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daily articles for founders

How to work as a CEO/COO team  

Sometimes, the best solutions are the simplest.

Joel Gascoigne:

I asked Leo to become COO in November last year. (...) The problem we found, was that it was almost impossible to clearly separate these two processes. If Leo was working with someone to try and set goals and keep to them, he inevitably had to make decisions which affected our direction.

It felt like with the new structure we were suddenly both involved in every decision. The goal of the new role for Leo was to speed things up, but with both of us discussing every decision, things were sometimes grinding to a halt, especially in cases where we didn’t immediately agree.

The solution? Split the CEO responsibilities across the two roles, with each doing what they do best!

This may seem really simple in hindsight, but it's the kind of solution that's just not all that obvious when you're first going through it. The article is well worth a read.

Hacker News transparency  

dang, HN's new official moderator:

Right! Let me try to set you at ease, at least a little. Yes, we will make an effort to make moderation more transparent.

(...)

there's no one on the team arguing for secrecy. The question is not whether to be more transparent, but how.

Great to see! That's a move in the right direction. I completely understand that the previous... opacity... was due to Paul Graham not having the bandwidth to deal with HN properly - but the result was the same: an arbitrary, fickle, un-transparent, unpredictable community site that feels like it's at the whim of a mostly benevolent dictator.

This new move is a great step forward towards making HN worth continuing to invest time in, imho. I know a number of old HN regulars who stepped away because they were frustrated by the secrecy of the moderation. Perhaps this will bring them back.

Either way, good luck to the new team!

An easy way to increase startup success rates  

Mike Thomsen writing for Forbes, about the culture of working ridiculous hours:

The irony of this increase in working hours is that it usually comes in service of extraordinarily bad ideas, the majority of which end in failure.

Yep. This is not a new point, unsurprisingly for such an endemic problem.

A study in Sleep, the journal of the American Sleep Disorders Association, found significant declines on “divergent” thinking, a category of mostly creative brain functions.

Sounds a bit like Modafinil's effect on me then.

Here's a constructive and effortless suggestion if you want to easily boost your startup's success chances by what, in my opinion and experience, will be a significant margin (more than double I reckon):

Sleep 8 hours a night minimum, and enforce a half-hour walk through a park every day. And a two-hour walk on Sunday.

Your best ideas will come during that walk, and they will make a very tangible difference to your business's likelihood of success.

Mutual Respect and the barking of dogs

Yesterday, I got involved in a little twitter spat where someone attacked Dave McClure to try and censor his company. The conversation is not important, nor is the person who was attacking him and 500 Startups. I won't link to them to give them greater attention, because they don't deserve it, but if you're very curious and you're reading this shortly after publication, you can look through Dave's tweet history and see parts of the sad excuse for a "discussion" that occurred.

In short, it involved someone getting terribly offended at what someone else was doing on the internet, and lashing out with all the verbal violence they could muster (which wasn't all that much, but was vitriolic enough to be quite sad to look upon). Swear words were used and reused and abused (on one side only), and there was a general lack of respect for Dave or his calm, measured, polite responses. Dave came out looking like a hero of good behaviour compared to his somewhat animalistic attackers.

What I find very interesting is that I got very upset at all this. I was clearly angered by part of this discussion. See, I find abhorrent the idea of a person trying to forbid another from doing something just because they find it offensive. It's deeply, deeply repugnant, scary, and ignominious. It brought to my mind this response by Philip Pullman about his book titled "The good man Jesus and the scoundrel Christ", where he responds to one critic who declares himself offended by the title:

No one has the right to live without being shocked. No one has the right to spend their life without being offended. Nobody has to read this book. Nobody has to pick it up. Nobody has to open it. And if they open it to read it they don't have to like it. And if you read it and you dislike it you don't have to remain silent about it. You can write to me. You can complain about it. You can write to the publisher. You can write to the papers. You can write your own book. You can do all those things, but there your rights stop.

That response made me buy and read the book (which was not all that amazing, though intriguing). I felt it was inspiring, and was a very measured and civilised response to a topic which, in me, provokes red, stupid anger. To me, the attempt by one person to censor another based on what they find offensive is a kind of intellectual violence akin to rape (yes, I use the word deliberately - bear with me) - why is it like rape? Because it is the (usually intellectual, but, in some parts of the world, frequently physical) violent imposition of your way of seeing the world on another person, and it is a violation of someone's mental integrity.

