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daily articles for founders

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

Sometimes, failure is your best option  

Brad Feld:

I strongly believe that there are times you should call it quits on a business. Not everything works. And — even after trying incredibly hard, and for a long period of time — failure is sometimes the best option. An entrepreneur shouldn’t view their entrepreneur arc as being linked to a single company, and having a lifetime perspective around entrepreneurship helps put the notion of failure into perspective.

Entrepreneurship is a career (and a safe one at that). But that doesn't mean that every startup you start has to succeed for you to be successful.

Quite the contrary. Both of my first two startups failed. My third company is now successful, highly profitable with 11 employees and growing, and so I am generally considered a successful entrepreneur now.

The only constant about declaring that your startup has failed seems to be that everyone wishes they'd done it six months earlier. It's easy to know when you're succeeding, it's much harder to know when to quit and try something different.

VisualMess guide to design  

Being able to design your way out of a wet paper bag is one of those skills that is immensely useful as an entrepreneur. Not everyone has an awesome designer as a cofounder and, let's face it, a great many people who are technology wizards or business experts suck at producing something that looks even half-decent.

And yet, decent design is not magic. Great design might be out of the reach of those who don't have a knack for it (though it's worth mentioning that this knack tends to be acquired through decades of practice, not magic), but decent design is within everyone's reach.

Here, then, is an excellent guide to the basics of design. Enjoy.

How Andrew Plotkin raised $24k on Kickstarter  

A surprisingly informative article, for CNN, by Andrew Plotkin describing how he raised $24k via Kickstarter. He proposes some tips to access this innovative way of raising funds (and not losing equity features in the process):

  • Say up front what you want to do with the money
  • Have a great video
  • Break down your audience into key groups and be sure to give them all something to satisfy them
  • For a game project, include a demo
  • Don't be afraid to plug yourself and your CV
  • Don't be a jerk - actively. Say thank you to everybody, early and often.

He also actively promoted his project by contacting interactive-fiction-related publications and getting them to help.

In short, raising via Kickstarter will take a lot of effort if you want to succeed, much like any other fundraising method. If you can raise via Kickstarter rather than traditional funding routes (or if traditional funding routes are closed to you), it's certainly worth considering.

Why transparent salaries make sense  

Following up on my recent post about developing a good culture, I noticed Joel Gascoigne posted a brave article exposing the open salary structure at Buffer.

I felt Joel's article missed out a bit on the "why" side, so I wrote a response article to that on the GrantTree Blog: Why transparent salaries make sense

This was posted to HN, and did reasonably well, until the controversy detector flagged up that there were too many comments (apparently this is a very interesting topic for discussions) and then it sank without a trace, so you might have missed it then.

Bootstrapping and knowing how to make things  

Rob Fitzpatrick makes a very valid suggestion to non-programmers:

If you want to get into startups and you don’t already know programmers who enjoy working with you, then I seriously suggest you start learning to program immediately. It’s not as bad as it sounds.

Too many people go around looking for a "technical cofounder" to build out their idea (which, usually, at that point, exists on the back of napkins and business plans - both more or less equally worthless media).

One of my best friends, who used to be one of those "non-technical" people (i.e. he didn't know how to program), taught himself how to build a simple site with ASP back in 1998. He made a few hundred pounds from it. He then built a more complex site and made a few thousand pounds from it. After that, he built an even more complex site that made him hundreds of thousands of pounds.

Recently, he's taught himself Rails, server administration, has learned to manage a team of developers (outsourcing to Russia works if you're a competent programmer yourself). He's now building out site after site, trying out many different ideas until he finds one that really takes off. Those are not trivial sites - they're the kind of applications where most people would say "you need a technical cofounder".

The fact is, you're not going to get to that level instantly, or within a few weeks. But once you start the process of learning how to program, several things will happen:

  • You will have started a lifelong process that may well get you to the point where you don't need any technical cofounders.
  • You will know a lot more about what "technical people" do, so you can both recognise the good ones and "talk the talk" (which makes you a better person to work with).
  • You will be able to build simple things to test your ideas without any outside assistance! This dramatically lowers the bar to testing ideas.

It's worth finishing with a note that "programming" is a subset of "making things", one of the key skills in the startup skill set. Programming happens to be an insanely useful skill these days, but there are other ways to make things. With sites like Kickstarter, we're seeing a resurgence of people being able to build companies based on their ability to make physical things, for example.

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.

Judging people based on grammar  

This HBR article by Kyle Wiens, takes a hard line on people with poor grammar:

On the face of it, my zero tolerance approach to grammar errors might seem a little unfair. After all, grammar has nothing to do with job performance, or creativity, or intelligence, right?

Wrong. If it takes someone more than 20 years to notice how to properly use "it's," then that's not a learning curve I'm comfortable with. So, even in this hyper-competitive market, I will pass on a great programmer who cannot write.

I would agree. In fact, I used to agree with this view.

Unfortunately, I can't, because I've met some extremely intelligent people who consistently mis-spell things. For example, Bob Leung, my cofounder on Woobius, is one flagrant such case.

