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daily articles for founders

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

How to approach an angel investor  

Andrew Scott, founder of location-aware recommendation startup Rummble and several others before that, has written a good beginner's guide to approaching angel investors.

A key extract:

Ask an Angel up front some basic questions. Don’t be shy. You need to know:

  • Do they have the money?
  • What is the typical size of the investment they do
  • What was the size of the last 3 investments and in to which companies

It's key to know these sort of things to avoid wasting time pitching someone who can't or won't invest. Another founder I know, who's building a startup that's currently pre-revenue and pre-traction, always starts by asking:

We're pre-revenue and pre-traction. Does it still make sense for us to pitch?

This makes it harder for the investor to then turn around (as european investors are wont to do) and say, after a long pitch process, "We'd like to invest, but come back when you have traction."

Have a read if you need a refresher on raising investment, or want to find out more about it.

Startup sales: #4: Make it easier to say yes than no

First, second, third parts. Now fourth part:

#4: Make it easier to say yes than no

This is a simple one: make the default next step a positive one.

For example, if a sales lead has been going cold and you want to give them an ultimatum to react or be forgotten (which might be the right thing to do to spur them to action), don't end that communication with "if we don't hear back from you, we'll get in touch with you". End with something where it's easy to say yes.

For example: "I believe it makes sense for you to buy X since it will generate Y for you. Previously, you said Y was of interest. Please let me know if that's no longer the case." With this phrasing, they should, out of politeness (and assuming you haven't been a pest in previous communications), get back to you if they don't want to go ahead.

This is not a dishonest manipulation technique. It is simply about phrasing the question in such a way that the default is positive progress that brings you closer to a sale. It's the sales equivalent of asking an interviewer "So, if I get the job, when should I plan to get started?" rather than "So, if you don't reject me, when should I plan to get started?"

There are, of course, all sorts of further language tricks that you can use and abuse in the closing phase of the sales process, but this one is so important that it's worth highlighting separately. If you ask for a no, you're more likely to get a no.


How to set up meetings with customers, investors, mentors, ...  

Vinicius Vacanti proposes a better way to set up meetings with potential customers, business partners, mentors, and so on.

Rather than putting the onus on the person you want to meet with "I'm pretty free for the next two weeks, let me know what time works for you", take off the cognitive load of deciding when to meet, and propose some concrete times.

In practice, I find this does work very well. Usually, proposing 3 times in the next 2 weeks does the job. One of the main reasons this helps is because it reduces the back and forth to set up a meeting (which saves everyone's time):

Hand to wannabe "product guys"  

Is a potential business cofounder pitching himself as a "product guy", without any evidence that he can do it? Aaron Harris has an answer for them:

The first, and I suppose seemingly easiest claim and means to justify your place in the startup world, as someone who has no experience, is to call yourself a product person.

But that claim generally comes with a fundamental misunderstanding of what it means to do product. It is not code for a person who doesn’t really know how to do anything but thinks he can boss engineers around. It doesn’t refer to marketing guys who had an idea. Understanding what it means to drive a product means understanding the full scope of the vision of your company. It means understanding your engineering team, their capabilities, and their priorities. It means understanding what your next move is, and what your 6th move is from every angle.

Aaron also proposes a development plan for people who want to become product guys in reality as well as in title, which involves both practicing the craft and reading some product development classics.

Paths and deterministic design  

Brad Hargraves:

In a path-driven business, each experience that a user — especially a first-time user — encounters is designed with the singular purpose of pushing a user to the next experience and perhaps collecting some information along the way. In the case of web businesses, each “experience” is a page. To generalize, a path is deterministic in nature; a subject’s destination on any particular page has been determined by the page’s design.

(...)

I’m not arguing against design. But good design is hard, and design outside of the constraints of a deterministic path is really freaking hard. And if you’re a founder of an early-stage company, your job is already hard enough.

Can you build a great tech firm outside of Silicon Valley?  

