daily articles for founders

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

All startup advice is wrong?  

Evan Williams says startup advice is wrong because it's often not proven properly since it's impossible to A/B test startup advice, and all advice depends on context.

He's right. And wrong. I guess that's ironic? Hah. Anyway.

As I covered in my article on how to write good startup advice articles, when giving startup advice, the two most important points are:

  1. Avoid over-generalisation
  2. Provide context to personal experience

If you avoid over-generalisation and provide context, then people can work out if, and how, your advice applies to their situation.

Obviously, if I dish out advice like "only hire A players", then my advice is wrong. But that's just because it's crappy advice. If, instead, I say: "in a company like the one that I'm running (include description), in this context, I found that hiring in this way worked better for me than hiring in this other way", that's advice that is valuable because it includes the context needed to figure out how and when to use it.

The best advice is disastrous in the wrong context. Startup advice is never universally right, but that doesn't mean it's universally wrong.

How to generate startup ideas  

Wesley Tansey proposes a number of techniques for generating startup ideas. The techniques are useful tools to expand your repertoire of techniques, but the key point, in my opinion, is after the list:

One important thing to remember is that these are not meant to be options that you choose at the start. Rather, consider each of these strategies to be a background process that runs continuously in your mind. Every time you encounter a problem, if it may be solvable by one of these strategies, that's a potential startup idea!

This echoes what I've pointed out before: the way to generate ideas for businesses begins with a continuous process of evaluating business opportunities, rather than business ideas, around you.

That said, once an opportunity has been flagged, Wesley's techniques can help to define what sort of opportunity it is.

Go for the win-win situations  

One friend that I respect very much said to me: "The way to get people to do what you want is to get them to want what you want. You need to come up with a deal that is good for them and good for you, and convince them that it's in their best interest to do that deal."

It sounds obvious, on the face of it, but often, the deal involves multiple parties, multiple moving parts that need to each come together in a smooth mechanism. It's not a skill that I've perfected yet, not by a long shot (though this friend of mine has many times proven his mastery at this particular game).

In practice, a win-win deal can be fiendishly hard to put together. And sometimes, it's just not possible. But when you can achieve it, it is the ultimate way to get people to do what you want. As the king said to the little prince:

"Exactly. One must require from each one the duty which each one can perform," the king went on. "Accepted authority rests first of all on reason. If you ordered your people to go and throw themselves into the sea, they would rise up in revolution. I have the right to require obedience because my orders are reasonable."

Favo.rs makes a similar point:

At the outset of each of these negotiations, the mutually shared goal was positive value creation for both parties, and a foundation for a sustainable partnership that would cause minimal to no pain for each side. However, once negotiations began, these potential partners would inevitably take one of two paths. Path one: true shared value creation, a.k.a. collaboration. Path two: a one-shot game, where maximum value capture for only one party during the first set of negotiations was the desired result.

Entrepreneurs can easily get bullied or pressured into accepting path two.

Adam of Favo.rs advises entrepreneurs to walk away from "one-shot" deals, because they foretell a poor relationship in the future:

(...) would I like to deal with this partner in this manner on a monthly, weekly or even daily basis for the foreseeable future? If the answer is no…then don't be afraid to simply walk away. Chances are you'll look back someday and be happy that you did.

Anatomy of the long sales letter  

"Long sales letter" landing pages, such as this one, are often used in the Direct Marketing/MLM industry, because, well, they work rather well. In this article, Paras Chopra interviews copywriter Jeremy Reeves about how to put together a long form salesletter, why it works, and so on.

Question: Do you think "sophisticated" web designers lose a lot because they are not ready to embrace techniques employed by long sales letter pages?

Absolutely. In fact, I'd be willing to bet that if they started testing long-form salesletters… they'd very soon be able to buy themselves a new house.

While the long-form salesletter format has certainly proven its worth in some industries, one would do well to apply a thick layer of context to this advice. In some cases (for example, a site targeted at geeks, a long salesletter would be simply disastrous, because it conveys a certain product image that Github's market has a strong dislike for.

So, it really depends who you're selling to, and, as Paras himself would probably advise (update: he has just done so here), the solution to this is not to decide in theory which one works, but to do some testing and figure out which one converts best for your product and your market.

Regardless, here's one of several gems in the article:

Question: What are your favorite copywriting tips and techniques?

The best technique you can ever use in copy is simply understanding the dominant emotions going on inside your prospects mind at the exact moment he/she is reading your copy. If you can understand that… it paves the way for every single word on the page and the copy flows like water.

Convertible Debt  

Everything you always wanted to know about convertible debt, by VC Jason Mendelson, via Brad Feld. There's a lot of material there, but basically, if you need a crash course in convertible debt, this will cover pretty much everything you need to know in about 2 hours of reading (4 if you're taking notes).

There are 9 parts to it:

Think small, be specific  

Sahil Lavingia, serial app maker, on being specific:

Instead of a one-size-fits-all product, you often end up with a one-size-fits-none product. It leads to over-generalized products — and messaging! — that lacks any focus and emotion, two things you need when acquiring your initial user base. You can't build everything for everyone, at least not at the start.

Indeed. I made exactly that mistake on my first startup: we built it for "small businesses online", without any specific customer in mind. As a result, when we finally launched, no one found it all that useful.

Unfortunately, if your product is built for no one in particular, it will be useful for no one in particular. On the other hand, if you can focus on a niche and dominate it in terms of usefulness, chances are people outside that niche will find it useful too.

