daily articles for founders

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.


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.

Running a business vs building a product  

Elad Gil writes:

As the CEO, you need to keep your eye on the underlying product and business fundamentals of what you are doing. If you can not keep focused on the business side you must hire someone who will. Otherwise there is a reasonable chance your company will die. The two most common ways for a startup to die are founder conflicts and running out of cash. Running out of cash is often avoidable.

This is why I often advise people who want to play the startup lottery but have no business experience to try building a profitable bootstrapped business first. You learn a lot from running such a business that is just as essential when running a funded business.

Failing in an interesting way is hard. If you fail at the basics of running a business, you've not failed in an interesting way. If you fail because of some predictable startup issue like a founder conflict or building something nobody wants, you've not failed in an interesting way.

Failing in an interesting way means avoiding all those obvious traps and failing for some reason that is actually challenging and unforeseeable - for example, a smarter, more aggressive competitor stole your lunch, or if a political event simply made your product unsellable - those are interesting ways to fail.

Money and wealth

Money and wealth

First, a disclaimer: I am not an economist. However, most people misunderstand money and its purposes and uses so badly that I feel compelled to write out my understanding of it. Perhaps because I am not an economist, this might help some.

My context: I am running a successful, profitable company that I started with my wife. I spent a number of years broke, but I have never been poor. I've always had the safety net of a middle class family and a top education (provided and paid for by my parents) to fall back on. I've lived in not-so-great accommodations, but it always seemed temporary in my life. Now for the first time I have enough money that I don't need to worry about it. I can afford the things I want (though I typically don't buy them, because once I can afford them, they no longer seem so desirable, just wasteful). Perhaps this is temporary, but at this point in my life I have enough money.

Thirdly, I am in this article discussing material wealth. There are many other potential variations for the meaning of wealth in other contexts. I'm not talking about these. Just the good old fashioned material wealth that society keeps telling us to chase.

With all that in mind, let us begin…

Money is a medium of exchange

The first and perhaps most important mistake people make is to confuse money for wealth. This is not too surprising when the dictionary itself proposes this misleading definition of "wealth":

1 . a great quantity or store of money, valuable possessions, property, or other riches: the wealth of a city.

It's worth including the "Economic" definition on that page though, it does change things somewhat:

3 . Economics:

a. all things that have a monetary or exchange value.

b. anything that has utility and is capable of being appropriated or exchanged.

You'll notice the Economists don't define wealth directly as money, but as the ownership of things that are worth exchanging for other things of value or for money.

The more I earn, the more I realise that wealth is not money, but the ability to generate money (and other things of value). This is akin to the difference between saying "I am a dancer" (i.e. I have the ability to dance) and "I was a dancer" (i.e. I once had it but I no longer have it). Being wealthy is equivalent to the first statement, while having money is equivalent to the second.

Having money does not make you wealthy, but having the ability to make money, through net income generating assets such as businesses, investments, or even just your own skills, that makes you wealthy. This is perhaps why those with a solid education are never really poor, but merely broke: they have the potential to make money, even if they don't have money right now.

But surely, having a lot of money, say a billion dollars, is the same as being wealthy? In theory, perhaps. In practice, it seems people who know how to maintain wealth would never keep a large sum in cash around, but quickly turn it into net income generating assets, and those who do not (e.g. lottery winners) often quickly find that the seemingly infinite pile of cash has evaporated into nothing.

Having a lot of money is at best a very temporary form of wealth.

Wealth is measured in net income generating assets, in things that allow you to generate money: skills, stock investments (if they generate profits), profitable businesses you own, cash-flow positive lands and properties, etc.

Money is not a net income generating asset. Money is not wealth. Money is a medium of exchange. By reading about rich people, you'll notice they generally try to avoid having a load of cash lying around, because money is not a place to store wealth. It is and has always been, historically, a very, very poor store of wealth. Currency, since its invention, has been a fantastic tool to facilitate exchanges of things of wealth. That is what it is, nothing more, nothing less. Our economy could not function without money, but its value is not in the money. The relationship between value and money is like that between a community and a message board, or a bicycle and its tires. The first can exist without the other, but the second without the first is mostly useless.

Some people will perk up at this and say "aha, this is because of the evils of inflation, and a return to the gold standard or a switch to Bitcoin would solve that".

To which the only valid answer is: bullshit.

