Tim Draper recently sent me this great post from Marc Hedlund at O’Reilly on Entrepreneurial Proverbs. Lot of great advice summarized here (including from Chicago’s own Jason Fried).
Starting
- It’s good to be king — being an entrepreneur is the best
job I’ve had. Every day your job is new and different; you constantly
have to push yourself in new directions. You no longer have to say,
"Well, I’m just an engineer, but…" — you have a great excuse to take
an interest in everything. Working in an environment you shaped to your
own beliefs about how a company should be run is incredible (and
humbling!). And of course there are sometimes financial rewards,
although it’s still a great job regardless. - Losing sucks — shutting down a company is unbelievably
difficult. It affects your home life, your health, your job prospects,
your financial stability. Professional investors are grown-ups, but
it’s still extremely disheartening to lose the money people invested
based on belief in you. If your backers include friends or family, it’s
extremely difficult to have to tell them the company is closing and
their money is gone. Most entrepreneurs fail several times before
succeeding, too, so losing is both terrible and nearly inevitable.
Fight as hard as you can against it. - Building to flip is building to flop — this is taken from Jason Fried,
and he’s right. People who start out with only one goal, to sell to a
big portal, will find their options are too limited. Plan as many paths
to success as possible for your company, and always have a Plan B when
acquisition (or whatever path you choose first) doesn’t work. - Prudence becomes procrastination — it’s great to research
your market and talk to potential buyers about your ideas. It’s
terrible to let an excess of this become a impediment to getting
started. Too much prudence edges away from research and into
procrastination. - Momentum builds on itself — just start. Do whatever you
can. Draw a user interface. Write a spec. Make something, anything,
that people can see and touch and try. A prototype is worth ten
thousand words. Once you start moving, you will find that people start
to carry you along. - Jump when you are more excited than afraid — lack of fear
is irrational, and too much fear is debilitating. Make the jump into
your business when you have considered the fear, and come out more
excited than afraid.
The Idea
- Pay attention to the idea that won’t leave you alone — this is taken from Paul Hawken’s Growing a Business.
Sometimes an idea catches hold of you and you find you can’t put it
down. Pay attention to that! Just start working on it. Can’t get
yourself to do anything on it? Move on. Find yourself waking up out of
bed to write down new ideas about it? That’s a good one to choose. - If you keep your secrets from the market, the market will keep its secrets from you
— entrepreneurs too often worry about keeping their brilliant secrets
locked away; we should all worry much more about springing a surprise
on a disinterested market (anyone remember the Segway?). To quote Howard Aiken: "Don’t worry about people stealing an idea. If it’s original, you will have to ram it down their throats." - Immediate yes is immediate no — does everyone immediately
tell you your idea is great? Run away from it. If the idea is that
obvious, the market will be filled with competitors, and you’ll find
yourself scrambling. One good test: when the New York Times Magazine
puts out its annual "Year in Ideas" issue, is your idea in it? Then don’t do it. You’re already too late. - Build what you know — this is the most basic advice of idea
generation: scratch an itch you have yourself. To make a great company,
stop and ensure that your need is broadly felt, and that your solution
is broadly applicable — not everyone spends their life in front of a
computer, remember. - Give people what they need, not what they say they need —
interviews are tricky. People will swear up and down that they would
buy a product you describe if only it were available, and then fail to
do so as soon as it is. Likewise, in conversation an idea can sound
terrible, but in actualization the idea can become a compelling
product. You have to sherlock out the truth of the interest people
express, and "yes/no" questions are usually less useful than "how much"
or "how bad" questions. - Your ideas will get better the more you know about business — engineers hate to hear this, but you can generalize up quite far from here: the more you know about everything, the better all
of your ideas will get! If you want to start a business and your
strength is in development, learning about pricing, sales, marketing,
finance, and yes, even HR, all of it will make your product ideas
stronger and better.
