My Entrepreneurial Principles
Intro — why write about this?
It has taken me a lot to push through my aversion to writing about things that I still know so little about. In general, it’s a good thing to be humble, but I think we rob ourselves by holding back. If we share our ideas, we end up seeing our errors, or we let others teach us differently. And what better way to express yourself than to explain the way you see the world? So here I am, writing about the principles that I use to think about the world of entrepreneurship.
1.0 There should be no excuses
Not having enough money or time shouldn’t stop you from starting. You can work evenings and weekends; planning and starting businesses don’t cost you anything.
1.1 You’re not in Kansas anymore.
Running a startup is not just a hobby, and it’s likely to take all you got. Grit is the single most vital trait to predict whether you’ll make it as an entrepreneur. Make sure you’re ready and that it’s the right path for you.
1.3 9/10 startups fail — the odds are against you
You have to be comfortable with the fact that failure is very likely — 9/10 startups go bust, for various reasons. You might think you’re special (which you have to) but if you can’t bear the pain of failure, you should do something else.
1.4 It’s dangerous to go alone!
You shouldn’t start a company by yourself, It’s a tough task, and you’re going to need support from day one. Make sure you have one or two reliable partners before you embark, and be clear about expectations in terms of commitment. I remember someone from Y/C, claiming that 2–3 people tend to be the most successful number in their companies, which sounds about right.
2.1 Plans are useless so make sure you write one
Eisenhower famously said, “In preparing for battle, I have always found that plans are useless, but planning is indispensable.” There’s a trend in the startup world to be quick and agile. To not spend too much time planning, but instead starting something quickly and iterating. I think this is a mistake. Planning and iterating aren’t mutually exclusive concepts. Having a plan is better than having no plan; it forces you to analyze every aspect of what you’re doing.
2.2 A solution needs a problem.
In the world of hype-cycles and trends, it’s important to remember this fundamental fact. To build a business, someone has to want or need what you’re offering. Cool demos don’t make your business; new technology doesn’t make your business; market trends don’t make your business. Market need makes your business.
2.3 Build it, and they will come (but probably not)
It’s not enough to expect people to see the value of you’re doing. Either find a new problem to solve or sell your product better than everyone else.
2.4 Markets don’t have morals
Make sure you’re not blinded by the social or environmental value of your startup. Businesses with a mission to make the world a better place have to operate under the same laws of nature as the rest.
2.5 Your idea should elicit a hell yes, or a hell no from people
A lot of great ideas seem idiotic, which is good; that’s why no one has tried them yet. Imagine pitching living in a stranger’s apartment instead of a hotel (Airbnb), or getting into a strangers car instead of a cab (Uber). Great ideas also get an emphatic, “why didn’t I think of that?” What good ideas don’t get is “Meh…”
2.6 Talk about your idea
Some people are reluctant to talk about their idea for fear of someone stealing it and beating them to the punch, which is a genuine risk. However, the downside pales in comparison to the value of talking about your idea with as many people as possible. Feedback is everything.
TEAM & CULTURE
3.1 The team is the most important thing
Your company is a team of people trying to accomplish something, and in a startup, every single person on that team is crucial. This is the most important thing to get right, and the most expensive thing to get wrong.
3.2 Know who you are, so you can partner up with who you’re not
When deciding on co-founders and early hires, look for traits that you lack. If you’re more analytical and introverted, look for someone who’s more intuitive and extroverted. You’ll need all those qualities and more.
3.3 To get a good culture you have to build a foundation
Start building the culture you want early rather than late. We set a culture by who we hire and the way we choose to conduct ourselves every day. Be conscientious about what type of culture you want in your company, and how to get there.
3.4 Vulnerability + Transparency = Success
To improve as a team, everyone must be able to show vulnerability. Rivalry and a pretense of perfection kill collaboration. That’s why you need to build a feeling of safety and openness. You can do that in many ways, but the best is to lead by example; be the first to admit when you’ve messed up. Make sure everyone’s comfortable with admitting mistakes, and areas of improvement. Aim for transparency in every aspect.
3.5 Being honest isn’t the same as being an asshole
Transparency isn’t a license to be an asshole; It’s important to give feedback with empathy and care. Protect against rivalries and competitive behavior. Collaboration is what makes the team thrive.
3.6 Meaning is the new black
Nietzsche said, “He who has a why to live can bear almost any how.” I believe a team that has a why to work towards, can bear almost any how as well. Make sure you cultivate meaning and purpose in your company.
3.7 It’s your job to lead — the best way to lead is not to suck
Everyone will be looking towards the CEO or Co-Founders. Which means it’s tough to have an off day because it can affect the entire business. Make sure you have outside support and ways of dealing with stress so that it doesn’t seep into the team.
4.0 Capital is a means not an end
You raise money to make something great. Capital is a means to an end, so don’t celebrate it — get to work.
4.1 Honesty goes further than deceit
When raising money, don’t hesitate to be honest. Investors have seen all kinds of bullshit and appreciate candor. If you don’t know the answer to a question just say, “You know what, let me get back to you on that.” Investors are more interested to see that you have the moxie and adaptability to run a business.
4.2 Find investors who can put their mouth where their money is. Yeah, you read that right.
If you’ve done your job, getting investors shouldn’t be too hard. But getting investors that contribute more than just money, might be. Make sure to really vet your suitors before you put ink on any paper. Don’t be afraid to ask for references from the investor’s portfolio companies, and make sure to be diligent in asking what they’re going to provide you other than capital.
4.3 Too much is better than too little…
If you’re raising money, try to get as much as you can. You never know what will happen, and lack of runway is the way businesses go down. No company has ever failed by having to much cash…
4.4 … But resourcefulness is worth more than resources
With that said, raising too much money comes with a few caveats. You’ll likely increase the valuation of your company, resulting in more significant expectations. And having too much cash can make you less diligent and careful; resourcefulness and frugality are still great virtues in a startup.