Those who think money used to be stable need to read the book Money: whence it came, where it went (if you can't find a copy, send me an email). It is very instructive to look at the history of money and realise just how unreliable it is as a store of wealth. Historically, every few decades, money used to lose all its value in some kind of disastrous bubble that affected currency itself. Any wealth that was stored in money simply evaporated into nothing at all. Even gold suffered enormous ups and downs - for example, the importation of large amounts of pillaged south-american gold into Portugal destroyed its economy through hyper-inflation; the difficulty of moving gold between central banks during the gold standard era caused massive deflation in some parts and massive inflation in others.

The deep irony is that all those people calling for an end to inflation (and usually a return to a gold-like standard) because of the evil erosion of money, have lived their entire lives in a period of unprecedented monetary stability. Money is so stable nowadays that it sort of looks like a store of wealth, enough so that people get incensed that the state would dare allow inflation to affect it. The reality is that the current system has resulted (in some parts of the world, by far not all) in fairly steady and predictable inflation for almost a century.

Given the perils of deflation, a small, steady, controlled inflation is really the ideal situation for a medium of exchange. Not only that, but a moderate rate of inflation is generally considered a very good property for a medium of exchange for wealth, since it encourages people not to treat money as wealth, and to instead look to store their wealth in things that actually have value (ideally investments that enable the economy to work better, putting the accumulated wealth to use as capital).

But enough about misguided gold-standard bitcoin purists. How does this affect you, dear reader?

To get wealthy, build net income generating assets, don't accumulate money

Robert Kiyosaki, author of Rich Dad, Poor Dad (worth reading along with its sequels), proposes that rich people get rich by building their net income generating assets column (i.e. things that generate positive cash flow each month, not "buy and pray" investments like most stocks or houses), and that middle class people fail to get rich because instead of buying or building net income generating assets, they buy loss-making assets (e.g. by buying a bigger house with larger mortgage payments, or a new car with monthly payments) that drag them down.

I won't try and summarise Robert's entire philosophy in a blog post, but a common misconception (and my misconception, earlier) about "getting rich" is that it involves accumulating money.

As I hope I've made the case, having piles of money may occasionally happen on the way to getting rich, but it's not the goal, nor a desirable thing.

To get rich, what you want is net income generating assets, including the skills to generate those net income generating assets. Learning how to turn business opportunities into functioning businesses is an invaluable net income generating asset: I believe you can exploit that net income generating asset in almost any economic context, even war. But, as a more generic category, the fundamental pillars of wealth seem to me to be health (including youth, energy, endurance), education (including work ethic, general knowledge, wisdom, self-knowledge), intelligence and relationships (connections to useful people, trust, reputation, power). If you have those (at least the first three), and you truly desire wealth, it is yours for the taking, in this world at least (so long as you don't let your own beliefs hold you back).

The key takeaway should be that instead on focusing on how to accumulate money, you should instead focus on how to turn money (or other things) into things that create more money. A wealthy person doesn't set a goal of saving up a million dollars, and if they find themselves with a million dollars in cash, they quickly set to work finding a better format to store that wealth into.

Instead, figure out how much income you want and create things that will generate that income for you.


In that context, saving large amounts of money seems very ill-advised. Of course, at age 33, my perspective on this is limited, and perhaps I'm getting it all wrong, but it seems to me that the idea that the best preparation for retirement is to save up a load of money is a horribly noxious lie that has likely led to the bitter disappointment of hundreds of millions if not billions of people.

In the distant past, people "saved up" for their retirement by creating net income generating assets - out of their loins. Grown children can create wealth to sustain you when you can no longer do so yourself. A similar approach seems sensible today: instead of saving piles of cash that can depreciate rapidly or even be lost when the stock market turns sour and the bank or government turns around and slashes your retirement fund, create net income generating assets that will generate the wealth you will need to live on.

Saving for your retirement instead of creating net income generating assets seems like piling up potatoes in your cellar instead of keeping the potato farm running. The potatoes will go bad over time, you'll almost certainly miscalculate the amount of potatoes required, and if you run out, you're really properly screwed, because you don't have a farm to grow new potatoes anymore.

Pensions changed this somewhat - they were equivalent of handing the potato farm over to the state in exchange for a steady supply of potatoes until your death. In theory, this was a great idea. Unfortunately, history is showing that the state is a stingy, cruel, unfair and generally grossly incompetent manager of potato farms. Any people my age who, today, trust that the government will provide for them in their old age through pension schemes, are, in my opinion, delusional. Perhaps something else might change this situation, but who knows when such revolutionary ideas will actually take hold. In the meantime, Caveat Emptor.

