swombat.com

daily articles for founders

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

Who is swombat.com for?

Like any long-term venture, the goals of swombat.com have changed over time.

When I started, I just wanted to focus on providing a filtering mechanism for all the great startup articles out there, to separate the entreporn from the really good stuff, and to enable busy entrepreneurs to stay on top of the best, latest ideas without having to spend hours every day browsing a collection of websites and RSS feeds.

Then, over time, I saw there was a problem with this approach: most start-up advice is valuable for a very long time - not just the few days or months after it's published. Paul Graham's articles are as worthwhile today as they were 3 years ago. So I launched the Founder's Library and set up an automated twitter feed to push forward these pieces of evergreen content.

Even more importantly, I realised some time in the last month that although highlighting other people's great articles is fun and worth continuing, I have a lot of thoughts, ideas and advice that I'd like to communicate, for three reasons: first, and most important, it might help someone who needs that particular idea; secondly, it helps me to formulate those ideas more clearly to myself; thirdly, accruing those ideas in this place might form the material for a book (yes, I do want to put those ideas into a book sometime). So, there'll be more of a continuous flow of full-length articles going forward.

My understanding will, of course, continue to evolve. But the question I'm answering in this post is, where am I now? And, more importantly, what does this mean for whether you will derive value from subscribing to this site (by RSS or email)?

Focus

To be effective, swombat.com requires some level of content focus. Articles about how to fire an executive in a late-stage, well funded, expanding startup may be highly interesting - and I am sure that Ben Horowitz's advice is invaluable when it comes at the right time - but if you're fighting to get your MVP out the door and achieve early traction, it's just a distraction, no better than counting your chickens before they're hatched.

Focus should of course be driven by what I've done and achieved myself. Naturally, the most insightful comments I can make are about things I've experienced directly. A lot of my experience is at the early stages of a company's existence. At the same time, through GrantTree I am gaining a lot more experience of a wider variety of businesses, so the breadth of advice I feel confident in giving continually grows. Still, my roots are in the early stage.

Luckily, I think that's where most of the problems are. That's where it's possible to add most value. The transition between "the normal world" and the crazy world of startups is tough on pretty much everyone. I have yet to hear anyone declare "I had no problem switching from my banking job to running my own startup". Everyone seems to come out of this with a bloody nose, and for a good reason: it's really hard.

The beginner entrepreneur

This, then, is my target audience with these articles: the entrepreneur who is around the transition point from doing something else, to running their own business. You might still be in school, or you might be slaving away in a consulting company or some other corporate paymaster. You might have made the leap already (and be well on the way to smashing into the ground painfully), and might even have managed to conjure up a parachute so as to land more softly.

What's in common between all these scenarios is you want to run your own business, and you're not yet confident in your abilities to do so. You want it to be a startup (technical or not), i.e. you want it to grow and make you a successful entrepreneur.

The aim of this site is to help you build the skills that you need to achieve this independence, and, equally importantly, to build the skills to avoid the worst disasters. It's easy to fail really hard at the transition to running your own business. Most of those failure modes are avoidable. My goal is to reduce the chances that you'll fail to make the transition and break teeth in the process.

This is an important distinction. Many startup advice sites are about how to "make it big", how to build a huge success and, to paraphrase Paul Graham, to condense a 40-years career in 10 or less years of intense startup insanity. Using my success scale, those are "wealth" or "mega-wealth" successes, and they are needed to sustain the VC/investor industry, and so it's fair enough that this is the type of startup they want to encourage.

However, I believe that there is room for a great many businesses which, while not world-changing or billionaire-creating, enable smart, intelligent, driven people to gain control of their life, achieve a comfortable level of wealth, and create jobs and other benefits for society without becoming world-class successes. Most people would like a Facebook-level success if they can get it, but I think many would be satisfied with comfortable success, at least as a stepping stone.

I also happen to believe that if there are more baseline successful entrepreneurs out there, there will be more huge successes too. Currently, huge successes are largely based on luck, because most entrepreneurs faced with a facebook-like opportunity fumble and fail at the very basics of running a business. If there are many more competent entrepreneurs out there, there will also be more opportunities being exploited successfully (though they may very well not need investors' assistance to do so).

So, this is what my writing, and the articles that I link to, will be focusing on: helping people make the transition and achieve at least a moderate level of success, so that they can continue being entrepreneurs for as long as they please.


What are the best metrics?  

Andrew Chen makes an excellent point about metrics:

Metrics are merely a reflection of the product strategy that you have in place.

