“[M]ost businesses should not look to raise money. As true small businesses—in the eyes of venture capitalists, even a $5 million or $25 million business is considered a small business—they do not really fit the framework of professional venture capital. That does not, however, mean these businesses are not worth building. In fact, a $12-million-a-year company fully owned by the entrepreneur is a wonderful situation. Full control. Loads of cash. And true independence.”—The VC Quandary - Forbes.com
“Smart founders are never satisfied with simply executing their current business model, they are constantly observing, orienting and deciding whether their current business model can be made better. This tendency is a two edged sword: by iterating strategy a startup can dramatically improve the size and trajectory of the company, but at times this process can be the bane of venture investors (and why they have prematurely grey hair.) When a startup finds a repeatable sales process and steadily increasing revenue, its investors wants to harvest the rewards and build a culture of “execution.” However, if the founder is still running the company, the last thing he wants is a company complacent with day-to-day execution. This disconnect – between a founder’s endorphin rush from learning, discovery, insight and acting – versus investors needs for stability, execution and liquidity – is the basis of lots of founder/board travails.”—Steve Blank
When a problem comes along You must ship it Before the cream sits out too long You must ship it When somethings going wrong You must ship it
Now ship it Into shape Shape it up Get straight Go forward Move ahead Try to detect it Its not too late To ship it Into shape Shape it up Get straight Go forward Move ahead Try to detect it Its not too late To ship it
“If you’re describing something, and you find yourself saying “blah blah blah” to close out the thought, it may not just be a shortcut to the next sentence. Instead, it may be a sign that you haven’t thought enough about what you’re trying to describe. Try finishing your explanations with real words to make sure you’re actually on the right track.”—Jason F.
“The problem is, we only get one chance at this, with no do-overs. Life is, in effect, a non-repeatable experiment with no control….One of the hardest things to look at in this life is the lives we didn’t lead, the path not taken, potential left unfulfilled. In stories, those who look back — Lot’s wife, Orpheus and Eurydice — are lost. Looking to the side instead, to gauge how our companions are faring, is a way of glancing at a safer reflection of what we cannot directly bear, like Perseus seeing the Gorgon safely mirrored in his shield.”—The Referendum
“Narrow it down. Complexity creeps into startups like weeds into a garden. Good ideas often die the Death of a Thousand Features. A company often aims for a bullseye and misses the dartboard altogether. To counteract these tendencies, narrow your company down until you can describe it in three words. Successful companies thrive by following a simple, easy-to-understand mission, especially in their early days. Pick a three-word monicker and stick to it. While your execution may change, your premise should stay consistent.”—Christian Perry: 7 Things I Learned From My Startup Failing
I was a mentor this week at seedcamp in London. Here is a transcript from those sessions:
1st Time Founder Guy: How much time should I spend on my business plan.
1st Time Founder Guy: What do you mean? Don’t I need to have a plan?
Me: No, you just need to have a direction. Get out there fast, make mistakes, and learn from them.
1st Time Founder Guy: What should we focus on most in our first 6 months?
Me: Proving some real user demand for your product.
1st Time Founder Guy: How much money should I raise?
Me: As little as possible.
1st Time Founder Guy: How does that work?
Me: Raising money is not a milestone. Shipping product and getting to usage goals are milestones. Only raise enough money to get you past the next significant product milestone. Spend it carefully. Hit the milestone. Then plan for what’s next.
1st Time Founder Guy: We’re just 3 developers. When should we hire our first “business guy”
Me: Not until you’ve proven that there is a user-need/demand for your product. Unless that business guy is going to help you write specs or work with the UI team to sharpen the experience, he’s just overhead until you demonstrate some early traction.
1st Time Founder Guy: When should I hire my sales team?
Me: When you get to the point that you can’t sell it yourself anymore because you’ve taken too many orders.
1st Time Founder Guy: I’m a developer and I built our entire product. But, now I’m thinking of hiring some developers so that I can focus on sales.
Me: Sounds like a dumb plan. So far you’ve proven that you are good at development. Stick with that vs. randomizing the project by trying to prove you are good at something else.
1st Time Founder Guy: When is the right time to hire internationally? We need to have a presence in other markets.