The best kind of net income generating asset would be one that can adapt to changing circumstances, that has the lasting power to survive through dramatic world events (which no one can guarantee the future to be free of). The net income generating assets need not be imperishable: they merely need to have a very good chance of surviving you. Strangely enough, from this perspective, well educated, healthy, intelligent and loving children are probably still the best retirement net income generating asset you can possibly create, as they have been for thousands of years.

The purpose of wealth

Some people reading the above may think to make wealth their fundamental goal in life. I believe that's very misguided. As Paras Chopra said recently, the real use of money (or rather, wealth) is to buy freedom.

As Bob Dylan put it:

A man is a success if he gets up in the morning and goes to bed at night and in between does what he wants to do.

Wealth can help with that, depending on what you want to do. Lack of wealth can definitely hurt that goal. I took some acting courses, and one acting teacher once declared that a "successful actor" earned about £5,000 a year from acting. The rest of their living costs came from odd jobs like being a waiter or working in a supermarket. I politely kept silent, but my thought was, this is not a successful actor, it is a successful minimum-wage worker with an acting hobby.

Wealth, to me, serves as a platform to enable you to do what you want without so many distractions. Fooling oneself into pursuing wealth as a fundamental objective is as limiting as failing to consider wealth at all.

Importantly, in this context, wealth is highly relative to the person. You are wealthy not if you exceed some social threshold, like being a millionaire or a billionaire, but simply if you have enough wealth to meet all your needs. This points to an obvious way to increase your wealth: reduce your needs. Some take this to the extreme. Some take this to even further extremes. The fact is, if you believe you need a castle and a ferrari to be happy, your bar for wealth will be much higher than if you are happy wherever you are and don't particularly care for owning cars.

Unfortunately, if you work surrounded by people who make lots of money, chances are they spend lots of money too, and by spending so much time with them you will learn to need to spend a lot to be satisfied too. This is why high-paying jobs seem, in practice, to fairly rarely result in creation of actual wealth. Instead, we end up reading stories in the New York Times of couples who earn $500k a year and feel poor. Those stories are usually made fun of as disconnected from reality - but there is no contradiction between earning money and being poor. Money is not wealth. Poverty in your mind cannot be cured with pay raises.

A final summary about money

If you want to avoid falling into some of the most devious traps that wrong-thinking about money can lead you into, keep the following principles in mind:

  • Money is a medium of exchange for wealth, it is not a store of wealth.
  • Money is transient and unreliable, and expecting it to display permanence will only lead to disappointment.
  • Wealth is not an accumulation of money, but the ability to generate it when you need it.
  • The fundamental building blocks of wealth are health, education and intelligence. Money is a side-effect of combining these building blocks with a wilful effort to create wealth.
  • Any aggregation of lots of money is a risk. Turn it into net income generating assets as soon as possible to reduce that risk.
  • Any aggregation of assets also is a risk! It can have maintenance costs, if they're not net income generating assets. Sometimes those costs outweigh the value of the assets in which case the assets are a net negative. Be careful what assets you invest in.

Perils of founder fighting  

Mark Suster advises us to bring in third party counselling/coaching when there are founder issues:

If you struggle through similar issues - which means nearly all of you - please consider how and when to bring in help, to embrace mediation. It's hard to be open with your co-founders without somebody helping to broker the conversation. In many cases it's easier if this person isn't a board member or VC unless you have an extremely close or trusting relationship with them. You want to be able to be open without your board members losing confidence in your future.

My suggested approach is to do this much sooner. By the time previously hidden (or previously nonexistent) major founder disagreements come out in the open, it's too late to bring in the doctor. It helps, for sure, and if you can find a good mediator, trusted by both parties, then definitely bring them in. But the time to act is now when there are no problems.

Quoting my own article on the topic:

There are a number of subjects which seem almost embarrassing to discuss when things are going well. For example, "What if one of us decides to pull out?" Your first reaction to this topic might be "What? We're barely getting started, and already we're talking about what happens if one of us pulls out?"

The reality is that people's life circumstances change through time. They get married, or decide to leave the country, or get engrossed in a different pursuit, etc. Many things can get in between a founder and his start-up. Similarly, many things can go very wrong with a start-up. When those things do go wrong, or when one of the founders decides to pull out, is not the time to discuss these things. You need to discuss them with a clear head when no one is thinking of pulling out and the business looks healthy and hopeful.

Discuss those things early, following the steps in my article. It's easy, if slightly odd, at the beginning. Then you won't have to start thinking about bringing in a mediator when the shit hits the fan.

