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daily articles for founders

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

The head of X  

Brad Feld:

When I think about roles, regardless of where the person sits in the organization, I like to think of them as "head of something." That lets me focus on the "something" that the person is responsible for. This scales up and down the organization since the receptionist in a company is the "head of meeting people when they walk in the door and making sure the are comfortable and find their way to the meeting they are there for." More importantly, it forces senior execs, such as a COO, CSO, CPO, CRO, CIO, CTO, CDO, CAO, or CFO to define clearly what they are the "head" of.

Even in a tiny startup this makes sense. Everyone may get involved in everything, but what is it that each person is ultimately responsible for? Resolving that ahead of time helps solve two issues:

  1. Problems being ignored because everyone thinks they're somebody else's problem.
  2. People stepping on each other's toes and creating bad feelings.

Some people need hand-holding all the way to take responsibility for something. You ideally don't want those in a startup. Other people, at the opposite ends of the scale, react badly (for example, by not caring anymore) when you constantly step into their area of responsibility and override their choices. Being clear about who does what can help make sure you don't do that, and so let them do a great job.

Clearly defining areas of responsibility should be done, however informally, at every stage of a company's growth. One caveat: if you're spending lots of time discussing who's responsible for what, rather than actually getting things done, you're doing it wrong.

Behavioural change  

An earlier post on Hacker News linked to this presentation about key mistakes, and solutions, to encourage behavioural change. Summarising the points, it goes:

  1. Don't rely on willpower for long-term change. Assume willpower doesn't exist.
  2. Don't attempt big leaps. Seek tiny successes, one after another.
  3. Consider how your environment shapes your behaviour. Change your life and change your context to influence your behaviour.
  4. Don't try to stop old behaviours. Instead, seek to create new ones. Focus on action, not avoidance.
  5. Don't blame your failures on lack of motivation. Instead, make the behaviours easier to do.
  6. Triggers are a key to behavioural change. No behaviour happens without a trigger.
  7. Information does not lead do action. Reading articles (or, ahem, presentations) does not magically lead to behavioural change. Human beings are not so rational.
  8. Focus on concrete behaviours, not abstract goals. For example, "Walk 15 minutes today" is much better than "Get in shape".
  9. Don't seek to change a behaviour forever. Instead, aim for a fixed period.
  10. Behavioural change is not difficult. It's easy when you have the right process.

BehaviorWizard is a related site that guides you through different patterns and pieces of advice to effect behavioural change. Of particular interest is the linked Behaviour Grid, which is like a crib sheet for approaches to changing your life patterns.

Why is this relevant to startups? Because as an entrepreneur, your main resource is yourself. We all get the same 24 hours each day. Learning to make better use of them is crucial to success as an entrepreneur (as it is in many other areas of life).

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.
Freemium: make the cheapskates pay  

Here's an excellent article by Andy Singleton that covers a lot of insights he has gathered over years of selling freemium products. There are too many points to summarise the whole article, but here are a few key points:

  • Customers have a price they're willing to pay ($0, $X, or more) before they ever even sign up. The key to selling a freemium product right isn't to turn $0 customers into paying customers. That's very hard to do. Instead, you need to make sure that those willing to pay you are paying you, and that they're paying as much as they're willing to pay.
  • Metered pricing is a disaster in most cases. It encourages people to use your service less so that they can save $2 per user per month. It works against your product and creates uncertainty that makes customers uncomfortable.
  • Bundles should be sized in such a way that "the effort to move to a smaller bundle should be big enough that it is not worth a subscriber's time to figure out how to reduce usage to the next lowest package".
  • Customers will compare you to the nearest similar commodity. You need to manage how the price anchoring affects you when you're being compared to something that has one tenth the features, and a proportionate price.

There are many other points in the article. It's worth a careful read and some note-taking. Andy doesn't offer conclusive solutions to all the issues he raises, but he offers enough for this to be essential reading for those thinking of building a b2b SaaS product with freemium.

Updated: corrected author, thanks Tim Freeman.

Impatience

One of the qualities and vices of the entrepreneur is impatience. It is a quality, because too much patience means that nothing will ever happen. A buddha-like, infinitely patient entrepreneur will simply wait for someone else to scratch that itch, rather than roll up his sleeves and get it done himself. Infinite, god-like patience is not compatible with being an entrepreneur.

At the same time, too much impatience is a problem. Things take time. A lot of time. Ridiculous, unacceptable amounts of time. We can use impatience to make them happen a bit faster, but there are limits. Too much impatience breeds discontent, unhappiness, demotivation, all because of unrealistic expectations.

This is true in all areas of life. People who take up a new diet or exercise regimen often expect results within days. The reality is, though you might feel better right away when you start exercising, tangible, lasting results typically take 6 weeks or more to appear for good. New habits take 30 days or more just to become habits, let alone to make a lasting difference to your life. Some benefits might be visible right away, but most take much longer. Reading a new self-help book or article won't instantly make you better - it takes time and perseverance, sustained effort over a period of time that, for the impatient man, is excruciating.