Some of you may think that my use of the word "rape" was excessive. In fact, I know that some people will react to this word emotionally, seeing red, feeling very angry that this is desensitising people to rape, and so on. If you feel like that, great - I apologise for making you feel this way, but this is exactly how I feel about the mob censorship described above. So now we understand each other, let me withdraw the misused word "rape", and please forgive me for using this device to rouse your feelings.

This kind of bigoted censorship is like someone stepping into your head, declaring ownership of your thoughts, and deciding what you're allowed to express, marking some kinds of thoughts as improper, others as allowable, and, fundamentally, imposing their way of thinking on someone who is not them, by force or by threat. To me, this is a straight path to the thought police and the kind of 1984-style world which I do not ever want to set foot in.

Here's the kicker then: because I really care about this topic, I found myself getting angry, and had to make a conscious effort not to devolve into the kind of uncivil, frothing-at-the-mouth nonsensical verbiage that I was deploring in these very attackers!

The line between man and beast is oh, so fine.

Thinking about this further, and looking back at my own history of posting and arguing with people (particularly on the internet, where intellectual violence comes easily since you do not typically get kicked out of internet circles for being an asshole like you would in real life), I have myself descended into this sort of behaviour. I can't even claim it was rare: I'm quite certain it was very frequent, and even recent. Some subjects just get my goat and manage to make me see red, and want to fight, with words, to hurt the other side. It's as deplorable to observe this in myself as in anyone else.

I think it takes supreme self-control to be civilised at all times, even in the face of a heinous lynch mob who wants your blood based on a misunderstanding (often deliberate) or downright fraudulent misstatement of facts. I take my own hat off to the man with 500 hats, for his impeccable behaviour in this particular instance.

Mutual respect

But there's a reason for writing this article beyond getting this off my chest and handing Dave a medal. There's a lesson for everyone here, I think, because I really doubt that I'm the only one who feels the lure of the beast in all of us from time to time.

Here's a thought: beyond the fairly advanced disagreement hierarchy proposed by Paul Graham, or beneath it, rather, there is a more fundamental principle at play: conversation between civilised individuals should always begin, proceed and end with mutual respect. Without this, there is no discussion, no argument - merely the noise of dogs barking at each other.

So here's my challenge, for myself and for any others who lack the buddha-like peacefulness of a still pond, which can never be disturbed by the barking of dogs or wolves nearby:

When someone challenges you by engaging you on a subject which really gets you, which makes you want to hurl words at them for no productive purpose other than getting your anger out - take a deep breath, calm down, and find a respectful way to proceed.

Even if the other side is not being respectful, you owe it to yourself to be so. After all, a gentleman remains a gentleman even in the gutter.

If I ever fail to do so in the future, please do call my attention to it.


Read advice in between the lines  

Dustin Curtis:

When I watch experienced people talk today, I catch the little subtle notes in between the obvious pieces of advice, and I find myself constantly thinking–oh shit, yeah, I experienced that, and this person knows what they’re talking about; I wish I had known that two years ago! How is it possible that I missed all of these things in the past?

Bingo. And this is why I think giving lots of context is essential for good startup advice article. Most of the value is not actually in the advice itself ("Hire for culture fit!") which anyone could write, but in your own, personal, deeply useful experience that you brought to bear in a specific way, on a specific problem, in a specific context.

Games with IAPs should be regulated like gambling  

This article by Thomas Baekdal resonated with me. Most of my gaming now happens on iOS, and I generally avoid games with In-App-Purchases, because they are generally designed for idiots, and have very shallow gameplay with constant monetary hurdles that's more akin to a slot machine than a modern game. I watch with a concerned eye as many games switch to the IAP model.

Back when I was a kid and had no money, I spent most of my savings on computer games. Prices of 89 CHF (that's a whopping £70 inflation adjusted) were common. I spent lots of money on games.

More recently, I have happily shelled out £10-20 for an iOS game (I'd recommend X-Com for iOS as an excellent example of the genre. I still spend money on games - less, because I have less time to play them.

Yet I will not pay even one penny to buy "gems" in some stupid "free" game. I suggest you also don't, and advise everyone you do to do the same... but even that's not enough:

What EA has done here has nothing to do with gaming, and the same is true for pretty much all other 'free-to-play + in-app purchase' games. We don't have a mobile gaming industry anymore. We have a mobile scamming industry.

The mobile slot-machine industry won't be defeated just by intelligent people doing intelligent things, much like the gambling industry is not defeated by intelligent people staying away from slot machines. Apple has no interest in clamping down on IAPs.

