STARTUP X ACADEMY
We believe that young entrepreneurs like yourself will unlock human potential and make the world a better place. This is just another tool to help you make that happen.
TABLE OF CONTENTS
MARKETS & COMPETITION
FOCUS & INTENSITY
THE CEO GIG
HIRING & MANAGING
7 STARTUP MILESTONES
Disclaimer: The ideas here are NOT ours. Okay some of them are but most are from people much smarter than us. It’s a collection of strategies, principles and practices in entrepreneurship and startups that we feel will be useful to you and your future; lessons learned from Silicon Valley unicorns like Uber, Snapchat, Airbnb, and Dropbox or taught at Y-Combinator by Paul Graham and Sam Altman or uncovered in books or essays written by Peter Thiel, Mark Zuckerberg, Elon Musk, Jeff Bezos, etc… Basically it won’t hurt to know some of this stuff especially if you plan on going out on your own at some point.
New technology comes from startups. Big organizations lumber around uselessly, and individuals don’t have the resources to create an entire industry. Small, agile groups foster innovation.
Hollywood, social media, Instagram influencers and eccentric billionaires have elevated entrepreneurship to Rock Star Status. And it definitely has its perks but Startups are really weird.
If you follow your instincts they will lead you in the wrong direction.
You can’t tell if you can succeed doing a startup.
No one can predict this.
What you need to succeed in a startup is not expertise in startups.
You need expertise in your own users.
And you won’t know what your users want until you build it.
Here’s a simplified blueprint to startup success: Pick your users. Find out who you want to ‘serve’ (best to pick a very small, untouched market). Make something valuable for them and get them to use it. Get feedback and make the changes they’d like to see. Make your users happy and get good reviews. Get more users. Then figure out how to make money from it (you may have to pivot) or hope someone buys you out before you run out of cash.
In a startup there is no boss to trick. You cannot trick people. There are all users. And all users care about is if your product does what they want.
Startups are very time consuming. Here is the daily routine of the entrepreneur: Talk with users, build product, eat, sleep and exercise.
You need a remarkable Idea, have enough funding, have a good business model and a team that can execute. But most of all you need to have the right timing.
How do you know if you are working on real stuff? Real problems are interesting (even if no one cares about them), if you like it just learn it; it will become useful later.
Learn about things that matter
work on problems that interest you and
with people you like and respect.
When a side project is turning into an alarming portion of your life you’ll know you are turning this side project into a startup. Google, Apple, Facebook were all first side projects; not bad company.
The definition of idea includes the size and the growth of the market, how the market is going to evolve, the growth strategy for the company, defensibility strategy, exit and so on. Think through all of these and not just the product.
Have a Mission. Great missions are very easy to explain and very easy to understand. If it takes more than a sentence to explain what you are doing its almost always a sign that is too complicated.
Your idea must be REMARKABLE - worth making a remark about. Even if it’s polarizing; creating something people either love, or hate has been very successful in many aspects in life, we can see its effectivity in today’s American Political atmosphere.
If people think the idea sucks that’s not necessarily a bad thing just remember Mark Twain’s quote, ‘Whenever you find yourself on the side of majority its time to pause and reflect.” Think different.
You got your idea, great. The next thing you have to do is think about what is the actual problem.
Think where is this problem happening in the world.
Why now is the best time to think about this idea and start this company? Why not two years ago? And why two years in the future would be too late?
It’s better if the problem you are solving is a problem that affects you as well. Otherwise you’ll have a disadvantage in getting close to your customers.
Describe it in one sentence. How does this problem relate to me? Why I am so passionate about it? Also, verify that this is a problem that other people have too. You learn this just by going out and talk to people. One of the biggest mistakes entrepreneurs can do is not thinking if this is something they really want to do before building.
How do you start? So you are now able to state a problem. What do you do next?
At FORKAIA, we listen to demand and build the MVP (minimum valuable product) embedded with user DNA but minimalistic to the core and tinkering along the way until we find product market fit. The key is resist the temptation for perfection and just get your idea out fast so you can test it. Technologies survival depends on its usefulness. Test, tinker, get your first users. get feedback, iterate, get more feedback, iterate and repeat until the product is curated well and valuable/useful to the people that use it. When that happens growth is fast and organic because it won’t be that hard to turn your users into champions.
We call this the P.U.F.I Approach. It stands for Product. Users. Feedback. Iterate.
The product you launch will almost certainly not be the product that takes you to scale. Your job is to progress and iterate as fast as possible. You’ll want to create a platform that’s beautiful, with clean code, and that scales.
You need to make something people share with their friends. Get users and get user reviews. At Forkaia once we have this proof of concept, we go full throttle. Optimize for speed over scalability. Only worry about the next order of magnitude; when you have your tenth user, don’t worry about how you’re going to serve one million users. You don’t want to do things that don’t scale for as long as possible so you can stay connected with users. You’ll need to move as fast as possible in development, but don’t give that up willingly.
To build a great company, you first have to turn a great idea into a great product.
If you have a great product, other tasks would be easier (raising money, PR, etc). Focus first in building something the users need.
Find a small group of users and make them love your product. It’s much better to first make a product a small number of users love than a product that a large number of users like. Even though the total amount of positive feeling is the same, it’s much easier to get more users than to go from like to love. It is easier to expand something from small-amount-users-love to large-amount-users-love than to expand something from large-amount-users-like to large-amount-users-love.
One way you know your idea is working is that you are going to get growth by word of mouth. When people love something they tell their friends about it and you see organic growth. If you don’t have early organic growth then your product is not good enough yet. A good product is the secret to long term growth hacking. Don’t build a growth machine before.
Very few startups die because of competition. Most startups die because they don’t grow enough or catch on, usually because they don’t examine what their users like and they spend time on other things.
Start with something simple. Flatten the learning curve. Good products should be intuitive to use without having to refer to a manual or take a class.
It’s much easier to build something good if you start with something simple. Even when your plans are complex (and hopefully they are), you can always start with the smallest subset of the problem and then expand. It’s hard to build a great product so start as small as possible.
