In my first of this three-part series, I gave some background on the current state of entrepreneurship today, and explained how Silicon Valley is the new Hollywood. In this second installment, I’ll enumerate, in no particular order, several valuable lessons you should heed when diving into your startup.
1. Don’t be too lean
Eric Ries’ book The Lean Startup is practically legendary by now, and to be sure, you should (generally) heed his advice. In short, built fast and build light, andtest everything against a valid “if-then” hypothesis (tests without hypotheses are completely and utterly useless). The point is to get a product our there and test the waters (against your hypotheses) to see whether people like what you built.
On the other hand, there is such a thing as diluting yourself prematurely with completely useless early builds. To understand this, let’s consider some examples at the limit: at one end, we have just enough HTML / CSS / whatever to display a pretty landing page, with no functionality whatsoever, nary even an email capture form; at the other, we have a full Facebook / Yelp / Dropbox / whatever clone.
Clearly, neither extreme is a good idea for a first release to test your market and market hypotheses: the former offers no testable functionality, while the latter requires an entire product to be built before it is ever tested. But between these two endpoints lies a spectrum, and it is along this spectrum that you need to discover the optimal point at which you want to release the first version of your product. Release too early, and you risk alienating your earliest — and arguably, most influential — adopters; release too late, and you risk burning through what little time and money you have prematurely.
How do you define “too early” or “too late?” Agree upon some threshold tests. For example, a product is “too early” if a user cannot accomplish your product’s intended goal with satisfactory results. For a job site, are they able to see a large list of genuine, legitimate job listings? For a Yelp-like product, can they at least see a list of your city’s restaurants, and assign up- or down-votes, never mind that written reviews aren’t yet enabled?
In contrast, a product is “too late” if it prematurely aims to include all of the above functionality: job listings, employer reviews, friend referrals; upvotes, downvotes, star ratings, comments, reviews, replies, maps, ability to message the establishment itself.
To determine your optimal point along the release spectrum, figure out the bare minimum you need to enable people to understand, to like, and to need your product, and of course, to use it to sufficient degree as to give you constructive feedback and sufficiently test your hypothesis.
Any less is useless; any more is unnecessary and wasteful.
2. Don’t raise money too early
This may come as a bit of a surprise, but it’s actually related to item 1 above; indeed, if you followed the logic above, then you already know where this is going, so I’ll keep it brief.
In order to raise money, you need one, or optimally, both of (a) users and/or (b) revenue. If you have neither users nor revenue, then you are essentially raising money for nothing more than an idea. Alternatively, if you have already built a killer product, and it really is more than just a slide deck, and if you still have neither users nor revenue, then you do not, in fact, have a killer product, in which case see item 1 above again. You’ve either released too early or too late — or perhaps too crappy — but in any event, have not found your market fit, either because you’ve just missed it entirely, or because you didn’t find that optimal point along the development spectrum to release the first build of your product.
3. Don’t PR too early, or, why the TechCrunch Bump is a bad thing
Similarly, there is a very real risk with premature PR. Don’t get deluded by the mythical “TechCrunch Bump,” that glorious spike you see in your Google Analytics traffic as soon as TechCrunch publishes a story about you. The whole point is precisely that you do not want a “bump” in traffic: not from TechCrunch, not from anybody. What you want is a surge followed by gradually increasing growth, and not a precipitous drop three to four days later. What’s the point?
The optimal timing for your first PR onslaught also lies along a spectrum bounded by two limits: on the one end, (miraculously) getting a story on TechCrunch when you barely have a working product gets you that infamous Bump; on the other, getting a story months after you start to see hockey-stick growth is just a delayed opportunity.
Point: it’s better to err on being fashionably late rather than foolishly early, when it comes to PR.
One more thing worth mentioning, don’t ever work with a PR firm that locks you into a multi-month contract or says it will take 4-6 weeks before you see any results. This is totally unfair at best, and complete and utter crap at worst. The last thing you want is to be paying for weeks (months?) of non-results. And unless it’s somebody like LaunchSquad or another big, reputable PR agency — which you most certainly cannot afford as a startup anyway — you should not be paying more than three or four grand per month at most, and you should not be engaging anyone for months at a time Just don’t do it. Look for a small boutique firm willing to work on a month-to-month basis instead.
4. Don’t celebrate when you raise your first $X million
Yes, go grab some beers with your team, but don’t think for a second you can lighten up. As my dad always used to say when I got an A on one of my UCLA midterms, “Great job! Now make sure you study even harder to ensure you ace the final too! Now’s the time to push harder, with your confidence from this midterm, not to relax.”