Why most VCs give bad advice  

Kamal Hassan:

To sum up, venture capitalists:

  • know less about the business than the entrepreneur
  • often have limited experience in the industry and in running businesses
  • often feel that they know better (their environment encourages it)
  • can fire the entrepreneur, so their ‘advice' carries too much weight
  • have a different share class so have different incentives
  • are on a fixed timeline that may impose looming deadlines
  • are biased to take action if things seem to be going poorly

Advice is a dangerous beast. Advice from the wrong context pushed overly forcefully can easily damage or even destroy your business.

As an entrepreneur, it is your responsibiity to:

1) understand the context that the advice is being given from; is that context actually relevant to the advice being given? 2) translate it to your own context; how much of the advice can reasonably translate to your potentially very different context? 3) decide how and whether to apply the advice, if any is useful at all.

It's your business and your life. Only you can make the call on whether the advice makes sense. Any situation where you have no choice but to disable your critical thinking and take someone's advice anyway should be avoided like the plague - whether or not you're going down the funded vs bootstrapped route.

I've heard some pretty horrendous advice given to startup founders by people who sounded like they knew what they were talking about. One startup I advised recently was being told by one of their "advisors" that a transactional business model, for what they were doing, was impossible, so they were going for a subscription model instead. I know several businesses using transactional models in similar contexts, so I was able to undo that bad advice, but ultimately there's only one defence against bad advice: think and make up your own mind.

Pick a goal  

Ivan Kirgin:

Deciding what the goal should be is hard. Startups are flooded with numbers: web traffic analytics, product event data, site speed & perf metrics, app store metrics, cohort data, and on and on. People see dashboards full of dozens of numbers, with additional complexity because you never just care about a number but also how it changes too.

One wise saying is that you get what you measure. Another wise saying is that you really do get what you measure, and nothing else, so be careful what you measure.

For any company, however, picking the most important metric and focusing on that is fundamentally important. For many profitable companies, the key metric will be, quite simply, profit. But that's at the company level. When you're driving a specific change, focusing on what impact you want to see out of that change is important.

However, don't let yourself be caught into mistaking the measure for the real thing. Measures can be misleading and can even distort things in such a way that a previous good measure becomes dissociated from real positive change. Whenever you measure things and aim for goals, keep an eye out for these distortions.

Still. As Eric Ries put it, if you cannot fail, you cannot learn. Goals are things you can fail at (or even succeed!). Read more here.

How to get users through business partnerships  

Getting users from another business via a partnership (what the author calls B2B2C) can be very hard to pull off. I've had several such attempts fail in the past. So it's with great interest that I found and read this article by Brian Balfour that provides a thorough guide with do's and don't's - well, as thorough as an article can get.

Enjoy the article here!

How boards need to evolve over time  

Mark Suster on how company boards need to evolve from first fund-raising until later. Unfortunately, the post is entirely focused on VC-funded businesses, whereas there are many more non-VC-funded businesses that could use some good advice about how to structure their board. One very important point made in passing:

And here's an important point that I think modern entrepreneurs often forget: Investors are "co-owners" of your business. If you raise millions of dollars from professional investors it is no longer "your" company but a shared company that you control. I think that mindset is useful to remind entrepreneurs that it is a shared journey and capital (whether active or passive) is a part of your success and your ability to access it when you need to and for the amounts you need is a very critical differentiator between successful companies and unsuccessful one.

(emphasis mine)

The law of averages  

Joel Gascoigne:

As soon as I accepted that the whole world works in ratios, that's when it became easier. Knowing that success happens in ratios allowed me to go ahead and send that email, without worrying about not getting a response, about ‘failing'.

In sales, this is usually phrased "every no gets you closer to a yes". Joel gives some examples of this fundamentally important rule, but the key is, simply, that everything you do will have a certain success rate, and part of your job as a founder is to figure out that success rate, and then figure out if it's high enough to enable you to run the business successfully.

That you will encounter failures is a certainty. In some parts of the business, the failure rate will hopefully be very low (e.g. keeping existing clients happy). In other parts, it will probably be very high (e.g. sales). That's part of the job.

Growth vs Capital Efficiency  

Boris Wertz:

I often see two entrepreneurs executing on similar opportunities, but with two very different capital efficiencies. First, there's the aggressive one who spends money very quickly, building a large team, buying early growth through aggressive marketing and sales, and hoping for a large upround in the next financing round. Then, there's the bootstrapping entrepreneur who hires carefully (sometimes too little, too late), trying to get as much runway with the current money as possible and build a "real" business.

In other words, bootstrapped vs funded.

Boris makes some good points, though I feel he still glorifies the funded path a bit more than necessary (perhaps because he's himself an investor, and is therefore interested in there being more funded businesses). One essential point:

3 . Evaluate your market: is it winner-takes-it-all?

