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daily articles for founders

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

How to email busy people  

As a founder, you will find yourself emailing busy people on a regular basis - investors, potential clients, actual clients, actual clients who haven't paid their invoices... and so on. Hopefully not too many of the latter.

Here are some good advice from Jason Freedman of FlightCaster on the etiquette of emailing the kind of ultra-busy person who literally gets a thousand personal, non-spam emails a day. In short:

  • Keep the subject line concrete and very descriptive.
  • Use your company email address.
  • Remind the receiver of the context.
  • Limit your mail to five sentences - or, ideally, three.
  • Make it clear and explicit what you're asking for.
  • Respond immediately if he answers.
  • Include a short, professional signature with the relevant details.
Do you really need investment?  

Jean Derely on WooRank's early days:

We couldn't get anyone to invest in WooRank when we got started, and despite this seeming like the hardest path at the beginning, it might well be the best thing that could have happened to us.

(...)

The first benefit is that there weren't external pressures on us (from investors) to achieve specific levels of profits, or to develop WooRank in a way that was not necessarily in our customers' or our own long-term best interests.

(...)

Another consequence of not having early investment is that we've had the flexibility to cultivate the company culture as we ideally envisioned it. This includes giving team members additional incentives and a great work environment - and despite long working hours at the beginning, to give the team the necessary professional freedom to maintain a healthy work/life balance. Who knows if this would have been possible with the pressure of measuring up to our investors' wishes weighing us down?

Control over your company's destiny is definitely a huge benefit of bootstrapping. Another benefit that shouldn't be discounted is the financial side: all the profit is yours to keep, and to take out of the company right now if you so wish, without having to wait for a payout day sometimes in the future.

Stealth mode startups  

Mostly correct advice, for most cases, to startups in stealth mode:

... stop being in stealth mode. Stop asking for advice. Stop doing your start-up. You're not ready.

Jason Freedman of HumbledMBA proposes these key reasons why you should never be in stealth mode:

  1. Execution is more important than the idea;
  2. Someone else has the exact same idea anyway;
  3. Completely unique ideas generally don't make it;
  4. The most likely cause of failure is your incompetence, not the competition;
  5. You desperately need real feedback;
  6. First mover advantage is just silliness.

Another side-effect, perhaps less important, of stealth mode, is that people you meet in networking events will think you're a startup newbie (and they'll probably be right). You won't get the same level of introductions, because who wants to risk their reputation introducing someone who doesn't even know the basics of startups? Instead, you'll get lots of advice about why you shouldn't be in stealth mode.

My first startup was involuntarily a stealth startup. We didn't tell anyone other than friends because we didn't think it was that important, and we wanted to build a sense of excitement around the launch. It was one of the main reasons the product stank at launch.

If you don't get user feedback from the right people during product development, your product will suck. That was lesson from startup number 2. It's not enough to get feedback, you need feedback from paying users, as soon as you possibly can, or else your product development bus will drive down the wrong road, and it's damn hard to turn it around later.

There's always a caveat, though, always a context where this doesn't work. I believe it works for most web startups, but in other industries, stealth mode may be de rigueur.

Standing out as a marketing strategy  

Under the guise of providing some practical examples of how they got the attention of big brands like Pepsi or AT&T while running a 3-person startup, Alex Debelov of Virool presents a great philosophy for getting early attention:

When I got there, I wanted to look professional, so I put on a suit and went to the panels. As it turned out, pretty much everyone in the room was dressed in suits. Since I was in my early 20′s most CMO's/agency reps that I met assumed that I was looking for a job. When I would tell them about my company, they would just follow up with dazed, "cool, here's my business card" and leave. I realized that I needed to do something different.

Good strategy is about pitting your strengths against their weaknesses. As a new startup, you are definitely not stronger at the traditional networking/marketing game than established players with a lot of resources. You don't even have time as an advantage.

Alex went on to trade his suit for a t-shirt asking "Need 1,000,000 views?" He boldly approached the CMO of PepsiCo on LinkedIn before meeting him in person. He irreverently placed letter flyers advertising his tiny company on every seat at a panel organised by one of his competitors.

What is Virool's relative strength? Nothing to lose. Some of Virool's approaches may infuriate competitors, but there's no chance they'll copy them any time soon. If Virool had done this at a startup event, they would have gone unnoticed, because everyone is in that position. But at a big industry event, it stood out.

The take away here is not to do things that will potentially piss off people in your industry, but to figure out what it is that you're willing to do to grab attention that will be effective and that no one else at the event you're going to is going to do.

That said, the techniques outlined in the article are all pretty cool and worth noting for future use...

Bootstrapping on the side  

Joel Gascoigne proposes a method for working on a startup while busy doing something else (a full-time job to pay the bills, for example). He doesn't mention too many details of actual method, but one of his methods seems to be to do something every day to push the startup forward, no matter how small.

This is definitely a good method to build your startup if you have no other choices (which is the case for most), and I agree with Joel that it is better than his previously described "working in waves" method.

However, he is too quick to discard the potential for losing to faster competition:

On top of that, let yourself succumb to the myth that you can be killed by your competition and you're in for a tough ride.