What you are trying to do should lead what you want to measure, not the other way around. It's for this reason that the blanket questions and answers around "best" metrics are meaningless- the question is, what are you trying to do.

It sounds obvious when stated, but it's so easy to focus on measuring metrics without understanding why you're measuring them. That being said, because most startup's goal is to increase the bottom line, there are some fundamental metrics which, when used properly, will tend to appear in almost any sensible strategy.

But, at the end of the day, the relevant metrics depend on what you're trying to figure out, what hypothesis you're trying to test:

So ultimately, the important part is to figure out what you are trying to do and what the expected behavior is around it. Only once you have that should you then ask yourself how you'd validate and test it using metrics.

How to find a designer  

Sacha Greif provides some solid advice for how to find and select a designer. This is something that many startups hit up against at some point in their life, since most startup founders are not professional designers - and, at the end of the day, there is a clear qualitative jump between what you can throw together yourself in a pinch and what a seasoned professional can produce.

Sacha's tips focus on finding freelancers, and cover where to look for designers, how much you should pay, how to pick the right designer, how to select a designer that has the skills you need, the use of multiple designers, and how to get the designer started.

Very much worth a read if you're thinking of hiring a designer for some aspect of your startup.

Which metrics do Valley investors tend to check first?  

When investors see our business for the first time, they need to wrap their head around it. It's like films - they often start with a bit of scene-setting before jumping in with the plot.

Investors also like to hear the main numbers up front. They're pitched all day -- certain numbers tell them if your business matches their selection criteria to avoid wasting time talking about bad fits.

Andreesen Horowitz explains:

When initially evaluating businesses, investors often look at GMV, revenue, and bookings first because they're an indicator of the size of the business. Once investors have a sense of the the size of the business, they'll want to understand growth to see how well the company is performing. These basic metrics, if interesting, then compel us to look even further.

They then go on to explain 16 commonly misused metrics.

The mid-size market  

My first startup targeted the impossible market of "small businesses online". This was a disaster, since such a wide market presents a couple of insurmountable challenges. First, it's so wide that it doesn't have any specific needs. The problem with that is that the only way to get a new product out on a low budget is to focus on a clearly defined niche and be very specific and therefore better than the generic solutions out there. The second problem was one of marketing: it's impossible to target such a wide market.

Jason Cohen describes another mythical, unattainable market: that of companies with 50-500 employees, or the "mid-size market".

They're not "small enough to be nimble," because at fifty employees they've already established much of the lumbering process and bureaucracy of companies a hundred times their size. Shackled by budgets and internal politics, technology changes require expensive coordination and retraining, and fear of change trumps potential rewards of improvement.

All this makes for an arduous sales process just like with big companies. But although they have the process and controls of a large company, they don't have the budgets to match; there's no large reward for successfully navigating the painful, Herculean sales adventure.

His conclusion:

So my immediate reaction to anyone "selling to middle" is the same: Yuck. If you're going to do it anyway, I hope you have some nice, extenuating circumstances that truly makes you the exception to the rule.

Jason also rightly points out that "50 people" can mean very different things in different industries. As Peter Drucker points out in some of his books on management, a 500-people factory is a relatively small factory with fairly straightforward operations (this was back in the days when there was less automation, mind you), while a 500-people consulting firm is a very large and complex firm.

Is it possible to crack the 50-500 market with some kind of innovative sales process? I'm not sure. If it is, I certainly don't know how.

Setting up your accounting system  

Brad Feld:

To be successful, you need to know about a wide range of issues affecting your business. However, you do not have to become an expert on each and the degree to which you need to understand various issues evolves along with your business. It is easy to get caught up in all the administrivia of of forming a company, building a business plan, and developing financial forecasts that you fail to spend time building your product.

On my first two startups, being the technology cofounder, I didn't care about the accounting system, what transactions were going through, how they were classified, what the tax implications were...

I started a consulting company to handle some of the work that was coming my way, and even there, I thought that deeply understanding the accounting was below me.

That was a mistake (and in the case of the consulting company, it cost me cold, hard cash).

On GrantTree, I've made sure to be entirely on top of the accounts, to know every transaction, how it should be classified, how it will be taxed, etc. I supported this without hesitation by investing in a product like FreeAgent (note: this link includes a referral code; this one doesn't...) to make it a bearable and organised task.

As Brad states in this article, it's important not to get bogged down in things that don't matter (e.g. spending a week creating a spreadsheet model of your finances instead of selling or building the product). But the basic accounting stuff is the beating pulse of your company. Having a firm grip on that is, in my opinion, essential.