Simple is good because it forces you to do one thing extremely well. And you have to do that to do something that people love.
Recruit them by hand at first. Don’t buy google ads. Find real people that would be good users. Understand that group extremely well and get extremely close to them. Listen to them and you’ll find out that they are always willing to give you feedback. Listen to outside users and let them tell you how to make a product they’ll pay for. Do whatever you need to make them love you because they’ll be the advocates to get your next users.
Your goal as a startup is to make something users love. If you do that, then you have to figure out how to get a lot more users. But this first part is critical—think about the really successful companies of today. They all started with a product that their early users loved so much they told other people about it. If you fail to do this, you will fail. If you deceive yourself and think your users love your product when they don’t, you will still fail.
Identify customer segments: Focus on their needs. Learn a lot about the industry: Become an expert so people trust you when building this product.
Storyboard the ideal User Experience: Do this before writing code. Not only a storyboard about how they go through the website but also how they find out about you (word of mouth, how users get to come to your website, what you communicate, what they get at the beginning of the process, what they get when they finish using the product, reviews, comments, etc). Visualize the flow/user experience.
Start with you! You are going to be the first user, then your friends, families, co-founders, coworkers. After that, you are going to start needing more customer feedback. Some resources are online communities (if you are building products for developers, Hacker News and reddit are good examples), local communities (if you are building consumer products, mailing lists) or niche influencers (like mommy bloggers). Lastly, cold calls, emails and press.
Everyone looks for that dream solution with tremendous ROI, hypergrowth, accelerating partnerships, etc, etc. But the reality is that for most companies, that’s not possible – those are unicorns. The reality of most companies that (from the outside) look like they’ve had a dream growth curve had first users that were probably impossibly hard to get. Getting the first users are the hardest, but as a founder, it’s your responsibility to do whatever it takes to bring them in.
Once you have those users, you want to turn them into champions (someone who talks about and advocates for your product). The best way to turn a user into a champion is to delight them with a memorable experience. You can get to know what users think of your product and learn what they need by talking to them both constantly and consistently.
Build an engine in the company that transforms the feedback from the customers and make them into business decisions. And get back in front of the user and repeat. Ask them what they like and what they don’t like? Watch them use the product. Ask them what they’d pay for? What would make them recommend it to their friend or if they already have?
Make the feedback loop as tight as possible.
Use Metrics: Focus on growth
Net Promoter Score.
A Startups live on growth. It’s the only indicator of a great product.
How do you get users to switch to you?
Find a moment when your product is better or much better differentiated from the existing solution they have (for example, next day availability). Once they start using the product then they will start seeing the things that are more convenient for them that add up and makes them switch.
Now you have all these users, what do you do with them? Just ask them! Surveys are okay but people are going to respond only if they really love you or if they really hate you. In order to get those in between you actually go out and meet the person that is using your product (take them for coffee for example). Don’t make the interview an interrogatory, make a conversation, get to know them and get to a level when they feel like they can be honest with you and make you improve things for you.
The problem with retention metrics is that they take too long to measure. What works fast is reviews and ratings or NPS (Net promoter score- how likely are they to recommend you to their friend). Track your honesty curve. If it is a free product some people will lie to you as they are more separated from you. If they pay they will be more honest. Not necessarily the first product has to be free but make it so that you can get that type of feedback quick, as they will have to pay for your product in the future.
Here are three ways you can talk to your customers:
You can run customer service yourself to find out what’s not working with your product
Reach out to current and *churn customers (*customers that left)
Make sure your customers are having good experiences and reaching out to churn users can allow you to find out why they left in the first place
Personal outreach can be the difference between leaving and staying
You need to know how people are talking about your brand on social media; you’ll want to know when they’re having bad experiences and go the extra mile to make the customer happy
MVP. Minimum Viable Product
You build your MVP and talk with users as you do this, in order to solve immediate needs.
Build fast but optimise for now (for the first 10 to 100 users not for your million users). Manual before automation. Process is important but to understand what you should do is important to manually build it yourself. If you want to automate things too fast you’ll end up with a potential problem of not being able to move quickly on iterations.
Temporary brokenness is better than permanent paralysis. Perfection in this stage is irrelevant because you’ll always grow in the next stage and what you perfect in this stage is not going to matter anymore. Worry about the generic case.
Beware of Frankenstein approach, where you have collected all these ideas from the users and want to go and show the changes the next day. For example, if they ask you to build a feature you should go to the bottom of why they asked you to build the feature. Probably what they are suggesting is not the best idea but what they are saying is I have this other problem that you created by using the product or I need this problem solved before I’m going to pay.
Some people will continue to build their product and not ship it at all. The whole idea of being stealth in perfecting the product to no end is the idea that imitation is cheaper than innovation in terms of time, money and capital. You should always assume that if you have a really good idea, someone is always going to follow you and execute as fast as they can to get where you are. So there is no point in holding out all that user feedback that you can get because you feel paranoid that someone is going to copy you. Unless you require thousands of dollars, there is no point in holding back.
At the beginning, you are not going to create a team just for growth. It’s going to be one person only and you’ll need to focus. Don’t be tempted to try lots of things. You should choose one channel and execute it for one week. If it works then continue if it doesn’t then move on. Learn one channel at a time. Always iterate on it. These channels always change. Over time go back to the ones that you moved on from.
Types of growth
You know you are having sustainable growth when you have good return on investment. There are three types of growth: (1) Sticky (existing users keep buying stuff and pay you more), (2) Viral (word of mouth) and (3) Paid. How do you measure if you are doing good?
Sticky: If they have a good user experience they’ll come back often. Measure CLV (customer lifetime) and retention cohort analysis (analyze the curves in different points of time, before and after making improvements)
Viral: Focus on really good experience. Build a good referral system:
Customer touch points: Where they refer? after sign up or after they use the product?
Program mechanics: For example: they get $10 and you get $10 (or $25?).
Referral conversation flow: When your friend clicks on your referral link, optimise how he is going to sign up.