Learning to be a successful entrepreneur takes years. Building a profitable business takes similar amounts of time. There are shortcuts that can speed this up. If you have a great, hands-on mentor, perhaps things can go a bit faster. If you have a great salesperson on a roll, maybe the business can be profitable from year one. If you're very experienced, have a top team ready, and you know exactly what you're doing, maybe it can happen even faster.

Most of those shortcuts, though, are not really within our immediate control. This means building a successful business will take a lot more time than entrepreneurs have patience for. So get ready for a frustratingly slow pace of progress, and make sure that psychologically as well as financially, you're in it for the long term.

The longer term view

There are a number of consequences, in terms of your mindset and decision making, to taking a long term view rather than being focused on a short term outcome.

The first is that you are more willing to invest in learning things that can help you go faster over the long run. One of the symptoms of a short-term mindset is the feeling that you just don't have the time to learn new things, because you need to just get things done. While there is certainly a point where you should stop using "I don't know enough" as an excuse for getting things done, there should never be a point where you tell yourself "I don't need to learn anything anymore, I know enough already, I should just do things". That's swinging into the opposite and equally harmful extreme.

Another effect is that you start to make choices that offer the short term benefits you want, but that don't screw you in the long term. For example, you will pick technologies that are there for the long term, and you will avoid accumulating large amounts of technical debt. On a business side, you would make sure deals you make don't impose unreasonable long-term costs in exchange for short-term benefits (by for example tying long-term obligations to short-term results).

Another effect of being an entrepreneur for the long term is to take time to grow as an individual, both in terms of what you know (covered earlier under 'learning'), and in terms of who you are and who you know. Investing time to get to meet interesting people, or taking the time to teach others what you have learnt, may seem like a waste of time from a purely short-termist point of view. But those are all valuable things if you plan to be around for the long run.

There are always exceptions to every rule, always counter-examples that show that you don't have to do it this way. You will certainly find examples of people who got into startups, spent a handful of years building a company with a lot of focus on the short term, then exited and never thought of the topic again. But those are exceptions (and were, in many cases, exceptionally lucky). If you want to maximise your chances of becoming a successful entrepreneur, you need to realise that it will take years, perhaps even a decade, and make your decisions accordingly.


Picking technologies on the right side of history

When we started Woobius back in 2007, we believed (rightly or wrongly) that we needed to be able to provide a relatively complex, "UI-heavy" front-end to make things simple for our non-technical users. For example, one of the key screens in Woobius is an explorer-like file browser, loved by users, and only possible because of the technology we picked.

We surveyed the field in 2007, which was in the very early days of jQuery, Dojo and other rudimentary toolkits, and came to the conclusion that it would be very hard indeed to use them to deliver our vision (particularly since IE6 support was not optional for us).

So we picked... Adobe Flex.

Based on our perspective, it was the right choice. But our perspective was wrong. There was a factor which we didn't take into account, though we knew about it. It was clear to us that, because of the greater dynamicism and wider community behind javascript toolkits, they would eventually surpass Flex's power, flexibility and speed (and indeed that is what has happened). We knew Flex was on the wrong side of history, we just didn't realise how much it mattered.

As a technology cofounder, one of your unspoken functions is to be a visionary. Businesses are long-term endeavours (or should be). When you make fundamental technology choices for a business, they are there to stay. The longer such a choice is made and not changed, the longer it will take to change it. So, when we chose Flex, we chose it not for the short term (as we may have thought), but for years to come.

And, in hindsight, that was a mistake that cost us.

The cost of using Flex

Adobe (perhaps seeing for themselves that the writing was on the wall for Flex, though I think it was probably sheer laziness) never stood behind Flex the way they should have. They let ridiculous bugs and limitations fester over the years, and in the meantime, the chaotic horde of Javascript toolkits advanced, took over, became superior, better, and became the standard.

All the community effort that took the web into the design-centric UI richness that we know today went into Javascript, not Flex. Flex is now a relic that must be extirpated at great cost to guarantee a future to the Woobius collaboration product. And this is only 4 years after starting development.

When Kublax (a Mint clone) closed its doors in February 2010, articles mentioned there was an alternative called Money Dashboard. I went to check it out. I signed up. I went to the login screen, and I felt this sinking feeling in my stomach. Money Dashboard uses Silverlight. Oh woe! In 2010? Sure enough, within a year, Silverlight was doomed by Microsoft themselves (followed, a year later, by Flex itself). The anonymous tech cofounder of MoneyDashboard made the same mistake we did, though even more flagrantly. I never even bothered to log in, in the end, put off and saddened by the choice of Silverlight.

The history test

When you're picking what technologies to use in your brand spanking new startup, your responsibility as a technology cofounder is not just to make the best choice for today, but to look 3 to 7 years into the future, and make a choice that will be sustainable for at least that long, if not longer. Don't lock your startup into a technology path that is a dead end.

Yes, technology changes rapidly and somewhat unpredictably. That is precisely why you need to make sure that the fundamental, critical pieces of technology that your company depends on are there for the long haul, not dependent on a single vendor, and, most importantly, pass the "history test".

Every time you choose a critical technology to lock yourself into, ask yourself: "Is this technology on the right side of history?"