People
- Three is fine; two, divine — having too many co-founders
makes decisions hard to reach; if you’re on your own, you have to bear
all of the stress and worry about the success of the company. In my
judgment, three people can do well together, but having two founders is
best. - Work only with people you like and believe in — I once heard Eric Schmidt
say something along the lines of, "The older I get, the more I think
all that matters is working with people you like." If you’re smart and
talented, you’re probably going to like a lot of smart and talented
people. Working with people you like is so much more fun, and often
more productive, than fighting against someone who may be smart and
talented but just isn’t a great fit for you. - Work with people who like and believe in you, just naturally
— maybe you are very persuasive, and can talk people into working with
you against their better instincts. Especially for co-founders and
early employees, don’t try that hard. Find the people that naturally
want to work with you, and nudge them into the roles where you need
them. You’ll have more fun and get more done. - Great things are made by people who share a passion, not by those who have been talked into one — a corollary of the last; you can spark a passion in someone, but you can’t do it without some
fuel to catch. Better to wait, and find the person who is already
inclined to believe in your cause. You may talk someone into
co-founding a company with you, but will they stick with it through ups
and downs if they had to be persuaded that hard?
Product
- Cool ideas are useless without great needs — this is the
classic engineers’ entrepreneurial mistake (or at least I’d like to
think so, since I’ve made it). Techies love tech, and a new technology
can produce a lot of companies that don’t really meet a need. Better to
start with the need, and then see how what you know can produce a
better answer to that need. (Marketers tend to have the opposite
problem: real, pressing needs with completely unworkable solutions.) - Build the simplest thing possible — engineers have the
hardest time with this, with not overdesigning for the need they’re
addressing. Make the simplest possible product that makes a significant
dent in that need, and you’ll do far better than you would addressing
two or three needs at once. Simplicity leads to clarity in everything
you do. - Solve problems, not potential problems — you can waste a
lot of money implementing solutions for problems you don’t have yet,
and may never have. Work on the biggest, most pressing problems today,
and put aside everything else. - Test everything with real people — it’s unbelievable how
helpful this is. Go find civilians, real people who use computers
because they have to and not because they love to. Find them in
Starbucks, or at the library, or in a college computer lab. Give them
$20 for 20 minutes, and you’ll be paid back a hundred times over.
Money
- Start with nothing, and have nothing for as long as possible
— small budgets give big focus (probably another line I’m stealing
from Jason Fried: it sounds like something he’d say…) Don’t go out
and raise a ton of money right away. Instead, give yourself just enough
to get going, and use the limits that imposes to motivate yourself. - The best investor pitches are plainspoken and entertaining (not in that order)
— think about what this implies. A plainspoken pitch is the surface of
a very solid business. If you have to fudge and lie to get investors
interested, why is that? If you’re running a great business, it is not
hard at all to lure investors into it; the worse your business, the
bigger (and more odious) your fundraising task is. Entertaining implies
a fun person to work with, and VCs like working with people they like
as much as the rest of us do. If you don’t bring the funny, bring the
person who brings the funny. - Never let on that you’re keeping a secret — telling an
investor "I don’t want to talk about that" is terrible. It’s the
natural converse of being plainspoken. It’s good to be aware, though,
that some potential investors will listen to you and then share your
information with your direct comptitors, and not always because they’re
invested in those comptetitors. Knowing that, you have to keep some
secrets — but be as diplomatic about that as possible. Respond to the
idea behind the question, without giving away more than you feel
comfortable discussing. Learn to steer the conversation in the way you
want it to go. And then give up more information as you become more
comfortable with the potential investor. - No means maybe and yes means maybe — you should never take
a "no" from someone you want to work with. Accept the no, ask for
feedback, and then just keep sending them updates on how much butt
you’re kicking in the market. During one company, three of the five
term sheets I collected came from VC firms that told me "no"
originally. Conversely, though, the only money in the bank is actual
money actually in the bank. Everything else is just a possibility, and
you have to treat it as such. Don’t stop fundraising until you have a
firm commitment for the funding you need, and don’t accept halfway
promises like, "We’ll fund you if another firm comes in." Keep on
driving until the wire transfer is complete. - For investors, the product is nothing — the classic
engineer’s VC pitch has ten slides about the product and two about the
academic achievements of the founders. That’s a terrible pitch. One
slide should be about the product, while the rest cover the market,
competitors, financials, funding history, and the relevant experience
of the team. The product matters far less to most investors than the
reactions of customers, the properties of the market, and the
credibility of the team. Obsess about the product on your own time;
present your business in all of its parts. - The best way to get investment is not to need it*
— if you have a running business with real customers and you’re paying
all your bills, you are much more likely to get a funding round than if
you need the round in order to survive or succeed. The pitch that goes,
"We could accelerate our growth with more money" is much more
compelling than, "I need your money or our doors will close."