Paid: Think about what are you going to get in return. Is the CLV more than you Customer Acquisition Cost? An advance way to do this is to break it in segments. It’s important to know the difference between them and know when you buy ads for these different cohorts/segments.
Consider your payback time when thinking about sustainability. How much risk can you handle? A safe payback time would be one or three months. If you are a risk-lover, twelve months is okay for payback time. More than twelve is unsafe.
Some common examples of paid growth are the following:
Groupon/ daily deals
If you’re an early startup, you shouldn’t have a growth team. The whole company should be a growth team with the CEO as the head of growth. Keep in mind that as your team grows, having more than one person working on something will mean you’ll have less control on what everyone is doing. When there’s a lot of people, everything becomes less about control and more about influence. You’ll need someone to set a North Star to guide where your company wants to go. The North Star can be the number of active members for a social media platform or the amount of sent messages for a messaging app. It’s critical to have a North Star to define yourself as a leader.
The second thing to think about:
Focus on optimizing rather than growth alone. For example, notifications can be something that people receive too many of, but rather than eliminating them all together, trust that users will have their own filters. You’ll want to build an incredible product that includes optimizing for the people that use the product the most.
However, to drive growth, the people already using your product aren’t the ones to worry about: you’ll need to focus on the marginal user. For social media, there will be users who create, deactivate, then come back (resurrected users) and you’ll need to focus on them and how to get them to tell their friends.
Think about a metric that everyone in your company is thinking about and driving their products toward. Any metric that aligns with your mission and value is the one you should go for.
Last Area: Tactics
The first tactic to pursue is internationalization. Facebook did this too late, which led to similar social media platforms (clones) being made. Despite the clones, Facebook utilized different methods for growth by focusing on connecting 10 friends to users in 14 days, getting users to a magic moment and prioritizing the right languages to translate once they went international.
The next tactic to observe is virality. First is payload, how many people can you hit with a given viral blast? Second is the conversion rate, and third is frequency. In SEO, there are three things you need to think about: keyword research, getting valuable links from high authority websites, and having the right headers on XML sitemaps.
Email is not a successful tactic to use for people under 25 as things promoted through email are often sent or marked as spam. If you can't get your email, SMS, or Push Notifications delivered, you will never get any success from those options, messages that are delivered, then come with the concern of whether or not they’re even being opened. The most effective email you can send is a notification but you have to think about what kind of notification you’ll be sending and how you can create great triggered marketing campaigns.
Don’t do newsletters as you’ll send the same newsletter to everyone on the site and everyone has different needs/concerns.
And lastly, A good plan violently executed today, is better than a perfect plan tomorrow.
Mediocre teams do not build great companies.
It starts with the founder. What makes a great founder? The most important characteristics are ones like unstoppability, determination, formidability, and resourcefulness. Intelligence and passion also rank very highly. These are all much more important than experience and certainly “expertise with language X and framework Y”.
Most successful founders are the sort of people who are low-stress to work with because you feel “he or she will get it done, no matter what it is.” Sometimes you can succeed through sheer force of will.
Good founders have a number of seemingly contradictory traits. One important example is rigidity and flexibility. You want to have strong beliefs about the core of the company and its mission, but still be very flexible and willing to learn new things when it comes to almost everything else.
The best founders are unusually responsive. This is an indicator of decisiveness, focus, intensity, and the ability to get things done.
Most FORKAIA Startup teams are made up of the following personnel.
Front end developer
Back end developer
Social Media/Marketing specialist
Remember that at least a thousand people have every great idea. One of them actually becomes successful. The difference comes down to execution. It’s a grind, and everyone wishes there were some other way to transform “idea” into “success”, but no one has figured it out yet.
Rule # 1 in competition is Don’t Do It!
Never go up against market forces; find a small group of particular people concentrated together and served by FEW or NO competitors. Competitive markets aren’t where the big profits can be found; it’s better to create new markets. Get the hobbyists instead; start small and monopolize. Only once you have found your niche, scale up. But don’t intentionally set out to be disruptive.
Competitors are a startup ghost story. First-time founders think they are what kill 99% of startups. But 99% of startups die from suicide, not murder. Worry instead about all of your internal problems. If you fail, it will very likely be because you failed to make a great product and/or failed to make a great company.
99% of the time, you should ignore competitors. Especially ignore them when they raise a lot of money or make a lot of noise in the press. Do not worry about a competitor until they are beating you with a real, shipped product. Press releases are easier to write than code, which is easier still than making a great product. In the words of Henry Ford: "The competitor to be feared is one who never bothers about you at all, but goes on making his own business better all the time."
Every giant company has faced worse competitive threats than what you are facing now when they were small, and they all came out ok. There is always a counter-move.
A small market with a slow adoption rate can lead to other companies competing with you, while a small to mid-sized market with a fast adoption rate are the ones that you can attempt to take over.
How can you build a Monopoly?
Economies of scaling
In the beginning, you’ll want to go after smaller markets as they’re easier to dominate than larger ones. By starting small, you’ll have the advantage to take over a whole market and expand. Having a unique business also gives you the upperhand as the products offered may be things that haven’t been done yet. Almost all successful companies in the Silicon Valley started with a model of starting a small business and expanding (i.e. Amazon was an online bookstore, then expanded). Most of the value of these companies come from growth rate. Established firms in established markets have competition; their margins are chipped away by market forces. Startups in innovative markets are more likely to have monopolies; their good days are still ahead of them.
The rule of thumb in tech is to create something that’s an order of magnitude better than the next big thing. For software, you have to create something better than what already exists. Proprietary technology is tricky, as areas of innovative tech can be at risk of being surpassed by someone else. In those situations, you can make a lot of innovation but because people are constantly building better programs, your product can be replaced. This can be great for customers as products are constantly getting better, but it won’t help those that start the company. Instead, you’ll want to focus on what will make your company the leading one in 10-15 years from now.