Mark Suster makes the point that you can, but it will look different from the company you might have built in the Valley. The article is very american-centric, but worth reading even if you're not US-based. Here's why a company founded outside the Valley will look different:

  1. Funding is different outside the Valley so you will not be able to raise lots of cash quickly and swing for the fences - you'll have to show profits much earlier.
  2. Necessity (of making money) will drive the business: companies outside the Valley have developed many innovative monetisation models, marketplaces, etc.
  3. Recruiting and retention will be easier without the competition of a zillion startup trying to recruit your best people away. However, if you need to grow huge, you won't have large targets like Google and Zinga to dig into.
  4. You'll be able to take advantage of other 'strategic assets' such as fashion, media, art and financial services in New York, government and defence in Washington, etc.
  5. Communities outside the Valley have matured, providing support networks, advice, angel funding, introductions, etc.

Does the same apply in other parts of the world? To some extent. The point that stands out, and which is certainly correct, is that the right way to do startups depends on where you're doing them. Don't try to do a classic "web play" Silicon Valley startup in, say, London. Instead, take advantage of the local differences to build something that Silicon Valley couldn't build even if they had all the funding in the world (which, to an extent, they do).

Power blogging hour: an approach to startup blogs  

Robert Laing proposes a method for encouraging people at a startup to blog regularly:

Every week on Tuesday morning at 11am, all permanent staff pick their blogging topic from a list and complete a blog post on that topic within the hour. We then post the output staggered throughout the week.

That's a great approach, and Robert is right that an active blog is an invaluable asset to a budding startup, in terms of generating visibility and opportunities.

Robert also proposes some key elements to make the blog posts successful:

  • Write as yourself
  • Avoid regurgitating news
  • Have an opinion
  • Stay relevant
  • Keep the rhythm
  • Finish on time (if doing the power-blogging hour)
Habits of effective startup mentors  

I've argued before that mentors are essential to startup success, but who trains the mentors? Can you get a mentorship mentor? As it happens, you can, and much like most coaches are themselves being coached, mentors usually have their own mentors.

That said, it's interesting to try and write down what a good mentor should do. Here's a list, by LeanStartupMachine mentor Giff Constable, of ten best practices for being a startup mentor. The habits are:

  1. Always start by defining the fundamental idea behind a product or service
  2. Prioritize the startup’s biggest risks
  3. Get practical on the tactics to empirically mitigate risks
  4. Use your network to find them potential customers
  5. Challenge, play devil’s advocate, and poke holes in arguments
  6. Let the team come to its own conclusions
  7. Less mentorship may be better
  8. Don’t spoon feed, keep feedback crisp
  9. Collaborate with other mentors
  10. Be a mentor, not a CEO

Get the details here.

Startup Skill Set #6: The Startup Manager

Startups are often founded by engineers, designers, and other "doers". Often, they have spent most, or even all of their career working with incompetent managers who were over-controlling or over-lax, ignorant or too technical, domineering or distant, micro-managing or not paying any attention to the project, etc. Bad managers abound and they have rightly earned themselves a poor reputation in the technology world.

The result of that is often that startup founders feel that no management is needed, or indeed desired, and that the startup should go ahead without any management whatsoever for as long as possible... "until there are too many people" is a common milestone to start thinking about management.

However, that is not only a mistake, but quite simply a misunderstanding of what management is, what it's meant to look like in a small, expert team, how it adapts to different contexts, and so on.

What is management, anyway?

The effect of all these bad managers is that people end up assuming that "management" means having a boss who tells you what to do and stops you from doing the right thing. They are naturally irritated at such nonsense and avoid reproducing it in their own company.

There are as many definitions of management as there are people thinking about management, but rather than create my own, I'll pick one of the existing ones and use that. This one is quite good:

Management is the creative and systematic pursuit of practical results, (including the result of more knowledge), by identifying and using available human and knowledge resources in a concerted and reinforcing way.

Management is not about having a boss, it's about creating a system to enable you to pursue whatever results you intend to achieve in a more effective way. That seems universally desirable, but even with this definition, many will chafe. "There's only two of us, we don't need management, we just need to get things done". Again, this comes from a misunderstanding of the way management should be applied.