This really depends on what kind of product you're building. It's sound advice only in the sense that if you're building a winner-takes-all, high profile product, you shouldn't be bootstrapping anyway.

Traffic sources have a half-life  

Many startups measure at least some of their success in eyeballs (mistakenly or not). A media event (like a successful post on Reddit or Hacker News) can be an exciting moment in a startup's life. This article by Rob Walling suggests that different forms of marketing have different half-lives. His conclusions:

  • Zero Half-life - Any kind of advertising
  • Short Half-life - StumbleUpon, Twitter, Hacker News, Digg, a direct mailing, most referral links
  • Long Half-life - SEO, email subscribers, RSS subscribers, Facebook fans (in some instances)

This is an excellent point, as well as:

... some companies appear to build their business around viral traffic sources (which have a short half-life), but they are, almost without us noticing, converting them into long half-life sources.

(...)

What you'll notice is these companies are using short half-life sources to drive traffic, but converting it into a source with a long half-life (an email list). This allows them to build a sustainable business over the long-term.

And therein lies the key: once you have tuned your ability to convert non-sticky traffic into something that will last, all traffic sources are good, no matter what their half-life.

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.

The born-again entrepreneur

When I finally left Accenture and started running my own business, I felt great. In fact, I started feeling great even earlier, despite (or perhaps because of) the lack of sleep of working two jobs. I felt part of a special, privileged few, who had seen the light of entrepreneurship and got the fact that it was so much better to be an entrepreneur than to slave away at a job.

In the few months leading up to and after leaving the corporate world, I was absolutely convinced that what I was doing was much better than a job. I would constantly talk about how great I felt about starting my own business. I'd talk about it with everyone, really. It was my favourite topic. And no doubt, in every one of those interactions, I would come across as fanatical, blunt and borderline unpleasant, because I Believed.

Even the demise of my first business only slightly dampened my enthusiasm. It took at least a year or two before I started to understand that although running my own business is clearly the absolute best option for me, that's not true of everyone.

There are many smart, competent people out there who are happier in other fields. Some prefer the academic life. Others enjoy the corporate environment and its specific sets of challenges. Others are happy as programmers and have absolutely no interest in learning how to run a business (which is a completely different skill set than writing code). Some want to become highly specialised experts in a narrow field, rather than gallivanting generalists.

Even security and stability, long decried by entrepreneurs as being a corporate illusion (when you run your own business, only one person can fire you), is in fact an advantage of the corporate world.

I want to fly away

The best analogy I've come up with so far is that working in a corporate job is like flying in a large passenger airplane. Working in a large company, you surrender your fate to the pilot, you agree to follow the rules set by the hosts and hostesses, you agree to do so with a lot of other people and to respect their rights too. You also accept that your flight might be cancelled or delayed, that you may be forcefully expelled from the plane before take-off if you don't behave yourself, that you may be arrested at your destination if you misbehave during the flight, and so on.

In exchange for this, what you gain is a vanishingly small likelihood of anything going really badly wrong (yes, large passenger planes do crash, and when they do, there's a lot of media talk about it, but statistically, it's incredibly rare). You also gain the ability to fly far and fast no matter your own personal ability to fly a plane.

Working on your own business, on the other hand, is like building your own plane and using it to fly to wherever you want to. If your plane is large enough to have hostesses, they'll do whatever you tell them to, and you can fly the plane wherever you think makes sense. If the plane is going to crash, you're probably going to know about it long before anyone else does, and you can grab your parachute and leap out long before hitting the ground (and then start building a new plane from scratch to continue your journey).

Having your own business is like having your own plane or boat - it provides you with incredible levels of freedom and autonomy. But, like having your own boat or plane, it's not for everyone, and not everyone wants to do it. It may be the absolute best choice for you, but that says nothing about what the best choice is for other people.

An admonition

So, this article is an admonition to all those who have recently joined the world of startups. Whether you took the leap a few months ago or a few years ago - don't be fooled into thinking that your way is the only way. There are many other ways to live one's life. This way is definitely not the universal "best" way. It's just one way among many.

Respect those who choose a different path.


Startup lessons from Constant Contact  

I'm not a huge fan of "X startup lessons" posts. They tend to be easy to write but hard to action, because they're fairly context-free, and when it comes to startup advice, context is everything.

However, this post seems better than the average. It's very focused on advice for low-priced SaaS B2B products, contains clearly actionable points, and quite quick to read. Here are a couple of points that stood out:

  • Get a CEO peer group to bounce ideas off of as soon as possible. Gail learned from a fellow CEO that calling free trial-ers would lead to a doubling in their "trial-to-pay" conversion rates. Trying this was the difference between a model that she thought was failing miserably and one that has built Constant Contact into a publicly traded company (see #3 on giving experiments enough time).
  • If your product is strong enough, people do not need to be sold. Focus your sales teams on being coaches, not salespeople. This means focusing salespeople on making prospective customers successful, and not on near-term revenue maximization.

The article also includes an audio stream of the interview if you want to listen to the whole thing.

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.


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