TRACTION & BRANDING
4.5 Your brand is what your customers say it is
Marty Neimeuer claims in his book The Brand Gap: “A brand is a person’s gut feeling about a product, service or company.” What he means is that humans are emotional and intuitive beings. We make fickle and often subconscious decisions about products. We feel a brand, and we decide whether we want to belong to the tribe that subscribes to it.
4.6 Branding is in everything you do
In order to create the gut feeling about the brand you want, you need to be conscious of it. Let everything you do be a part of your brand: the copy on your website, the way your logo animates, the stock photos on your brochures, your slogan and even the couch in your lobby. What tribe are we, and how do we make our customers feel it?
4.7 Traction should be 50% of everything you do
Start-up founders often get caught up in making their product, and that’s a good thing. But, don’t forget that the goal of your business isn’t to build products but to sell them and make a profit. That’s hard to do if no one knows you exist. As a general rule of thumb (even as an early startup), getting traction should be 50% of what you do as founders.
4.8 Avoid marketing Stockholm syndrome
By all means, don’t be too conventional in gaining traction. The effectiveness of marketing channels and methods vary widely, and it’s your job to find ways that get you the most bang for your buck. At least consider every marketing method you can think of, and test the ones that seem plausible.
4.9.1 It’s better to be first than the best…
It is estimated that 60% of Coca Cola’s value is in its brand. Pepsi is adamant about being the better tasting Cola with their blind tests, yet they’re far behind in terms of sales. VHS famously beat out Betamax as the primary video format, despite being the lesser of the two. Inferior products win out all the time, which is why it’s better to be first.
4.9.2 … If you can’t be first, change your niche until you are
If you can’t be first, change your approach until you are. Jira already had the market for agile task management, but Monday created an equivalent for non-developer people; a different niche, but an even bigger market.
4.9.3 Being first doesn’t happen in the real world
Was Coca Cola really first? I don’t know, and that’s the point: It’s not about being first to market, but being the first your customers think of. Being first isn’t about racing to the finish but covering the most ground with a strong brand.
4.9.1 Who, what and why?
From a brand perspective, you should be able to answer the following: Who are you? What do you do? Why does it matter? If you can’t, got back to the drawing board.
5.1 Find how you contribute the most, and fight for the time to do so
Don’t think in terms of work and hours spent on tasks. Instead, try and find ways to contribute to results, instead of putting in excessive hours. Don’t lose track of what’s actually essential (the goal of your business) by spending too much time in the weeds. Identify your highest leverage activities and protect your time spent doing them.
5.2 Workaholism is ineffectiveness uglier sister
Working more hours doesn’t mean you’re getting more done; busyness doesn’t equal productivity. Running a business is hard, so focus on your own longevity.
5.3 It takes time. Only outliers grow fast.
Building most companies takes time and patience — only outliers grow quickly. Don’t measure yourself against them and don’t try and emulate them.
5.4 When it’s going well it’s only count-down till it’s going shit again
Entrepreneurship is a roller-coaster, so make sure you’re up for the ride. And remember: just because something bad has happened, it doesn’t mean you’re all the way down yet…
5.5 All advice is good. The first statement is bad advice.
Running a startup is a continual learning process, and you have to listen to people’s advice. With that said, no two entrepreneurial paths are the same, which means you’ll have to ignore a lot of conventional wisdom and friendly advice.
5.6 Do your f*cking job (DYFJ)
Sometimes you’ll struggle to get something done that you know you have to and that no one else can. In these moments, you have to remind yourself to do your fucking job because everything depends on it.
5.7 Observe, orient, decide & act
When making decisions stalls, use the OODA loop — Observe, orient, decide, and act. It’s better to make clear and speedy decisions based on this paradigm than slow, vague choices. More information doesn’t mean you’ll make better decisions, and slowness is expensive in startups.
5.8 Do something till you can’t, then delegate. If you can’t delegate, hire.
As a founder, you have to do quite a lot, which is good because you’ll learn a lot quickly. But after a while, you have to focus on your own highest leverage activities, which means you’ll have to delegate. Don’t make the mistake of hiring as soon as you see a gap, or you’ll end up with a slow and bloated team. Try and figure out if there’s anyone on the team who can fill a role or take on different tasks. If not, consider hiring.
5.9 Don’t put all your eggs in one basket.
Life’s short, so make sure you have a life outside your business. You’re going to need positivity in other areas when times are tough. And if (god forbid), your business fails, it can’t be the end of the world. Entrepreneurial depression is real, so strive for balance.
6.0 Successful people quit (otherwise they’d all still try to be batman)
“If at first, you don’t succeed, try, try again. Then quit. There’s no point in being a damn fool about it.” — Anonymous.
There’s a massive taboo around quitting, which is silly; if nobody ever quit, everyone would still try and be successful ballerinas, football players or batman. The art is knowing when to quit. Make sure you’re not persisting — or quitting — for the wrong reasons: a fear of people’s opinions; a fear of what lies ahead; a fear of failure in general.
Don’t persist because of a sunk cost fallacy; it might mean a more damaging opportunity cost. Imagine what might lie ahead? And lastly: even in the downs of the roller- coaster, you should ultimately enjoy what you do, otherwise what’s the point?
Ultimately, success relies on vast amounts of luck; the stars must truly align. All progress has an element of luck to it. With that being said: “Luck is when preparation meets opportunity” — Seneca. So don’t forget to prepare.
Thanks for reading. I hope you found this interesting, and that you disagree wildly with some — maybe all- of it.