First Mover versus Late Mover Advantage? Should I be the first mover and pick up as much market share as possible or be the last mover; make the last great great development in specific market and enjoy decades of monopoly profits. Sometimes it’s better to have the last significant boom and ride it longer; it’s much easier to improve on somebody else's idea than it is to build something from scratch. Facebook came way after Myspace and Friendster and before there was Google there was Yahoo and the seven dwarfs (just Ask Jeeves!) But you can also go first, leave your foot on the gas, build a big lead and gobble up the market and ring the exchange bell like Uber and Lyft. By being the first-mover in the smartphone and tablet markets, Apple saw its shares quantify in value. So is it better to go first or last? My answer is both and that it doesn't matter if you stop innovating.
What is the psychology of competition?
There’s something in nature about mimicking which is why we tend to find it reassuring if other people are doing what we’re doing. However, competition isn’t a form of validation. It’s a blind spot psychologically as well as intellectually, as it gets people wrapped up in the idea of winning rather than being better. This can make people forget what’s truly important and valuable.
Your beliefs become your thoughts. Your thoughts become your words. Your words become your actions. Your actions become your habits. Your habits become your values. Your value becomes your destiny.
What is a culture?
A culture is the beliefs, customs, arts or anything else that belongs to a particular society, group, place or time. It is a way of thinking and behaving that exists within a place or an organization.
But what is a culture within a company?
A culture within a company or business works the same way. Everyday each member of a team is in pursuit of one goal or core value that the company is striving for.
It's important to have core values and appropriate behaviors put into place that employees and team members are working towards-the mission.
Why does it matter?
Principles: Maintaining a company’s principles makes it easy to make decisions when falling back on original ideas or making new plans.
Alignment and Stability: Having a strong culture helps align the core values the company was built upon while providing stability for any backsets or downfalls.
Trust: Maintaining a company's culture and core values retains more employees by creating an environment of trust one another can rely and depend on.
Core Value Cheat Sheet
How does a company choose their core values?
As the leader, what personal values are the most important to you?
What do you look for in an employee as well as vise versa? Make sure to note what qualities and characteristics bad employees had previously.
Do your employees believe in your mission?
What characteristics will not work well in your company?
Are your core values credible and uniquely tied to your mission?
Core values should have meaning.
What values do your current employees identify with?
Make sure everyone is being held accountable for their responsibilities.
Although it’s necessary to build a great product, you’re not done after that. You still have to turn it into a great company, and you have to do it yourself—the fantasy of hiring an “experienced manager” to do all this work is both extremely prevalent and a graveyard for failed companies. You cannot outsource the work to someone else for a long time.
This sounds obvious, but you have to make money. This would be a good time to start thinking about how that’s going to work.
The only universal job description of a CEO is to make sure the company wins. You can do this as the founder even if you have a lot of flaws that would normally disqualify you as a CEO as long as you hire people that complement your own skills and let them do their jobs. That experienced CEO with a fancy MBA may not have the skill gaps you have, but he or she won’t understand the users as well, won’t have the same product instincts, and won’t care as much.
Growth and momentum are the keys to great execution. Growth (as long as it is not “sell dollar bills for 90 cents” growth) solves all problems, and lack of growth is not solvable by anything but growth. If you’re growing, it feels like you’re winning, and people are happy. If you’re growing, there are new roles and responsibilities all the time, and people feel like their careers are advancing. If you’re not growing, it feels like you’re losing, and people are unhappy and leave. If you’re not growing, people just fight over responsibilities and blame.
Founders and employees that are burned out nearly always work at startups without momentum. It’s hard to overstate how demoralizing it is.
The prime directive of great execution is “Never lose momentum”. But how do you do it?
The most important way is to make it your top priority. The company does what the CEO measures. It’s valuable to have a single metric that the company optimizes, and it’s worth time to figure out the right growth metric. If you care about growth, and you set the execution bar, the rest of the company will focus on it.
Here are a couple of examples.
The founders of Airbnb drew a forward-looking graph of the growth they wanted to hit. They posted this everywhere—on their fridge, above their desks, on their bathroom mirror. If they hit the number that week, great. If not, it was all they talked about.
Mark Zuckerberg once said that one of the most important innovations at Facebook was their establishment of a growth group when growth slowed. This group was (and perhaps still is) one of the most prestigious groups in the company—everyone knew how important it was.
Keep a list of what’s blocking growth. Talk as a company about how you could grow faster. If you know what the limiters are, you’ll naturally think about how to address them.
For anything you consider doing, ask yourself “Is this the best way to optimize growth?” For example, going to a conference is not usually the best way to optimize growth, unless you expect to sell a lot there.
Extreme internal transparency around metrics (and financials) is a good thing to do. For some reason, founders are always really scared of this. But it’s great for keeping the whole company focused on growth. There seems to be a direct correlation between how focused on metrics employees at a company are and how well they’re doing. If you hide the metrics, it’s hard for people to focus on them.
Speaking of metrics, don’t fool yourself with vanity metrics. The common mistake here is to focus on signups and ignore retention. But retention is as important to growth as new user acquisition.
It’s also important to establish an internal cadence to keep momentum. You want to have a “drumbeat” of progress—new features, customers, hires, revenue milestones, partnerships, etc that you can talk about internally and externally.
You should set aggressive but borderline achievable goals and review progress every month. Celebrate wins! Talk internally about strategy all the time, tell everyone what you’re hearing from customers, etc. The more information you share internally—good and bad—the better you’ll be.
There are a few traps that founders often fall into. One is that if the company is growing like crazy but everything seems incredibly broken and inefficient, everyone worries that things are going to come unraveled. In practice, this seems to happen rarely (Friendster is the most recent example of a startup dying because of technical debt that I can point to.) Counterintuitively, it turns out that it’s good if you’re growing fast but nothing is optimized—all you need to do is fix it to get more growth! My favorite investments are in companies that are growing really fast but incredibly un-optimized—they are deeply undervalued.
A related trap is thinking about problems too far in the future—i.e. “How are we going to do this at massive scale?” The answer is to figure it out when you get there. Far more startups die while debating this question than die because they didn’t think about it enough. A good rule of thumb is to only think about how things will work at 10x your current scale. Most early-stage startups should put “Do things that don’t scale” up on their wall and live by it. As an example, great startups always have great customer service in the early days, and bad startups worry about the impact on the unit economics and that it won’t scale. But great customer service makes for passionate early users, and as the product gets better you need less support, because you’ll know what customers commonly struggle with and improve the product/experience in those areas. (By the way, this is a really important example—have great customer support.)
