Entrepreneurial Proverbs
Entrepreneurial Proverbs (Embedded image moved to file: pic21793.gif)
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http://radar.oreilly.com/archives/2006/03/entrepreneurial_proverbs.html
By marc on March 08, 2006
I gave a talk at ETech on Monday called "Entrepreneuring for Geeks." I've
given this general talk a few times now -- how can the more technically
minded among us move into making companies of our own? I really enjoy the
talks because I really enjoy entrepreneurs; at least, I enjoy the ones who
are really excited about making something fantastic through their efforts.
"Do you want to sell sugar water for the rest of your life, or do you want
to change the world?" Right.
I started out this year's talk with a set of "proverbs" I've collected or
thought up over the years. I liked the format of a Go book I recently read,
called (not surprisingly!) "Proverbs," and decided to adopt it for the
talk. These are basically little nuggets of wisdom for bite-sized
nutrition. Enjoy.
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 su*ks -- 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.
One 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."
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