I’ve been working on startups in one form or another since about 1999. I started hanging out in Silicon Valley informally in 2008 and moved formally at the beginning of 2009. When it comes to playing the basic Silicon Valley ‘game’ of building something meaningful that is validated by the market (most important), investors (less important) and ‘makes the world a better place’ I feel like I’ve had some share of big wins and great outcomes. I’ve also made a lot of mistakes.
Along the way I’ve also advised a lot of startups, as well as paid close attention to what’s worked well in the broader startup ecosystem.
What follows are some of my personal, high-level and incomplete tips resulting from this experience.
As always, there are exceptions to every rule and many of the individual things in this list are not fatal on their own, but if you start making too many of these mistakes, they will really undermine your chances for success.
Before you even get started
Be in Silicon valley - Yes you can succeed in other places, but the chances of success are so small, why start with a disadvantage
Some people argue that the ecosystem in their area is ‘getting better’ or ‘they’re going to help build the ecosystem along the way’. Are you f’ing kidding? It’s hard enough building and driving the train, you can’t build the tracks at the same time!
Have a big vision - a master plan for how you want to change the world
Now forget your big vision - Or you’ll risk trying to boil the ocean. Instead...
Figure out a very specific, painful, real problem where there’s a significant number of people or companies needing a solution. It’s essential that the problem is one you are personally experiencing and/or are super passionate about solving.
Find people who are uniquely qualified to execute on this idea with you (Big question: why are YOU qualified?). They should be the best in their field
If you can’t get the rockstars with experience in the space, then at least find curious, humble, high-EQ people.
Make sure you have a technical co-founder who knows what they’re doing. If you’re doing software you can’t outsource the core technical function
You’re going to have high, highs and low, lows. It’s a rollercoaster. As the sunscreen song says “Whatever you do, don't congratulate yourself too much, or berate yourself either. Your choices are half chance. So are everybody else's.” - stay calm, focused and deal with the most pressing issues one by one.
It’s likely going to take many, many years. 5 - 10 years.
Product
Figure out a very specific, simple, discrete solution for a specific, well defined customer (preferably in the form of a software product). Keep in mind that…
If your product is B2B, it still needs an easy way for employees to onboard themselves - See Slack
If your product is B2C you will likely, once you hit scale, need a plan to..
Sell it to brands, distribution partners, advertisers (See Twitter, Facebook, Snapchat etc - in this case just note that you can’t avoid a ‘sales’ team and B2B conversations) or,
Charge a fee for ‘pro’ features
Charge transaction fees
Avoid propping up incumbents - Ask yourself how you might build a full stack startup
Building on top of someone else’s (very successful or rapidly growing) platform might be ok as a way to bootstrap - but look out for cannibalization from the platform. Ensure you have alignment, access to their team and - better - a way to syphon value to your own property
Mobile seems to be popular right now - consider starting there.
Avoid any initial need/reliance on network effects - Your idea will need a great ‘single-player mode’ to avoid a ‘cold start’ catch-22 problem. This doesn’t mean your product can’t benefit network effects and viral mechanics, but it must (ideally) provide enough value without them so that it’s immediately useful and sticky for your initial set of users.
Make sure you have enough money and a guerilla marketing campaign - especially if you can’t avoid the need for network effects. You will need to find and activate passionate groups of users so that they take notice in a hungry, addicted way (passing interest isn’t enough). They must come onboard in big groups so that they break their own catch-22
Your first, specific, simple, discrete solution should (must) avoid trying to be a “platform”. If you think you’re going to start by build a container into which others pour their creativity - you’re likely very wrong.
Platform partners (in b2c this means users, in two sided marketplaces this often means content creators, app developers etc) only pour their creativity into platforms that provide massive utility (e.g. make it 100x easier to create something beautiful) and/or provide massive distribution to an existing audience (e.g. make it 100x easier to reach or benefit from large numbers of people)
If there’s an existing competitor with a massive audience, even significant utility may not be enough to draw users/content creators/developers since people gravitate towards winners and audiences
Platforms emerge from massive companies OR from great products with passionate users who then open up part of their experience as a platform
If you’re idea *must* be a platform on top of which 3rd parties will play, plan on doing ALL of the initial work yourself because...
You need to seed the platform with great ‘content’ so that customers can start using it before you have platform partners contributing 3rd party value
3rd party partners need amazing examples to be inspired by
Most people suck so you need large numbers of crappy 3rd parties in order to get just a few great ones
AirBnB had to manually go and get the initial listings. Pintrest had to create the initial pinboards. You will need people dedicated and passionate to do this obsessively well. It costs money and takes a lot of time so plan for it.