There’s a big catch to this—”Do things that don’t scale” does not excuse you from having to eventually make money. It’s ok to have bad unit economics in the early days, but you have to have a good reason for why the unit economics are going to work out later.
Another trap is getting demoralized because growth is bad in absolute numbers even though it’s good on a percentage basis. Humans are very bad at intuition around exponential growth. Remind your team of this, and that all giant companies started growing from small numbers.
Some of the biggest traps are the things that founders believe will deliver growth but in practice almost never work and suck up a huge amount of time. Common examples are deals with other companies and the “big press launch”. Beware of these and understand that they effectively never work. Instead get growth the same way all great companies have—by building a product users love, recruiting users manually first, and then testing lots of growth strategies (ads, referral programs, sales and marketing, etc.) and doing more of what works. Ask your customers where you can find more people like them.
Remember that sales and marketing are not bad words. Though neither will save you if you don’t have a great product, they can both help accelerate growth substantially. If you’re an enterprise company, it’s likely a requirement that your company get good at these.
Don’t be afraid of sales especially. At least one founder has to get good at asking people to use your product and give you money
FOCUS & INTENSITY
These words seem to really apply to the best founders I know.
They are relentlessly focused on their product and growth. They don’t try to do everything—in fact, they say no a lot (this is hard because the sort of people that start companies are the sort of people that like doing new things.)
As a general rule, don’t let your company start doing the next thing until you’ve dominated the first thing. No great company I know of started doing multiple things at once—they start with a lot of conviction about one thing, and see it all the way through. You can do far fewer things than you think. A very, very common cause of startup death is doing too many of the wrong things. Prioritization is critical and hard.
While great founders don’t do many big projects, they do whatever they do very intensely. They get things done very quickly. They are decisive, which is hard when you’re running a startup—you will get a lot of conflicting advice, both because there are multiple ways to do things and because there’s a lot of bad advice out there. Great founders listen to all of the advice and then quickly make their own decisions.
Please note that this doesn’t mean doing everything intensely—that’s impossible. You have to pick the right things. As Paul Buchheit says, find ways to get 90% of the value with 10% of the effort. The market doesn’t care how hard you work—it only cares if you do the right things.
It’s very hard to be both obsessed with product quality and move very quickly. But it’s one of the most obvious tells of a great founder.
You are not different from other startups. You still have to stay focused and move fast. Companies building rockets and nuclear reactors still manage to do this. All failing companies have a pet explanation for why they are different and don’t have to move fast.
Look for singularity and juice the source that’s paying off the most. One market will be better than all other. One distribution strategy usually dominates all others. When you find something that works, keep going. Don’t get distracted and do something else. Don’t take your foot off the gas.
Don’t get caught up in early success—you didn’t get off to a promising start by going to lots of networking events and speaking on lots of panels. Startup founders who start to have initial success have a choice of two paths: either they keep doing what they’re doing, or they start spending a lot of time thinking about their “personal brand” and enjoying the status of being a founder.
It’s hard to turn down the conferences and the press profiles—they feel good, and it’s especially hard to watch other founders in your space get the attention. But this won’t last long. Eventually the press figures out who is actually winning, and if your company is a real success, you’ll have more attention than you’ll ever want. The extreme cases—early-stage founders with their own publicists—that one would think only exist in TV shows actually exist in real life, and they almost always fail.
Focus and intensity will win out in the long run.
THE CEO GIG
A CEO has to:
1) set the vision and strategy for the company
2) evangelize the company to everyone
3) hire and manage the team, especially in areas where you yourself have gaps
4) raise money
5) set the execution quality bar.
It’s an intense job. If you are successful, it will take over your life to a degree you cannot imagine—the company will be on your mind all the time. Extreme focus and extreme intensity means it’s not the best choice for work-life balance. You can have one other big thing—your family, doing lots of triathlons, whatever—but probably not much more than that. You have to always be on, and there are a lot of decisions only you can make, no matter how good you get at delegation.
You should aim to be super responsive to your team and the outside world, always be clear on the strategy and priorities, show up to everything important, and execute quickly (especially when it comes to making decisions others are blocked on.) You should also adopt a “do whatever it takes” attitude—there will be plenty of unpleasant schleps. If the team sees you doing these things, they will do them too.
Managing your own psychology is both really hard and really important. It’s become cliché at this point, but it’s really true—the emotional highs and lows are very intense, and if you don’t figure out how to stay somewhat level through them, you’re going to struggle. Being a CEO is lonely.
A successful startup takes a very long time—certainly much longer than most founders think at the outset. You cannot treat it as an all-nighter. You have to eat well, sleep well, and exercise. You have to spend time with your family and friends. You also need to work in an area you’re actually passionate about—nothing else will sustain you for ten years.
Everything will feel broken all the time—the diversity and magnitude of the disasters will surprise you. Your job is to fix them with a smile on your face and reassure your team that it’ll all be ok. Usually things aren’t as bad as they seem, but sometimes they are in fact really bad. In any case, just keep going. Keep growing.
The CEO doesn’t get to make excuses. Lots of bad and unfair things are going to happen. But don’t let yourself say, and certainly not to the team, “if only we had more money” or “if only we had another engineer”. Either figure out a way to make that happen, or figure out what to do without it. People who let themselves make a lot of excuses usually fail in general, and startup CEOs who do it almost always fail. Let yourself feel upset at the injustice for 1 minute, and then realize that it’s up to you to figure out a solution. Strive for people to say “X just somehow always gets things done” when talking about you.
No first-time founder knows what he or she is doing. To the degree you understand that, and ask for help, you’ll be better off. It’s worth the time investment to learn to become a good leader and manager. The best way to do this is to find a mentor—reading books doesn’t seem to work as well.