I'd push for a stronger move than what is suggested in the article:

Games with IAPs should be regulated in a similar way to gambling. They are games that are addictive, can suck up ridiculous amounts of money from people, and generally add nothing in proportion to the time and money they suck up. Like gambling, they are a symptom of a bug in the human psyche that is greedily exploited by some unsavoury companies.

And like gambling, they should be heavily regulated.

The gaming industry will not self-regulate this mess unless threatened with heavy regulation from the governments of the world. So the threat needs to exist, and possibly be carried out.

Don't let me know how I can help  

Robert Williams from letsworkshop.com:

The single phrase (and every variation of it) that time and time again repels clients away from us and hurts our credibility in more ways than one:

“Let me know how I can help.”

When I said this I honestly thought I was being helpful.

Read on for Robert's explanation of what to do instead.

It's amazing how many little quirks of language can have a pretty significant influence on conversation. Two "power tricks" that I like are the use of the words "reasonable" and "fair".

When ending an email about a suggestion that you're not sure will be accepted, it helps to end the email with "Does this sound reasonable?" - because this question somewhat demands a yes. Even the recipient disagrees, they will typically start the answer with "Yes, that sounds reasonable, but I disagree because of XYZ". Saying "no, that doesn't sound reasonable" would force them to escalate the conversation in an unpleasant direction.

This is not a trick to be abused, but it can act as a tiny little nudge in the right circumstances, to help someone who would otherwise hesitate forever to actually make a move. "If it sounds reasonable," their internal monologue hopefully goes, "then let's do it."

"Fair" (and her evil twin brother "unfair") is an even more powerful word. Despite the fact that everyone knows "the world is unfair", people have a strong desire to be perceived as fair (whether or not they are). So, for example, when I feel like a sales situation is drifting out of control, and I'm tempted to simply end the sale completely, instead I give it a firm chance to get back on track by bringing "fair" into the mix. "I believe we're not being treated fairly in this discussion, and I'm not willing to do business on terms that I perceive to be unfair. I'm happy to start the conversation again if we can agree on terms that will be fair on both of us."

I wonder if there's a collection of these conversational power tools (and their brethren, the conversational limp handshakes like "Let me know if I can help") somewhere.

Count your fingers  

One of the unfortunate realisations when you start to be involved in giving money to people is that there are some people who will do anything to get their hands on that money, including build elaborate fantasies with just enough documentation to convince you that it's all real: in other words, con-men.

Just as bad, there are people who are conning themselves, and who are passing that delusion on to you when they meet you. Those are more common than the former (perhaps that's a good thing!).

What this means in practice, as Mark Suster points out in this article, is:

Always assume the worst. Always question the motives of those sending you dealfow – regardless of how nice they are or well meaning. I’m not saying all dealflow is bad or all referrers are hucksters. I’m just saying that you need to look at it through the lens of the motive. I always ask when somebody sends me a deal, for example, are you already a shareholder in the company?

If you've done your due diligence and the opportunity checks out, then go for it... but always question things that seem too good to be true and that magically land in your lap. Being just the right amount of suspicious is an essential business skill.

Guide to customer growth  

I generally don't like to link to slides, since they miss a lot of substance that is present in a real presentation or in an article, but this one by Sean Johnson is pretty excellent. Click through for a solid guide to customer growth with many useful and actionable tips and bits of information, such as this 90-second guide to Facebook Ads:

Images are the most important factor. Test 50 images. Test orientation (looking right, looking left). Test colour and shape of borders.

Use country targeting when testing conversion. US costs 5-10x other countries. Use Canada, New Zealand, etc.

Focus on conversion, not just on clickthrough rate. It's not uncommon to have 40-60% conversion rates if it's targeted well.

The guide is shallow, but provides a good overview with lots of starting points and links to further information. Worth a read through, and some clicks.

Firing yourself, again and again  

I often quip that my job as founder of the business is to get myself out of a job. Here's Joel Gascoigne's rather lengthier, better supported argument for that idea:

Having thought about the concept of firing yourself further in the last few weeks, I’ve come to a key realization: if you’re doing something yourself as a founder of a post-product/market fit startup, you’re probably not doing it well.

The way I see it is that if you are doing a task yourself alongside juggling all the other duties you naturally have as a founder, you have to make compromises. To put things into perspective, the areas we’ve identified as key tasks at Buffer currently are: Product (web and mobile), Engineering, Marketing, PR, Customer Support, Partnerships/BD, Admin, Growth, HR, Recruiting and Investor Relations. There are probably more, too. As CEO I have to have all these things in my head, and oversee half of them directly. As COO Leo oversees the other half.

