- It's good to be king -- being an entrepreneur is the best job I've had. Every day your job is new and different; you constantly have to push yourself in new directions. You no longer have to say, 'Well, I'm just an engineer, but...' -- you have a great excuse to take an interest in everything. Working in an environment you shaped to your own beliefs about how a company should be run is incredible (and humbling!). And of course there are sometimes financial rewards, although it's still a great job regardless.
- Losing sucks -- shutting down a company is unbelievably difficult. It affects your home life, your health, your job prospects, your financial stability. Professional investors are grown-ups, but it's still extremely disheartening to lose the money people invested based on belief in you. If your backers include friends or family, it's extremely difficult to have to tell them the company is closing and their money is gone. Most entrepreneurs fail several times before succeeding, too, so losing is both terrible and nearly inevitable. Fight as hard as you can against it.
- Building to flip is building to flop -- this is taken from Jason Fried, and he's right. People who start out with only one goal, to sell to a big portal, will find their options are too limited. Plan as many paths to success as possible for your company, and always have a Plan B when acquisition (or whatever path you choose first) doesn't work.
- Prudence becomes procrastination -- it's great to research your market and talk to potential buyers about your ideas. It's terrible to let an excess of this become a impediment to getting started. Too much prudence edges away from research and into procrastination.
- Momentum builds on itself -- just start. Do whatever you can. Draw a user interface. Write a spec. Make something, anything, that people can see and touch and try. A prototype is worth ten thousand words. Once you start moving, you will find that people start to carry you along.
- Jump when you are more excited than afraid -- lack of fear is irrational, and too much fear is debilitating. Make the jump into your business when you have considered the fear, and come out more excited than afraid.
- 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.
- 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?
- 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.
- 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.'
Top Signals of Success for Software Entrepreneurs:
- You like to experiment: You like to play with new software. You’re one of the first people to try new software (like Google Desktop Search, Yahoo! 360 and Microsoft Live)) within a week of its introduction. You end up using < 1% of these applications over the long-term, but still love to “play with new stuff”.
- You like to read and learn: You tend to read a lot. A combination of blogs, books, magazines, etc. You like to read on a variety of topics (marketing, technology, sales, strategy, etc.).
- You like to tinker and build: You tend to want to solve problems in a better way than is out there. You customize, you build extensions, you write scripts, you improve. You like to build things. You can start with nothing more than a computer and a compiler and create something that generally works.
- You are opportunistic: You’re always looking for leverage and an opportunity to create (and capture) value. You measure ideas by their ability to create something meaningful. Though you may not be obsessed with money, you’ve got a healthy recognition of the fact that money makes the world go round (and helps you have the resources to do what you love).
- You are an artist: You love having an audience (users). You’re fanatically obsessed with delighting your audience (users) with software that surprises them in positive ways. You like to continually improve. You take pride in your work by investing in great design that will withstand the test of time.
- You Live On Email: You tend to prefer email as your preferred communication vehicle. Though you see the merit and value of in-person meetings (and in some cases phone calls), you would much rather have 90% of your communications over email as you believe it makes you more productive. Your average response time on “emails that matter” is measured in hours, not days.
- You are considerate, respectful and nice: You tend to respect other people’s time, and show up on time for meetings. When you meet with someone, you pay attention. You don’t abuse the fact that you may have the upper hand in a given situation. You are considerate and empathetic and generally have a high emotional quotient. You tend to genuinely want to help people (even those from whom you are unlikely to receive anything in return). You are kind to animals and children.
- You have a proclivity for action: You are more likely to act than analyze, plan and obsess. You tend to “jump in” and do it and deal with consequences after the fact instead of figuring out precisely the right path, right product, right market, etc. You’d much rather ship a product that’s not perfect than try and spend another two weeks perfecting.
- You attract others like yourself: You tend to have a great nose for talent and your passion is infectious enough to attract them to your cause. You like to hang around other people that are as smart (or smarter) than you are. The thought of feeling threatened never even crosses your mind.
- You are a realist: You tend to look at most things objectively. You see them for what they are. You have ambitions, but not unrealistic ones. When in contentious situations, you’re usually the voice of reason. You keep things in context and tend not to over-react.
- You are exceptionally intelligent: Lets face it, software is a mind sport. Software as a business even more so. I’ve never met a successful software entrepreneur that I wouldn’t classify as being “well above average” in terms of intelligence. I’m talking about raw intellectual capability here (which may or may not have translated into great grades, exemplary test scores, or other “standard” measures – those these certainly don’t hurt).
- You are fundamentally likable.: People want to help you. Customers want to buy from you. Employees want to join you. Generally, people tend to return your phone calls and emails and they tend not to avoid you at parties.
- You exhibit “balanced frugality”: You tend to have a reasonable and rational approach to expenses in your business. But, its not frugality applied evenly across everything. You’re not always looking for the lowest price or best deal in all cases. In areas that matter (like the product!), you tend to spend what is necessary (and what you can). You also tend to let other people make money too (something about the karmic startup cycle). You avoid the temptation to “do everything yourself” using cost-savings as an excuse. You place value on your own time (even though you may not be paying yourself out of the company yet).
- You work hard: You’re an over-achiever. You’ve never been satisfied delivering the “minimum”. Though you understand the importance of work-life balance (you read about it in a book somewhere), you’re not frequently able to pull it off. When in a group setting where work is divided you somehow always do a disproportional amount of the work.
- You just love the game: You’re grateful to have the opportunity to do your own thing, create neat software products and serve customers. You love the adventure and the thrill and are not hung-up on the rewards (though some of those would be nice too).