It’s important that you distort reality for others but not yourself. You have to convince other people that your company is primed to be the most important startup of the decade, but you yourself should be paranoid about everything that could go wrong.
Be persistent. Most founders give up too quickly or move on to the next product too quickly. If things generally aren’t going well, figure out what the root cause of the problem is and make sure you address that. A huge part of being a successful startup CEO is not giving up (although you don’t want to be obstinate beyond all reason either—this is another apparent contradiction, and a hard judgment call to make.)
Be optimistic. Although it’s possible that there is a great pessimistic CEO somewhere out in the world, I haven’t met him or her yet. A belief that the future will be better, and that the company will play an important role in making the future better, is important for the CEO to have and to infect the rest of the company with. This is easy in theory and hard in the practical reality of short-term challenges. Don’t lose sight of the long-term vision, and trust that the day-to-day challenges will someday be forgotten and replaced by memories of the year-to-year progress.
Among your most important jobs are defining the mission and defining the values. This can feel a little hokey, but it’s worth doing early on. Whatever you set at the beginning will usually still be in force years later, and as you grow, each new person needs to first buy in and then sell others on the mission and values of the company. So write your cultural values and mission down early.
HIRING & MANAGING
Hiring is one of your most important jobs and the key to building a great company (as opposed to a great product.)
That being said: Try not to Hire.
The most successful companies have waited a relatively long time to start hiring employees. Employees are expensive. Employees add organizational complexity and communication overhead. There are things you can say to your co-founders that you cannot say with employees in the room. Employees also add inertia—it gets exponentially harder to change direction with more people on the team. Resist the urge to derive your self-worth from your number of employees.
The best people have a lot of opportunities. They want to join rocket ships. If you have nothing, it’s hard to hire them. Once you’re obviously winning, they’ll want to come join you.
It’s worth repeating that great people have a lot of options, and you need great people to build a great company. Be generous with equity, trust, and responsibility. Be willing to go after people you don’t think you’ll be able to get. Remember that the kind of people you want to hire can start their own companies if they want.
When you are in recruiting mode (i.e., from when you get product-market fit to infinity), you should spend about 25% of your time on it. At least one founder, usually the CEO, needs to get great at recruiting. It’s most CEOs’ number one activity by time. Everyone says that CEOs should spend a lot of their time recruiting, but in practice, none but the best do. There’s probably something to that.
Don’t compromise on the quality of people you hire. Everyone knows this, and yet everyone compromises on this at some point during a desperate need. Everyone goes on to regret it, and it sometimes almost kills the company. Good and bad people are both infectious, and if you start with mediocre people, the average does not usually trend up. Companies that start off with mediocre early employees almost never recover. Trust your gut on people. If you have doubt, then the answer is no.
Do not hire chronically negative people. They do not fit what an early-stage startup needs—the rest of the world will be predicting your demise every day, and the company needs to be united internally in its belief to the contrary.
Value aptitude over experience for almost all roles. Look for raw intelligence and a track record of getting things done. Look for people you like – you'll be spending a lot of time together and often in tense situations. For people you don't already know, try to work on a project together before they join full-time.
Invest in becoming a good manager. This is hard for most founders, and it’s definitely counterintuitive. But it’s important to get good at this. Find mentors that can help you here. If you do not get good at this, you will lose employees quickly, and if you don’t retain employees, you can be the best recruiter in the world and it still won’t matter. Most of the principles on being a good manager are well-covered, but the one that I never see discussed is “don’t go into hero mode”. Most first-time managers fall victim to this at some point and try to do everything themselves, and become unavailable to their staff. It usually ends in a meltdown. Resist all temptation to switch into this mode, and be willing to be late on projects to have a well-functioning team.
Finally, fire quickly. Everyone knows this in principle and no one does it. But I feel I should say it anyway. Also, fire people who are toxic to the culture no matter how good they are at what they do. Culture is defined by who you hire, fire, and promote.
What are the core parts of culture you found important when building your company?
Who are you hiring and what do they value
What do you want to be doing everyday and why are you doing it
How are you choosing to communicate
What are you choosing to celebrate
When you run a company that you celebrate you find more success.
Have transparency: If you are aligned and informed with the mission of the company and everyone believes in the company's success it helps one another work productively together and forgive setbacks.
A culture is the strands you want to maintain.
What are the traits do you looked for to maintain the culture of the company when hiring your initial employees?
Look for people who are talented and that you want to work with!
Look for people like yourself. Find someone who is curious and creative. They need the drive to want to risk anything to build something great.
The First Ten
The first ten hires make a huge impression on what the company's culture will be.
Call references and ask questions. This is also a great way to find new recruits for your company.
Find someone who isn't just excited about goals but executes them. Find someone who likes checklist and getting things finished and follows through with their end goal.
Find someone who is genuine, cares a great deal for the company, and is determined to complete things.
Trust people who are undervalued. If someone is a world renowned engineer they probably are already working at a great job. Don't be afraid to trust someone who is early on in their career.
The Elevator Pitch. Have a speech designed to sell your company's mission. You're Not just selling your company to investors but to hires.
Preparation will make the companies mission sound credible and exciting.
While you may think your company is going to be very successful you still have to convince employees to risk working for it. In the beginning the companies mission is just an idea. Convince the new hires that the company will last long term.
How do you maintain the company's culture long term?
Culture automatically starts once you begin working together. Make sure employees are reminding one another of short term and long term goals of the company.
Look at performance: Look at new hires from their first interview to the last thirty days of their performance. Have they maintained the companies culture and understand the priorities of the company?
Validate one another: Instill goals but don't forget to show employees you care. Celebrate goals and solve set backs.
How have you adjusted your processes to maintain the company's culture?
One thing we try to do is make the team over time. We are always trying to make it seem like a start up of many start ups
One goal is that each team controls resources to get things done. Remove barriers that aren't working and put some in to speed. Look at what culturally will be good for the company down the road and adjust.