Before I worked with Bob, I too held the view that grammar and intelligence were generally correlated. But then Bob posed a bit of a quandary. Here was someone clearly very smart, extremely talented, extremely driven, with great attention to detail, and who is completely incapable of writing a single paragraph of text without at least one or two mistakes in it.

Since then, I've revised my judgement, and I would urge Kyle to revise his too. If you're hiring writers or programmers, then certainly, attention to written detail is paramount.

However, for many other functions, like sales and design, while attention to detail is important, it doesn't always manifest itself as good grammar.

So my advice is: do not judge people solely by their grammar - it is just one factor amongst many.

The truth about a failing startup  

There's a pastebin text that went to the top of HN recently that is worthy of comment. I'll reproduce it below in case it gets removed from pastebin (not exactly the most reliable storage location):

Somehow, I managed to create an app that some people seemed to like. With some odd stroke of luck, an investor in the U.S saw the app, and saw something in me. He gave me a shot. Invested in me and my company.

Fast forward a couple of years, and that company still exists, but it’s on it’s last legs. It’s dying. I’ve failed. I haven’t been able to innovate, I guess I lost my touch. The money will run out within a couple of months, and the debts won’t be able to be paid. It will all collapse.

I think the investors lost faith a few months ago. They don’t contact me. They don’t even follow me on Twitter anymore and if they do contact and I reply, they don’t respond with answers to my questions.

It’s pretty shitty to be living in a state of impending doom. You know in a month or two, your entire life will crumble apart. You’ve tried everything but nothing works. Doom is coming. And you have to live with it. It’s a constant state of ever worsening depression.

When family asks how things are going, like all entrepreneurs, I respond with “Great!”. I don’t know how to tell them that I have failed.

The investors money is just about gone. My own money is non-existent.

I see articles on Hacker News about depression and entrepreneurs. Most of them are so far from reality. They don’t capture the sense of impending doom, the sense of failure. The don’t capture the loneliness, where you have nobody you can turn to.

If I can leave with one piece of advice to young founders. Please think really hard about taking other peoples money. If I had failed using my own money, I could live with it. But having a team of investors believe in you, only to let them down is an incredibly difficult thing to deal with. Try and finance your product yourself for as long as you can. At least until you can realise if your idea is decent (which takes a long time to figure out).

I commented on the HN post. I feel it's worth repeating that comment here and adding to it.

The idea that the (unhappy) end of a startup is depressing and filled with doom is pernicious, because it's partially true. Yes, it is a pretty difficult time, or at least it is until you finally admit to yourself that this venture has failed, and start the process on moving on.

Once you've done that, something surprising (at least the first time) happens:

You will feel an immense sense of freedom and lightness.

It's pretty obvious why: a weight is being lifted from your shoulder. Where your path was a narrow funnel leading to one specific destination, you will now have the infinity of all possible and reachable paths ahead of you. Before, you couldn't think of anything other than worrying about the startup - now you can do anything you want.

The end of a start feels very dramatic before it happens, but once it's done, you will feel a whole lot better. This is truly liberating.

One side-effect of this is that experienced founders tend to be much more willing to draw a line and call it a day. "Ok, this one isn't working. Let's figure out the next one."

Moving on cleanly and swiftly when it's time to move on (rather than 6 or 12 or 18 months later, after much, much more pain) is one of the skills that you learn from failing at your startup, that you do not learn from succeeding.

Advice for a young entrepreneur  

Tony Stubblebine starts with the following (well presented) advice:

  1. Surround yourself with interesting people;
  2. Focus on the right things (which means, ironically, figuring out what the right things are);
  3. Be useful.

He ends on a little zinger:

There’s basically two ways to be financially successful as a company. One, you could rely on time-tested business fundamentals. I call this the Warren Buffet model.

Two, you could rely on the greater fool theory, which is that with enough hype, smoke, and mirrors you can find a buyer who is an even greater fool than your investors.

(...)

So much of the startup world is arrayed around the greater fool theory that I felt like my best chance was to build a company that was independent of that system. I think of bootstrapping as a very slow form of raising money. But now that we’ve done it, I have a reliable stream of income and never have to raise money again. It’s really just at this moment in time that we can switch from doing whatever it takes to survive to actually testing our ability to make a major impact.

To be fair, there are situations where you do need the extra money to grow extra fast, or else you lose. Groupon is a good example - had they not executed so brilliantly and quickly, they would have been eaten alive by the dozens of clones which emerged everywhere.

I'm a big fan of getting profitable early, but it is neither the only way, nor the universal best way.

Never negotiate piecemeal  

Great piece by Mark Suster:

The problem with negotiating piecemeal as Stuart taught me is that you trade on every item. You don’t prioritize the issues which you really care about. If you don’t want to give a millimeter on one item you have a hard time doing that point-by-point. Done as a “package deal” you can say, “I gave in on these 5 issues that you asked for. On this issue I can’t give.” That’s much harder to pull off piecemeal.

Piecemeal you might be reasonable in your negotiation on each of those first 5 issues as each came up. You found middle ground on each of them. When the 6th point comes us – the one you really care about – you’ve lost your leverage. You might have been better off not finding middle ground on the first 5 points but rather having given completely on all of them in exchange for not budging an inch on point 6.

Chalk it up as one of these "obvious once you've been told" ideas that can save you a lot of money and worries.

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