If you're targeting a winner-takes-it-all (or almost all) market, then focusing on saving money makes no sense. You'd be sacrificing market leadership. Think about it. Nobody remembers Ryze, or Spoke as early LinkedIn competitors. But if you're operating in e-commerce or other non winner-takes-it-all markets, then you don't have to be overly aggressive in the early stages. In this case, you can take your time to fine-tune your model before aggressively scaling up.

I'd turn this point around and say, unless your market/idea has a property, like winner-takes-all or an intrinsic huge-upfront-investment (e.g. Tesla or SpaceX - and by "huge" I don't mean "it'll take 12 months to build v1"), it makes little sense to take funding, with all its associated problems.

More on thinking small  

Following on my earlier article about thinking big and small in the right context, I got into a small exchange on twitter with Joel Gascoigne, who had retweeted Gabriel Weinberg's article.

Joel pointed me to two blog posts on this topic which seem worth adding to the discussion: Steady yourself, those world-changing thoughts are not productive and Start something small.

Quoting a few passages from the first:

It may be healthy to be ambitious, but often these thoughts occupy more time than they should and stop us doing the real work we need to do to get anywhere near to those thoughts becoming reality.

It is easy to look at the success stories of the world and think they started at the top. Let's try and question that and think how all successful ventures or entrepreneurs started with something small.

And the second:

What I'm starting to notice more and more, is that great things almost always start small. Most of us know that Branson started the Virgin brand with a student magazine, but Virgin is just one of many examples which shows that the reality is counterintuitive: actually, the best things we know and love started as tiny things.

I've found that if I look into my own life, I find similarly that some of the most important achievements I've made started as little projects. My startup Buffer itself is a great example: it started as a two page website and in addition the short blog post describing this process has now turned into a talk I've given more than 30 times.

This is more evidence that thinking small is an essential first step before you start thinking big, which opposes the usual Silicon Valley advice of thinking big and choosing ambitious startup ideas.

Why is this idea so prevalent if it leads to lesser chances of success? One theory would be that most of the "think big" advice comes from investors (directly, or indirectly via entrepreneurs they've funded). Typical investors definitely wants all their investments to think big - that's how they make their returns.

That doesn't mean it's good advice for you.

Instead: Think small, make it work, and then think big.

Learn to think big and small  

Gabriel Weinberg:

You should learn to think big. It's the precursor to choosing an ambitious startup idea, which I also strongly recommend.


However, [thinking small] may make you just as much money. And that's an important distinction. Thinking big and making money are not the same thing. If your goal is to make money then an indie company (like my last one) may be your best bet, or some other industry altogether like finance.


The trickiest part about thinking big is you still need to think small at the same time while executing. You need that grand vision, but you also need to bring that back to today in the form of strategy, goals, priorities and of course your very next steps. Being able to articulate both the big and small in a succinct way that makes plausible sense is a signal of a great entrepreneur.

So actually, Gabriel's initial title ("Learn to think big") is not quite right, as he admits himself, though he mostly looks at the "think small in order to execute" side of things.

I'd focus on the second quote: if you want to achieve some kind of financial success through your startup (which probably should be one of your primary goals for your first successful startup, before you embark on moon shots and change the world), then think small. Think today, tomorrow, next month, think how do we make this fly now. Learn how to make the now work, and when you have that sorted, then cast your eye further out and start to think bigger.

That's the advice I'd give to a not-yet-successful entrepreneur. Think small, focus, make it work, then grow.

The real use of money is to buy freedom  

Paras Chopra:

The only, legitimate use of money is to be able to say no to things you don't want to do and yes to things which feel out of reach.

I find myself in a similar situation to Paras. I have enough money to afford whatever gadgets I may want, but what's the point of buying all those things?

I firmly believe that material possessions may end up owning my life rather than I owning them.

About a year ago, I was walking back home, and had to cross a bridge, and the thought crossed my mind: what if the bridge was closed forever and I could never get back to my flat?

I felt liberated when I realised that I didn't care. The only possessions I really care about fit inside a small backpack: a laptop and a portable hard drive. A nice new iPhone. A recent iPad with books on it. That's about it. The other things I care about are people, but those are different.

Sure, I like having a 42-inch TV in the nice new flat I moved into, and the under-floor heating in the bathroom is awesome (as is the plentiful hot water from the taps - my previous flat didn't have hot water from the taps for 3 years). But really, in the greater scheme of things, those are just luxuries. I can easily live without them - and I think I'm richer for it.

More thoughts on this in Paras Chopra's article.