What is a great Founder? Steve Jobs? Bill Gates? Mark Zuckerberg? A great founder is diverse, well-rounded. They can do everything; make a product or service fit, market a product, fundraise, hire, manage, etc, etc…
Important skills of a great Founder
Teamwork – Often two to three people. To compensate each other’s weaknesses because no one is perfect
Location – Always know where your company will be successful, know the marketplace and know where your product or service fit.
Should I do the work or delegate?
You need to do both. Not 50% work 50% delegate, in fact, you have to do both 100%.
Should I be flexible or persistent?
You have to be both flexible and persistent. Am I increasing confidence in my investment thesis? Or decreasing value in my investment thesis? If you are increasing confidence it is good to stay on track. Be flexible, even if it is decreasing, that doesn't mean jump out. Instead, look for the problem and solve the problem.
Should I be confident or cautious?
You have to be both confident and cautious. A great founder must be able to hold your beliefs with confidence and also smart enough to listen to criticism, negative feedbacks and competitive entries.
Should I focus internally or externally?
Both. You cannot just ignore the world and ignore the competitors. You also cannot be only meeting people, build connections and gather network intelligence. You have to focus on both in order to succeed.
Should I work by vision or data?
Well actually in fact, data only exists in the framework of a vision that you are building, a hypothesis of where you are moving to. And the data can even be negative and you can think, well actually in fact this negative data means that I need to change or alter the way that I’m thinking about something. But a great founder actually keep on a specific vision about what he/she is doing. And sometimes when you have the specific vision you don’t necessarily actually ever end up at that big vision that you were thinking about.
Should I take risk or minimize risk?
Be a risk taker and know how to take intelligent risk. A great Founder must learn to minimize the risk.
Should I focus on long term or short term?
All founders have to focus on both long and short term. Always have long term vision in mind and also solve the problems immediately in front of you.
How do I know if I am a great Founder?
It’s generally speaking useful to be a good product person. It’s useful to have good skills about leadership, bringing networks in, persuading people, and it’s useful to be able to recognise whether you are on track or not.
Oh yes, making money. You need to figure out how to do that.
The short version of this is that you have to get people to pay you more money than it costs you to deliver your good/service. For some reason, people always forget to take into account the part about how much it costs to deliver it.
If you have a free product, don’t plan to grow by buying users. That’s really hard for ad-supported businesses. You need to make something people share with their friends.
If you have a paid product with less than a $500 customer lifetime value (LTV), you generally cannot afford sales. Experiment with different user acquisition methods like SEO/SEM, ads, mailings, etc., but try to repay your customer acquisition cost (CAC) in 3 months.
If you have a paid product with more than a $500 LTV (net to you) you generally can afford direct sales. Try selling the product yourself first to learn what works.
When you get here, you control your own destiny and are no longer at the whims of investors and financial markets.
Sales is Hidden and hard work and happening around us 24/7, 365 days a year. It’s important to keep in mind that sales are as important as product. Advertising is not a waste of resources. Everything comes down to distribution which is all about communicating your message to the right user or customer or investor or employee. If you consider yourself an entrepreneur you better learn how to sell.
Watch your cash flow obsessively.
The single biggest thing entrepreneurs are missing both on fundraising and how they run their companies is the relationship between risk and cash.
Andy Rachleff onion theory of risk says basically that you can think about a startup one day as having every conceivable kind of risk and you can basically make a list of the risks:
Founding team risks - are founders going to be able to work together?
Product risk - can you build the product?
Technical risk - are you going to have something that works, or are you going to be able to do it?
Launch risk - did the launch go well?
Market acceptance risk
Sales Risk, can you actually sell enough to pay for cost of sales?
if you are a consumer product, you have viral growth risk
You raise seed money in order to peel away risks, basically peeling away risks as you go.
Survive and Advance - It’s like March Madness all the time, a thousand things can and will happen. As you achieve milestones, you are making progress and justifying more capital. The best way to pitch to someone is to say which milestones you achieved and which risks you eliminated. Pitching this way is more systematic than raising as much money as possible, building offices, hiring, and hoping for the best after.
Get the money you need, not more than that.
Most startups raise money at some point.
You should raise money when you need it or when it’s available on good terms. Be careful not to lose your sense of frugality or to start solving problems by throwing money at them. Not having enough money can be bad, but having too much money is almost always bad.
The secret to successfully raising money is to have a good company. All of the other stuff founders do to try to over-optimize the process probably only matters about 5% of the time. Investors are looking for companies that are going to be really successful whether or not they invest, but that can grow faster with outside capital. The “really successful” part is important—because investors’ returns are dominated by the big successes, if an investor believes you have a 100% chance of creating a $10 million company but almost no chance of building a larger company, he/she will still probably not invest even at a very low valuation. Always explain why you could be a huge success.
There are some startup companies that don’t make much money, yet they are valued higher than established companies with good cash flows. This seems illogical on its face, but an important part of the value of a company is how much potential it has for profit in the future.
Investors are driven by the dual fears of missing the next Google, and fear of losing money on something that in retrospect looks obviously stupid. (For the best companies, they fear both at the same time.)
It is a bad idea to try to raise money when your company isn’t in good enough shape to attract capital. You will burn your reputation and waste time.
Don’t get demoralized if you struggle to raise money. Many of the best companies have struggled with this, because the best companies so often look bad at the beginning (and they nearly always look unfashionable.) When investors tell you no, believe the no but not the reason. And remember that anything but “yes” is a “no”—investors have a wonderful ability to say “no” in a way that sounds like “maybe yes”.
It’s really important to have fundraising conversations in parallel—don’t go down a list of your favorite investors sequentially. The way to get investors to act is fear of other investors taking away their opportunity.
View fundraising as a necessary evil and something to get done as quickly as possible. Some founders fall in love with fundraising; this is always bad. It’s best to have just one founder do it so the company doesn’t grind to a halt.
Remember that most VCs don’t know much about most industries. Metrics are always the most convincing.
It’s beginning to change, but most investors unfortunately still require introductions from people you both know to take you seriously.
Insist on clean terms (complicated terms compound and get worse each round) but don’t over-optimize, especially on valuation. Valuation is something quantitative to compete on, and so founders love to compete for the highest valuation. But intermediate valuations don’t matter much.
