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."