One of the most important things I learned about management in my time in Accenture was the idea that management processes should always be tailored to the situation at hand, that there was no dogmatic, "perfect" management methodology that was "right" in all cases, that each situation required its own unique management processes. Accenture had a vast library of management processes, which at the time they called the "Accenture Delivery Methods", and an important part of the role of the project manager was to be aware of ADM and select which bits to apply to their project, which bits to change, and which bits to ignore completely.

Good management is like water. It flows around the situation, adapts to it, and fills the gaps exactly to enable a more efficient "pursuit of practical results".

Asking the right questions

In a small startup team context, being a manager means asking the right question. Do we need a process to keep track of bugs? Do we need a process to plan out in what order to build out the features? It means being aware that you need to figure out what those questions are, raise them appropriately with your team (even if that's just two of you), find solutions to them and put them in place.

Being a manager also means having some awareness of the possible solution-space. Most engineers will be aware of kanban boards and bug tracking tools, but how many know about retrospective meetings, five-whys analysis, functional point estimation, critical path analysis, etc? Being aware is not even enough. A lot of management tools are such that they can be hard to put into action until you've seen someone else do it. If you've never had a good manager, being a good manager yourself is pretty damn hard.

One of the observations I've made from a year and a half of running GrantTree, and looking into our clients' businesses, is the difference between those who are great at execution and those who are not. Great executers seem to have a deliberate energy, like a tidal wave pushing everything in the same direction at once. One of the skills that they almost always seem to possess is management. They address process problems quickly and skillfully. The result is a company that (once it's achieved product-market fit) grows fast, effectively, inexorably, with few major mis-steps. Even in a two-people team, they identify and resolve management issues quickly and effectively.

Another thing worth noting is that the Lean methodology, very popular lately with (almost) everyone in the entrepreneurial world, is all about management. Eric Ries explicitly defines entrepreneurship as a management science, and rightly so. There's management in finding the ways to achieve product-market fit, there's management in getting the right features built to get those initial sales, there's management in getting the sales, and there's management in growing the business once there is a business to speak of.

Management is certainly not the only skill required for entrepreneurs, but it is essential, and one of the hardest to learn.

What you can do

If you're still working in the corporate world, you have a chance to observe good and bad managers at work. Unfortunately, unless you know the difference, you won't be able to see what they do that's good or bad. My recommendation to "learn" management is to do two things. First, pick up some good books on management and read them. Here are a couple to get you started: Behind closed doors, Manage it!.

Then, open your eyes and look around. No doubt there are good manager operating in your company. Find them, and observe them. See what they do that bad managers don't, and, even more importantly, what they don't do, that bad managers do. If you can move to work closer to a good manager, do so, and show interest and support in what they do. Most good managers that I met in my time in Accenture were happy to offer advice and mentorship. You can learn a lot from great managers by simply showing interest and asking questions.

If you've already hit the eject button and jumped into the startup world, the task is much harder. The reading list above is still worthwhile, but you'll have to learn management without seeing it in action first, which is a bit like learning horse-riding from a book. It can be done, but you can expect a few falls. What you can do, however, is compensate for this gap in your skill set by being aware of it and seeking out advice from more experienced people on management issues. If you have friends who are competent managers in or out of the startup world, or mentors who have built successful businesses before (most of them will have developed management skills along the way), then make sure you ask for their advice on management issues, rather than plodding on blindly.

If you do get advice from manager friends, be aware of the context of their management experience, and take anything they say with a grain of salt. Unless their experience is in an entrepreneurial context, they may give you advice that's complete overkill for your context. It's also possible that, despite being your friends, they are bad managers. You can't abdicate responsibility for deciding which processes to apply and which to ignore (but you can always give their suggestions a temporary try).

The most important change, perhaps, is to simply be aware of all this. You do need management in your startup, it doesn't mean putting lots of restrictive processes in place or having a boss, and it's worth spending time and talking to people to learn to manage properly.


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.

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