Me: Only after you’ve proven something locally.
1st Time Founder Guy: What do you think our strategy should be?
Me: You need to answer that yourself. Why did you start working on this product in the first place? I bet the answer to your question lies in the reason you started this. Go back to that. If you can’t, my bet is you’re doing the wrong thing.
1st Time Founder Guy: Should we be planning for a company that is long lasting or a quick flip?
Me: Plan for a product that users love. But, guide your business towards the outcome that is going to make you most personally happy. Never lose sight of that. Come back to the question of “is this making me personally happy?” regularly, at least once a quarter.
“I think what people need to realize is that venture money is quite useful in enabling certain types of businesses. The problem is when people (very often Silicon Valley people) get into the mindset that raising venture capital is an end goal in itself, rather than looking at the overall business and seeing if it even needs venture money. During the dot com bubble, there was a time when people looked at venture capital like revenue — the more you raised, the better you were doing, rather than recognizing that it really meant you just had a bigger hole to dig yourself out of. However, in some cases, where a company really does need investment capital to take a business to the next level, smart venture money can be a great help. The nice thing today is that more and more businesses can be started, built and can scale without that need. That doesn’t mean that there’s anything wrong with venture capital. In fact, it’s better if it’s easier to build businesses. But that also doesn’t mean that VC is somehow bad or isn’t really a key part in accelerating certain innovative businesses. Venture capital is a part of the ecosystem, and that’s a good thing. There are times when people give it too much credit, and there are other times when it doesn’t get enough credit, but the real trick is just in understanding where and when it makes sense.”—Michael Masnick
“The problem is that we are in this awful in-between phase of our planets productivity curve. Technology has vastly reduced the number of workers and resources that are required to make what the planet needs. This means that a small number of people, the people in control of the creation of goods, get the benefit of the increased productivity. When we get to the end of this curve and everyone can, in essence, be their own manufacturer, things will be good again. But until we can ride this curve to its natural stopping point, there will be much suffering, as the jobs that technology kills are not replaced.”—The Real Problem With The Economy Is That It Doesn’t Need You Anymore
“[small business owner] If your business fails during a recession, its your fault. This bears repeating. Its not the economy, stupid, its you. Dont use the recession as an excuse. If youre not surviving its because you werent doing all that you should have during better times.Resist the bunker mentality—if you wait until the tide turns, you will drown. Instead, take action: cut costs, get aggressive about sales and fire mediocre workers. Continue to invest in areas of your business that will generate growth.Dont play the victim. Do everything you can to take care of your business—work harder, faster and smarter than the competition by a factor of 10. As long as your business has a pulse, its in your power to turn things around.”—It’s Not the Economy, Stupid
“It’s easier to say no when you have concerns about the market, the business model or the price. The entrepreneurial team is great, you would enjoy working with them, you think they are money-makers, but there’s something in the general model that prevents you from pulling the trigger. Those are the easy ones. The hard ones are when you are saying no because of the team. Successful start-ups typically follow Thomas Edison’s genius formula: 10 percent inspiration (the vision or idea), 90 percent perspiration (the execution). Whether you like the idea or not is irrelevant if you don’t believe the team has the wherewithal to execute it successfully.”—The idea’s great, but the leadership team stinks… Jeff Bussgang
User interface is what takes data and turns it into information, and that’s all you do if you’re a web company. You transform data. It doesn’t matter how hard the math was you had to do to transform the data into its final form, if you can’t get your user to understand the meaning of that transformation you have fallen at the final hurdle….programmers often do not care for user interface problems because they think they’re not “hard” and hence not interesting. Because coding an interface can be relatively simple, I think many assume that the problem itself is simple. If your interface was simple to write, it’s because you’re ignoring edge-cases and pushing the cognitive load to your users, making it hard to read and a pain to use.
User interface is the softest of problems, and thus the hardest to get right. It is also completely critical to your web company. You’re nothing but a user interface, so get it right.
“Life as an entrepreneur: at first people say you are stupid. then there’s a short period of time when they say you are a genius. then they say you are obvious.”—Hjalmar Winbladh, founder of SendIt (sold to Microsoft in 1999)