If it's not, think again.


The (un)importance of design  

Is design an important part of a startup's offering? If it is, how can we explain the fairly large numbers of companies who are making a killing while harbouring less-than-stellar, or even frankly horrible looking websites?

Jason Cohen nails it, as usual:

I think you can go either way, but you must decide whether or not you're going to value design as core to your startup's identity, and then act consistently.

(...)

...it is useful to decide where you come down on the question of design in your startup, because if it's important you'd better work on that right now and develop a consistent culture of valuing design through-and-through, and if it's not important you'd better decide what is important and nail those things all the harder, because you'll be competing with people who are using superior design to cover up their lack of competency in those same areas.

In other words, "it depends". In some businesses, design is crucial. In others, it doesn't matter. Make sure you figure out which business you're in and then act accordingly.

Advisors: stop screwing startups  

Micah Baldwin:

The last couple of years, I have become amazed at the emails I get from first time entrepreneurs or long-time employees ("entrepreneurs by proxy") telling me about the latest startup they are advising. That the founder of said startup gave them real equity in return for…well, hell if I know.

(...)

Advisors, stop hurting startups by adding minimal value. Just because you can spell Andreessen Horowitz doesn't mean you are adding any value.

(...)

Founders: 1) You don't need advisors. 2) Stop picking advisors based on the perceived value of their name. 3) Focus. Focus. And if you have time, focus.

Collecting advisors just for the sake of having them in your pitch deck may seem rather pointless, although, to play devil's advocate, if the said advisors are indeed well known, respected industry figures, there is certainly a "namedropping effect" at work that can help achieve certain results. Grant funding, for example.

That said, first of all you don't need to give equity to get advice, and secondly, you don't need people to be deeply involved in your business to be able to drop their name in your slide deck (though you should of course get their approval for it first).

As I've argued before, experienced entrepreneurs preserve equity at all costs. Leave the task of giving away small slices of their business to the newbies. You know better. You only give X% of shares to people who have demonstrated beyond a shadow of a doubt that they will increase the size of the business by several times that factor.

On the advisor side, I have given countless bits of advice to numerous startups (hopefully most of it good). However, none of it was to the level that would justify calling myself an advisor, nor would I want or expect any payment for this advice. If you're an "advisor" and you're asking for payment for your advice, and you're not Richard Branson or some other Tony Hsieh type of character, you should really take a look at yourself in the mirror and ask yourself who's really benefiting from your so-called advice.

Most of the "serious" advisors who do work that's worth charging for do a specific piece of work. They tend to be called consultants, though they also often appear on slide decks as part of the "advisory team". Oh, and they're usually paid in cash, not shares.

Where does the customer's story actually begin?  

Des Traynor at Intercom, wrote a great guide about how to onboard users with stories and addresses a common problem in customer interviews, misunderstanding the customer's true motivation.

When conducting your interviews, try to keep the participants focused on their actual actions and feelings when making the switch [into an active user of your product]. People are notoriously unreliable at predicting their future behavior and attitudes, so framing everything around what really happened (not what usually happens, or could have happened) during their onboarding experience keeps your emerging story tethered to the realm of reality.

Asking for specifics also helps transport people back into the actual moment, which brings up lots of super valuable accessory details. Rather than asking them if they had an easy time with setup or not, get to specifics by asking which part was the trickiest, and deeply explore that moment. By way of a real-world example, while someone might not have a lot to add to "are you a safe driver?", asking them to specifically recall the last time they were pulled over would immediately thrust them into a story rich with emotional details.

Also, be sure to track every story's breadcrumb trail as far back as you can get your interviewee to remember. The narratives that lead up to our decisions can be surprisingly long-much longer than the surface would show. A journey to a car dealership may at first seem to begin with seeing a newspaper ad, but after even a little bit of digging it could turn out to have really started with a funny noise in the engine two months before. Onboarding always begins with the motivation to change, which always takes place before the user ever pulls up your site.

In customer interviews, it's helpful to look for particular triggers in their life. Des describes a motivational trigger here, but there are others like:

  • awareness triggers: when and how they became aware of new, possible alternatives
  • decision triggers: what happened in their life that actually got them to start shopping

Together, these provide you with key landmarks in the users journey toward being a customer. With this knowledge, it's much easier to figure out how to attract, onboard and keep customers.

In addition to Des' post, Mckinsey's Customer Decision Journey elaborates on this, and it's relationship to your brand and competitors, and Rob Fitzpatrick's The Mom Test elaborates on customer interview techniques.

Building a viable business in 4 months  

This anonymous reddit poster built a viable business turning over $150k/year and making $1k/week of profit, in 4 months.

Then he decided to post an AMA (Ask Me Anything) on Reddit.

Worth a good read, and worth noting once again that building a profitable business and building a hot new startup can be completely orthogonal activities. Maids In Black applies a lot of the tools of the startup world (glossy design, cool attitude, differentiated service, etc) to a domain that many hackers would consider beneath them. The result for the entrepreneur is not beneath most hackers, though: he's doubled his salary and is planning to quit his job in 4 months, once he has paid up his debt.

Have a read for yourself.

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