You can't even delegate that to an accountant. Make sure you understand at least the basics yourself. Otherwise, it's not really your business.

Startup sales: #5: Follow-up meetings

First, second, third, fourth parts. Now fifth part:

#5: Follow-up meetings

Has this scenario ever happened to you? You have a great sales meeting, the client is excited, they want to work with you, you agree that you will send them a proposal or contract, and everyone shakes hands and goes away happy. Then you send the proposal. Then you wait. Then you follow up. And you follow up some more. And more. And... nothing. This client, who seemed to be in the bag, just seems to have their mind somewhere else.

Maybe you do eventually get through to them. You have a great phone call. They're still excited! They want to work together. They'll review the contract and get back to you.

And... nothing.

What you need is a follow-up meeting. And the best way to make it happen is right at the first sales meeting. While the prospective client is excited and wants to work with you, they're unlikely to say no to scheduling a phone call the following week. And if they do, chances are the sale was nowhere near in the bag, despite all the good feelings around the room, so at least you know about it, instead of walking away deluded.

Another benefit of scheduling that follow-up call is that you set a schedule for the client to actually look at your proposal. Instead of it being a loose, vague item that doesn't sit anywhere on their schedule, they now have a day to aim for before which the contract should be reviewed.

So, the tip is: try never to walk out of a sales meeting without a follow-up meeting or phone call scheduled.


Why you need to work for a big company  

I spent 4 years working for Accenture. That was a little longer than I should have stayed, but, in agreement with this article, I did learn a lot of things which are still useful in my startup life today. I also have numerous friends who are very happy with corporate life, and for some of them, I'm certain that's the right choice for them.

The key take-aways from corporate life, according to this article, are (with my comments in italics):

  1. You learn a lot
  2. You get to work with clever people (depends where you work)
  3. You build a network of former colleagues
  4. You have lots of perks (working in your pyjamas can also be a perk for some)
  5. You learn the art of politics
  6. You have time to reflect (it doesn't feel like that if it's your first job, though)
  7. You get a baseline from which to improve.

Good points all around for a very valid article. Spending a couple of years working for a corporation can teach you useful skills for startup life. That said, if you have a great startup to work for, and you know that's what you want to do, you'll probably learn even more at the startup.

I don't know  

Mark Suster:

She reminded us that in the world we live in we are often expected to be experts. We are expected to know everything and many people rush to conclusions given a limited set of information.

(...)

Learning comes from starting with a point-of-view that says, "I don't know." I said I learned this 15 years ago because that is when I stopped being a consultant.

Mark explains how the "here's an answer/solution" posture can hurt your business and your investments. This is an essential lesson for all founders, particularly since we are frequently thrown into situations where posturing seems to be the right choice (even if it's not), so it's easy to fall into the trap of thinking that it's always the right choice!

Worth reading if only for the Jewish story at the beginning.

How designers and developers can work together  

Matt Gemmell has written two excellent articles recently, aiming to help developers and designers to work together:

Both are solid and worth reading. The key points for developers:

  • Know what you want
  • Examples are helpful
  • Trust your designer
  • A sketch goes a long way
  • Consider sample data
  • Present all the work up-front
  • Remember design constraints
  • Be responsive
  • Don't assume it's easy
  • Don't micro-manage
  • Use the same tools
  • Speak the same language
  • Allow use as a portfolio piece
  • Pay on time
  • Don't condone spec work
  • Understand the model
  • Source code is extra

And the key points for designers:

  • Use an intelligent method of version control
  • Keep your layers
  • Name all your layers meaningfully
  • Use groups, and do so sensibly
  • Prune unneeded layers
  • Use Layer Comps
  • Keep everything as vectors, and scaleable effects
  • Learn how to preserve rounded corners while resizing
  • Design at 72 ppi
  • Snap to whole pixels
  • Always use RGB mode
  • Asset-preparation is part of your job
  • Be careful with fonts
  • Mimic the platform's text-rendering (where possible)
  • Be sure of design dimensions
  • Use the platform's idioms
  • Design once for landscape, then design again for portrait
  • Design for each major screen-size, and their contexts
  • Use genuine or at least realistic content
  • Consider localisation
  • Respect the global light source
  • Make navigational or organisational constructs explicit
  • Export cut-ups without compression
  • Ask about shadows
  • Understand how buttons are constructed

Read, bookmark, and remember.

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