Another big problem with designing a product for "everyone" is it makes it impossible to focus your marketing efforts. Marketing effectively to "everyone" is much more difficult than marketing effectively to "programmers", which in turn is much more difficult than marketing to "ruby programmers", which in turn is more difficult than marketing to "ruby programmers who use Rails 3 and above". The more you expand the market, the more expensive it is to reach. A tight product focus enables a tight marketing focus.

There's a time and place for "thinking big". Sometimes, thinking big is the right thing to do (as always, context is everything). However, if it's your first startup, chances are you can't really execute a "huge idea" effectively anyway, so building something directly useful to a specific group of people is most likely a better approach at first.

The processes that drive your business

Once your business has been running for a little while, and is starting to make a bit of money, it's worth spending some time to figure out what it is that drives the activity in your business.

Every business will have a different type of "driving process", but in all cases, they are activities (often meetings) out of which many tasks flow out.

The driving process for a project to deliver a piece of software will be the weekly or daily meetings to assign the tasks for the coming day or week. The driving process for sales is a sales meeting where currently active leads are reviewed and actions decided. The driving process for a service being provided to a number of clients might be reviewing the status of all the clients and deciding on next steps for each of them.

Some of those business activities need a certain rhythm in order to pick up momentum. There are various ways to achieve that, but meetings is certainly one of the most common ones. However, in a young company, meetings don't happen unless you make an effort to keep them happening - there's always something else to do that seems more appealing than having a meeting. Unlike the corporate environment, where meetings seem to thrive and multiply until the only thing being done is having meetings, startups have the opposite problem: startups are a toxic environment for meetings.

If, however, you know that a certain kind of meeting drives a key, critical process in your business, you will probably find it much easier to summon up the effort to keep that meeting alive - especially once you see the effect of the meeting on getting stuff done.

Two concrete examples

Here are two concrete examples of meetings driving key processes, taken from my own business, GrantTree. The two most important meetings we have are both weekly, and are scheduled on Monday morning, to drive the work for the rest of the week.

The first one is a sales meeting. We keep all our leads in Highrise, and the meeting consists of simply going through all the active leads in the database, adding any that are missing, updating the information on each of them, and deciding next steps for each lead. This creates a number of actions and follow-ups which end up driving the sales activity over the next few days. It's a clear, tangible, useful meeting.

The second meeting is the tax credit process review meeting. We track the status of all our clients in Trello, and go through all of them (active or inactive) to make a conscious decision as to whether actions are needed, what actions should happen this week, whether a client needs urgent attention, etc. This creates a number of actions and follow-ups which end up driving the tax credit process for the week. It's also a clear, tangible, useful meeting.

Those are the key drivers for GrantTree: sales and delivery. Each business will have its own specific driving processes, which will result in different types of meetings (or even things other than meetings!). I'm not suggesting that your business should have the same structure as mine - however, what you should do is think about what those key driving processes are for your business, and see if giving these activities a weekly or daily rhythm helps to make them more effective.

How to deliver an elevator pitch  

Don Dodge on the key elements for an elevator pitch (already covered before here, for those whose elevator rides don't last 3 minutes):

  • have several different pitches of different lengths;
  • start with a description of the problem;
  • describe the target customer;
  • stop for feedback to check the listener cares;
  • present the solution, and why it's better;
  • describe the competition;
  • described the business model (how you will make money);
  • sell the team;
  • close.
Startups need a strong vision  

Des Traynor:

Setting a vision lets everyone know what direction they're going, even in small teams. It helps you understand what activities are beneficial and which ones are valueless distractions. It tells you when to say no, and when to say Hell Yeah. As Michael Porter wrote in "What is Strategy", "Overall advantage or disadvantage results from all a company's activities, not only a few.". A vision let's you define those activities.

When you see all activities as being useful, no activities are useful. The problem with a plan like "Let's keep adding good features", is that it's hard for people to agree what's a useful thing to spend time on. This is fine during exploratory days when you're fishing around for a niche or an angle, but when you're specifically trying to achieve something you need a common vision to help you define what you should be doing. When you don't know where you're going, any road looks good.

This matches with my experience working with a fair number of technology companies over the last year at GrantTree. Once you're past the initial phase where you're figuring out whether you have a business that can make money, vision really ties things together. My observation is that there seem to be two types of business out there: those with vision and those without.

Those with vision seem to move deliberately and aggressively towards and objective, and their progress is often very impressive. Those without just react to opportunities that come their way and plod along. One could say that the true definition of a "lifestyle business" is that it lacks vision.

Classic startup mistakes  

This is an interview of Mike Arsenault, product manager at GrassHopper group, which built an application called Spreadable, which was eventually shut down.

Q: Did you talk to customers or just start building?

We just started building. This was probably the single biggest mistake we made. We made the assumption that since our program worked so well for Grasshopper, we could just port over the same functionality to Spreadable. There were major problems with that logic. First, very few of the customers who came to us had businesses like ours. We learned later that there is actually a threshold in terms of customer count for a Spreadable powered referral program to be successful.

For the experienced entrepreneur, the mistakes listed by Mike seem painfully familiar, and even obvious.

If you're on your first startup and thinking "our startup is different, that won't happen to us, even though we're doing the same things", don't. Not getting customer feedback early enough is the classic startup-killer mistake.