that won't damage your brand with the majority of your users.

The talk makes a great point that if you are going to be using dark patterns, you should do so deliberately, not by mistake, and with full awareness of the impact it may have on your brand.

Starting out? clone threewords.me  

Gabriel Weinberg suggests, quite rightly, that aiming to build something like threewords.me is a great approach to startups for a new entrepreneur.

I couldn't agree more. It's the "throw things to the wall and see what sticks" approach, and also what I would recommend to myself if I could travel back in time. This impatient approach may not be the best for building a great startup, but it is the best for building a great entrepreneur.