With this much to think about, anything Leo and I are doing directly ourselves right now has to be done only ‘partially’. We both look for the 20% of the work which will get us 80% of the benefits, and can’t do much more than that for everything we’re working on.

That's exactly how I function, and that's exactly why I try to pass anything I do with to someone else in the company as soon as I'm aware that I'm doing it more than once: because as long as I'm the one doing it, it'll always be a 20% rush job.

Four misconceptions about Lean startup  

The Lean Startup methodology is frequently misunderstood, unfortunately. This article by Jim Kalbach is one more attempt to clear up some of the more common misconceptions, namely:

  • Lean startup is not an engineering process, it's a method for building startup, so it won't make your developers happy.
  • Lean startup doesn't mean "let's just shoot from the hip without overanalysing things."
  • An MVP is not a lightweight version of the product, it's the answer to a question, the resolution of your next most pressing uncertainty. More on this here.
  • User testing will not "slow you down" - it's the heart of the Lean Startup method: do stuff only to learn about what your customers need before they can give you money.

Read the whole article here.

What to look for when picking a VC  

Mark Suster:

So finally, how do you know if your VC will stick by you in good times or bad? How do you know if they’ll intervene in a positive way in conflict? How can you tell if they really are good at intros and follow through on what they say they’re going to do.

The best way – of course – is to reference check. Here’s how you reference check a VC (link to post with longer version)

  • look at their portfolio list
  • subtract out the super, crazy successful companies. a) they have no time for you & b) everybody who has a super successful out-of-the-gate company loves their VC because there was no conflict.
  • call the companies that are doing well but not yet household names. Ask about the criteria above.
  • more importantly, call the companies that struggled. You’ll learn most about VCs when you find out how they handled themselves in tough situations. Make sure to call 3-4 members of the management team to avoid one person’s bias

The list of criteria to pay attention to is great, very useful. If your business does require you to take investment from VCs, this is a very helpful article

Definition of Product Market Fit  

Defining terms correctly is not just helpful, it is fundamental to useful discussion. All too frequently, we throw terms like "MVP" or "Product Market Fit" around without really knowing what they mean. I think there is a lot to be learned from asking "What is ...?" about all sorts of terms we think we are familiar with.

Inevitably, the answer includes other words that require definition, and their definitions in turn pose more questions. It's turtles all the way down, but the process of sounding out these foundations of our thinking processes is full of learning.

Marty Cagan of the Silicon Valley Product Group, in this fairly theoretical article, attempts to define terms like MVP (this definition is worth a read too - Marty proposes a less misleading term: "MVP Test"), and, in this article, Product Market Fit:

We create MVP Tests (typically measured in days) in order to discover our way to Product Market Fit (usually takes months). We continue to evolve the product from this Product Market Fit state all the way to achieving the Product Vision (typically 2-5 years).

Product Market Fit is a milestone, then, arbitrarily defining an early stage of success or maturity for the business.

Marty then proposes several definitions depending on the business context. I would suggest another one:

Product Market Fit is achieved when you stop needing to ask yourself whether you've reached Product Market Fit. When you're there, you tend to know it, because you're too busy dealing with the consequences of Product Market Fit (incoming sales, customer demand, user growth, etc) to worry about abstract questions like "have I reached product market fit?"

Toxic investment  

Kicking off the series of Founder Stories via Stef, here's a tale of the failed startup Tab by Shawn Zvinis.

It's always good to reflect back at the end of a project especially if it failed. Shawn highlights a number of reasons why his startup failed, none of which are particularly original (unfortunately), but which must have been painful to learn. I'm linking to this one because it seems like yet another startup that was hobbled by raising investment:

Key learning: try to avoid raising a single penny until you have built a working prototype and have some (any) early revenue — and in a best case, revenue that can at least pay your overheads, so you can have the upper hand when negotiating with early investors.

And:

Our biggest mistake was listening to these investors too much, and we started focusing our efforts on how we could make Tab more investable rather than talking to customers and iterating the product. If we spent more time working on the product, the product itself would have made the company investible, rather than us jumping the gun.

My takeaway is that out of 10 key lessons learned, eight are related, directly or indirectly, to the funding, and may have been avoided if no funding had been raised:

2 . Raising too little too early: That's obviously related to funding.

3 . Building a not-so-minimum viable product: would have been avoidable if there was no funding to insulate the team from the realities of having to make money.

4 . Focusing on accelerator too early: accelerators are another step in the funding game that should be avoided in most cases. I chalk that one up as funding-related too.