“There’s only two ways to make money - bundling and unbundling”. On mobile, however, bundling multiple features into one app is not an option unless you are somehow making a 5 step process into a 1 step process (in this case you’re bundling logistics, not features - See Uber). The current trend is unbundling features into stand-alone apps.
Do one thing really well
Do it really, really, well - design, simplicity and better ui/ux metaphors can be a big differentiator
Make it easy to adopt - really easy. Self-serve. Up-front pricing. Free-trials.
Make it easy to understand - a one page website is best
Get users to the magic moment as fast as possible - that moment where users go “Ooooh... that’s awesome!” when using your product
Wire it for metrics. How many page views, how many downloads, how many signups, how many users tried feature 1, 2 and 3.
Product/Market Fit
Ship it.
Get it into customers hands. Lots of them. Manually if you have to. Go meet them.
Look at the metrics
They will suck. Refine the product. Ship more.
Keep iterating until your acquisition and retention rates trend up and to the right
User support is massively important - listen carefully, look out for trends, respond quickly (both to the specific inquiries and with broader product changes).
Learn how to say ‘No’. Or ‘Later’. Because customers, partners, employees and your own entrepreneurial spirit are all going to demand you do a lot of things and you need to understand what’s inside and outside of scope for your product at this stage of its development. Focus.
Iterate, iterate, iterate
Have a plan (and enough money) to promote the hell out of it - Once the metrics (acquisition and retention rates especially) are trending in the right direction (and ONLY when they are), you need the resources and skills to push hard
PR
Sales
Bizdev
Content Marketing
Influencer outreach
Events (Sponsorship and speaking)
Social Media Marketing
SEO
SEM
Inside Sales
ALL AT THE SAME TIME - they build on each other. You can’t do them in serial.
Fundraising
Raise an Angel round. Don’t skip it. Angels can provide a strong foundation of contacts and peer influence. Don’t skip them unless you’re a rockstar.
Angels invest in great teams. At this stage your idea is just an idea - so they need to know they can bet on YOU to figure it out. So lead with your team in your pitch. Why are you uniquely qualified to do this?
Angels also want to be part of something that’s got early glimmers of traction that has the opportunity to become the next big thing.
Don’t pretend like you have it all figured out or you’ll just look like you’re full of shit
You just need to show that you’re asking the right questions and have concrete ways to go find the answers with their money
You should always raise at least 18 months of runway - because you will need to start fundraising again 4-6 months before it runs out
You will need more money than you think - don’t be too conservative
If you’re really good, a clever trick is to include Angels and Advisors in your Series A
Unless you’re a rockstar, you can’t raise an Angel round until you’ve done all of the above
YC, 500 Startups, Techstars are also great options.
Treat the Angel round like a product launch
Meet all the Angels you can. Get commitments. Getting a lead investor is the hardest step here.
Angels often invest in packs - try to find a great group of Angel friends who will make intros to each other.
Once you have 50%+ of your round filled in, launch on Angellist to get the rest
Have your existing Angels commit via the site to get Angellist’s attention and get featured (you should have spoken to them ahead of time and put yourself on their radar)
Make sure you agree with your Angels the metrics that matter in your business. Focus on them. Move them.
Even better, start talking to VCs about the metrics/proof points that would matter to them for a Series A.
Your angels can/should help make the intros
Talk to them early
Build a relationship
Listen to their objections carefully and find a way to address them
Make sure you have plenty of time to raise your series A (start 6 months before you run out of money)
Talk to VCs - You will need to talk to a LOT of them
Most of their objections will be around Team, Technology and Traction.
Team: Why is your group uniquely suited to this.
Technology: Why is your stuff better/faster/cheaper.
Traction: Can you demonstrate that this is (right now) a rocket ship of growth?
Hiring/Growing your team
‘Hire slow and fire fast’ - This is a cliche/classic recommendation - but it’s serious.
Don’t just hire whoever’s in-front of you. Cast a wide net. Actively reach out to amazing people. Build your dream team.
Vet potential hires thoroughly for culture, expertise and vision alignment. Of course this doesn’t mean hire ‘yes people’ - you want people who are smarter than you who can help make big strides in their respective roles.
Don’t avoid firing employees because it feels bad. Fire them QUICKLY if they are not fitting. They can burn a LOT of time and capital and destroy morale if they are the wrong person for your team.
This is, of course, not the end of the journey - but it is the end of my personal experience. Next steps involve further fundraising, IPOs, Acquisitions etc. More for me to learn!
Props to Woody Hooten, Julia French, Andrew Grignon, Jeremiah Owyang and Clara Shih for their feedback.