This might sound like trivial philosophical nonsense, but it’s a very real thing, and a very real risk: if you thought it was hard raising your first round, it’s nothing compared to your second round.
Raising money is like working out at the gym: every time you go in, you want to bench a higher weight than last time. And yes, this keeps getting harder and harder (usually, and up to a point, anyway).
Further, with all the Silicon Valley gossip and glossy click-bait tabloid headlines about one startup after another raising funding, there’s an infectious sense that once you raise money, then you get TechCrunch’d (but see above), and then you get famous, and then you grow faster (but see above again), and then you raise more money, and you grow faster and faster, and all is well in the world, and you can get your
$250K Lambo $100K Tesla. This is false. It is simply untrue. Unlearn it now.
Raising your first round, unless you’ve successfully avoided the pitfalls mentioned above, won’t get you anything at all except investors to whom you need to report every week (month?) or so and the utterly useless aforementioned TechCrunch Bump at best; while at worst, you won’t even get the investors or the Bump, which, admittedly, has at least some value: you get to find out whether your product sucks or not.
5. Don’t neglect your life, your health, or your friends and family
Sadly, this may be the most controversial thing I write, which is precisely why I’m writing it. No, not because it’s controversial, but because it’s so important to discuss.
Don’t mistake a legitimately productive, perpetual drive to succeed with the mere appearances of just working hard: to wit, work smart, not hard. Don’t email people at 2am just to show to them that you’re up at 2am if you could just as soon send it at 8am. Don’t stick around the office until 7pm even if your brain shut down at 6pm and you’re completely unproductive, just because you think it “looks good.”
In short, don’t be a poseur. Be legitimate. Be true. Be true to yourself, and be true to others. Because even if you’re fooling yourself, you’re not fooling anyone around you, and you’re just going to burn yourself out anyway.
At the end of the day, don’t forget, what you’re trying to do is just a startup. It’s a company. It’s your livelihood. But guess what? If it doesn’t succeed, either (a) learn how to turn your failure into success (as discussed in Part 3 of this series, coming up on Friday the 22nd), or (b) go get a job working for someone else. The fact is, if you’re alive, healthy, and able to support yourself, you’re going to be fine. Do you have a bed? A cell phone? Your computer? Food? Maybe you even have your girlfriend / boyfriend / husband / wife / your mom and dad around you? Best friends? Guess what. Those things are more important. So relax. It’s not the end of the world. You will survive.
Don’t neglect your friends and family. Don’t neglect your exercise (I’ll explain more in Part 3 next time). Don’t neglect a healthy diet. Don’t neglect to have off time in the evenings where you just relax and do something completely unrelated to your work.
Yes doing a startup is per se an imbalanced thing, a completely life-encompassing career, and you absolutely will live and breath it every hour of every day, but that is precisely why you need some time in the evenings to just unwind, and at least one if not two days on the weekends to completely disconnect, never mind the critical importance of exercise and a healthy diet.
I learned this the hard way both in my own startups, and also while studying for the California Bar Exam: I passed it precisely because I learned how to pace myself and disconnect an hour before sleeping every night, including and especially the days immediately before and during the three-day exam, during which, I barely studied at all. And I passed. On my first go.
And before you comment away that this approach to a startup is little more than wishful thinking and inevitably leads to failure, well, you’re wrong: one of my dearest friends of the past 15 years — and advisor and board member to my previous startup — has a large and very successful company in Silicon Valley; to wit, he made Inc. Magazine’s 30 under 30 a few years ago. To call them a startup is a bit silly at this point. Nevertheless, he’s been working 10-12 hour days in his office for the 10 years they’ve been around, never mind the additional time he works late at night when he gets home, including a 1 hour commute each way, mind.
But you know what? He still always made — and still makes — the time to meet with his friends for a late dinner or at least a cup of tea nearly every night of the week, let alone the weekends, even if only for an hour or so. He’ll often be nodding off, his eyelids heavy with exhaustion, sure, but the point is, he makes the effort, and he succeeds, both professionally, and even more incredibly, personally. It’s a quality I’ve always respected and admired about him and, frankly, I’ve never seen anyone else execute such work-life balance so well.
Right, now that you know what not do do, check back soon for the third and final installment, Be an entrepreneur, Part 3/3: The 5 things you should always do. And, if you missed Part 1, read it here!