5 . Going to the USA at the wrong time: would not have been possible to even consider without the cushion of funding.

6 . Starting scaling too early: according to Shawn this was kicked off by investors.

7 . Overvaluing qualitative vs quantitative: when you need to sell right away and start making money yesterday, it's impossible not to learn that adding some quantitative benefit to your customers is essential.

8 . Not generating any revenue: when you need money today, you don't talk to people who don't want to pay.

9 . Not building a financial model early enough: while "building a financial model" might be something you omit without funding, we're only talking about the theoretical financial model here. The practical one is being built every day, through actual selling and delivering.

Starting a business is hard and risky.

Starting a business with funding is harder and riskier.

Founder stories  

Great little collection of articles by Stef Lewandowski, under the heading "Founder Stories" and the description "Experiences of people who’ve built companies. Let’s learn from each other’s mistakes and successes." The ones I've looked at so far seem worth a read.

However, I'd caution against sequentially reading through all the stories (unless you're trying to educate yourself about random startup stories), as that's really just a way to pass time - and surely you have better things to do with your time! - but some of those will have some very specific take-aways worth being aware of. I'll go through them and pick out the ones that I find most useful, and link to them on swombat.com too.

Balance in the startup life  

Through the example of his excesses during his years at IronPort, Scott Weiss comes to a wise conclusion:

In retrospect, I believe that I could convince the hardest working CEOs that having some real life balance by investing in your important relationships will make you a better CEO. When you are out of balance, it affects your stress, judgment, and ultimately becomes another destabilizer just when you need to be the most put together. I also believe this change is actually a much better example of leadership than the one I was exuding. When a leader shows the way toward getting things done and balancing their life, it sets a much better example for everyone else in the company who struggle with it too.

Reading the whole article is quite harrowing. Scott's wife deserves a medal for putting up with all this.

At the end of the day, my advice is to reject the Aztec Principle of work: that there must be sacrifice and hardship so that the sun may rise tomorrow. Instead, realise that a healthy, balanced life is a much better starting point for success than an excessive, unbalanced, unhealthy life.

Thorough guide to scalable link-building the right way  

One of the proven ways to get SEO without dipping into black hat SEO (which will almost certainly get you nailed by a Google update at some point in the not-too-distant future) is to produce great content.

Even if you have the ability within your team to produce great content, though, great content is a creative activity that takes time and space. Let's say you have a Paul Graham on your team, who can write amazing awesome articles on a fairly regular basis. He still will only be able to write a few of those a month at best (probably less). Push your Paul-Graham-junior to write one article a day, and quality will drop rapidly.

So, how do you scale great content?

The secret is earth-shattering: you hire great writers outside your team. How do you find them? How do you approach them? How do you use them?

Check out this very thorough guide by Matthew Barby of reputable Moz.com for the answers.

Don't build a product without validation  

Trevor Owens:

There’s a pervasive, logical fallacy out there in startup land. Propagated by a Steve Jobs quote and entrepreneurs in denial, it is the fallacy that customers don’t know what they want until you show it to them. Of course, the mass market doesn’t know what it wants until you show them, but early adopters do. Logically, they must know.

A good point worth making more than once: if you are convinced that your idea is evidently brilliant, but you can't get any customer validation for it, you are wrong.

Going into denial, failing to accept that you're wrong, won't make you right: it'll just make you poorer. Having a vision is essential. Having tunnel vision is deadly.

It is important to get some market validation for your ideas, especially if you think they don't need validation, because they're obviously valid: that's the time when you're most in danger of getting it all wrong and flattening yourself on the ground like an egg fallen off a high shelf.

Why new features usually flop  

I've experienced this on my previous startup, Woobius. Once the initial feature set has been built, launching new features is tricky. They are soon forgotten, and left mostly unused, and then the dev team is focusing on the next feature that needs to be launched (and forgotten), etc...

Luckily, here's a great guide by Des Traynor of Intercom that provides some clear, actionable tips for how to better launch new features to an existing product.

The thing is, unless customers use a feature it may as well not exist. This is often forgotten in the rush to ship fast, it’s not just about shipping code to servers, or checking boxes on a roadmap, it’s about getting your software used. So before you ship that next feature, ask yourself these questions…

The key questions:

  1. Will everyone see and understand it?
  2. Are you showing users what you did, or what they can do?
  3. Are you announcing it in context?
  4. How will tomorrow's signups hear about it?
  5. Do you plan to follow-up with users and non-users?

The full article is well worth a read.

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.

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