The first check is the hardest to get, so focus your energies on getting that, which usually means focusing your attention on whoever loves you the most. Always have multiple plans, one of which is not raising anything, and be flexible depending on interest—if you can put more money to good use, and it’s available on reasonable terms, be open to taking it.
An important key to being good at pitching is to make your story as clear and easy to understand as possible. Of course, the most important key is to actually have a good company. There are lots of thoughts about what to include in a pitch, but at a minimum you need to have: mission, problem, product/service, business model, team, market and market growth rate, and financials.
Remember that the bar for each round of funding is much higher. If you got away with just being a compelling presenter for your seed round, don’t be surprised when it doesn’t work for your Series A.
Good investors really do add a lot of value. Bad investors detract a lot. Most investors fall in the middle and neither add nor detract. Investors that only invest a small amount usually don’t do anything for you (i.e., beware party rounds).
Great board members are one of the best outside forcing functions for a company other than users, and outside forcing functions are worth more than most founders think. Be willing to accept a lower valuation to get a great board member who is willing to be very involved.
One last thing, Raising money is not actually a success or milestone. There are seven milestones that every startup must focus on. If you miss any of them, your organization might die.
7 STARTUP MILESTONES
Prove your concept
Complete your design specifications
Create a prototype
Finance your business
Ship a beta
Ship the real thing
How do you decide to move on from a bad idea? When you realize that you have:
Bad growth: This is the trickiest. If you go two or three weeks without growth then pivot because in that early stage of the startup you should always be growing.
It shouldn't be that surprising that colleges can't teach students how to be good startup founders, because they can't teach them how to be good employees either.
The way universities "teach" students how to be employees is to hand off the task to companies via internship programs. But you couldn't do the equivalent thing for startups, because by definition if the students did well they would never come back.
If your goal is to start a startup, you can stick even more closely to the ideal of a liberal education than past generations have. Back when students focused mainly on getting a job after college, they thought at least a little about how the courses they took might look to an employer. And perhaps even worse, they might shy away from taking a difficult class lest they get a low grade, which would harm their all-important GPA. Good news: users don't care what your GPA was. And I've never heard of investors caring either.
What you need to learn about are the needs of your own users, and you can't do that until you actually start the company. So starting a startup is intrinsically something you can only really learn by doing it. And it's impossible to do that in college because startups take over your life.
The optimal thing to do in college if you want to be a successful startup founder is not some sort of new, vocational version of college focused on "entrepreneurship." It's the classic version of college as education for its own sake. If you want to start a startup after college, what you should do in college is learn powerful things. And if you have genuine intellectual curiosity, that's what you'll naturally tend to do if you just follow your own inclinations.
The component of entrepreneurship that really matters is domain expertise. The way to become Larry Page was to become an expert on search. And the way to become an expert on search was to be driven by genuine curiosity, not some ulterior motive.
At its best, starting a startup is merely an ulterior motive for curiosity. And you'll do it best if you introduce the ulterior motive toward the end of the process.
If you want to get into the startup world you should learn about a lot of different things. Practice noticing problems, things that seem inefficient, and major technological shifts. Work on projects you find interesting. Go out of your way to hang around smart, interesting people. At some point, ideas will emerge but only start a startup if you feel compelled about a particular problem and if you think that starting a company is the best way to solve it. Passion comes first. FInd your zone by doing what you love. We encourage you to take a deep look at what make you tick and find a career doing exactly that. We’ll teach you startups as much we can.
At FORKAIA we embrace BAM attitude and follow certain principles. BAM philosophy is perfectly aligned with startup culture.
We believe the details that go into being an elite athlete is the same that goes into being a great programmer, designer, data scientists, artist, chef, teacher or entrepreneur. So we adapt the same mindset, work ethic and habits. Same physical and mental conditioning that produces greatness. BAM stands for Business Athlete Mode.
AUTHENTICITY & TRANSPARENCY
PURE DNA: Be Authentic and Transparent. When you have nothing to hide you have nothing to fear then there’s nothing that can threaten you. Be yourself. Sky’s the limit!
Passion comes first. Be Inspired and follow your own blueprint. BAM is about self preservation; only do things that resonate within you and give you inspiration and energy!
Commit: Pick your Arena and summon the Warrior within. Overcome your Fear of Failure. Believe in yourself and trust your gut! Focus on you and nothing else. Turning yourself into a cheat code is your mission and no one is getting in the way.
MENTAL & PHYSICAL CONDITIONING
Samurai Discipline: Mental and Physical conditioning: Train, eat, hydrate and rest like an athlete. Deep breathing, meditation. Clean, anti-inflammatory diet with lots of water. Feed your brain, Write, draw, read books, do things that inspire you; Music, movies and places that resonate and give you energy. Embrace Dojo Living: be present, open and empty. Be humble. Practice Mindfulness, Compassion and Understanding. Be grateful and give back.
Crazy Work Ethic: Patience. Practice. Discipline. And outwork Everybody. Drive yourself and get better everyday. Push beyond your limits. We embrace a Day One attitude so it’s a never-ending process, the Secret is to Enjoy the Process.
Focus 2.0 - Learn from the Past but plan for the Future by fully Focusing on the Present. Your environment doesn’t matter; Put your Race horse blinders on get in Zero Dark Thirty zone.
COMPETE & FIGHT
Compete with a sense of urgency and heightened Focus. It’s Man in the Arena time, what all the hard work was about - it’s time to execute. Put everything out there and get back up. You’re a Warrior. Be Psycho Competitive - GETTING TO FIGHT IS THE REWARD.
Get into Subconscious Flow and take your Game to the Next level – Become the Best. BAM is when you’re fully immersed in a feeling of energized focus, full involvement, and enjoyment in the process of whatever it is you’re doing. You can be writing, coding, pitching, prototyping or draining the dagger three in crunch time - it’s all the same - BAM is the ultimate zone, a complete absorption with no sense of space and time making the impossible Automatic.
Do you think you have what it takes to start your own startup?