Things I will tell my kids if they become entrepreneurs

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The lessons I learned in 20 years as an entrepreneur. Partly inspired by Sam Altman's excellent course on How to start a startup, available on http://startupclass.samaltman.com

Feedback on laurenthaug at gmail dot com

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Things I will tell my kids if they become entrepreneurs

  1. 9 Things I will tell my kids if they become entrepreneurs
  2. 11 Disclaimer:
 There is no playbook for startups
  3. 13 Things I will tell my kids if they become entrepreneurs Idea Team Fundraising Execution Market Competition Money & Risk Success Tools
  4. IDEA 14 IDEA
  5. 15 Somebody somewhere already had your idea. Don’t waste too much time thinking you’re a genius
  6. 16 Your idea is 1% of success.
 
 Google’s key idea (pagerank) was published as a public paper in 1998
  7. 17 Execution > idea Jeff Bezos was not the only person trying to sell books on the internet. He just executed better and faster.
  8. 18 Team > idea A great team will pivot out of a bad idea
  9. 19 Product > idea How you implement an idea is more important than the idea itself
  10. Startup = idea + execution + product + team + luck 20
  11. 21 Talk about your idea to as many people as possible You will get feedback, challenges, referrals, unexpected connections
  12. 22 Great ideas have lonely childhoods. The more disruptive your idea, the less people will understand it.
  13. 23 Good ideas can look terrible at the beginning ex: Facebook was a social network for moneyless students
  14. 24 Copycats kill excitement
  15. 25 Don’t worry too much about your company’s name. You grow a name.
 What does Amazon, Google or Apple mean anyway.
  16. IDEA Where and when 26
  17. 27 Every new technology is an opportunity: look for gaps between how things have been done and how they can be done
  18. 28 Every asleep industry is an opportunity: do things incumbents can’t or won’t do because the economics don’t make sense to them, or because technically they can’t.
  19. 29 Every fringe user is an opportunity: go after those who are already behaving like everybody will behave in the future
  20. 30 Crisis are full of opportunities Necessity is the mother of invention (and entrepreneurship). Great startups are born all the time
  21. IDEA Vision vs feedback 31
  22. 32 “It’s not the customer's job to know what they want”
 Steve Jobs
  23. 33 “If I had asked people what they wanted,
 they would have said faster horses.”
 Henry Ford
  24. 34 Finding balance in feedback vs vision In absence of vision rely on feedback
 With a clear vision you can ignore feedback
  25. 35 Conscious feedback (survey) < unconscious feedback (data) What people say they do < what people really do
  26. 36 Friends & family might not give you truthful feedback Beware of asking your friends whether they would pay for your service. They will all say yes, until you ask for their credit card number.
  27. TEAM 37 TEAM
  28. 38 How many founders? 1 founder hard
 2-3 co-founders best
 4+ co-founders complicated
  29. 39 manager ≠ leader You need leaders and managers, and usually can’t be both. Make sure you and your co-founders complement each other.
  30. 40 If you’re not comfortable giving equity to someone, they shouldn’t be a co-founder
  31. 41 Clarify everything (cap table, salaries) on day one, especially if you’re working with friends
  32. 42 Define on day one what happens if a co-founder leaves
  33. TEAM CEO duties 43
  34. 44 No need to know everything. Surround yourself with people who know what needs to be known. 
 You are the head coach, not the star player.
  35. 45 Founders duties: vision, fundraising, evangelisation, hiring and managing
  36. TEAM Recruitment 46
  37. 47 Paul Graham: “People can become formidable, but it’s hard to predict who” Recruiting is one of the hardest thing there is.
  38. 48 First employees are as important as co-founders
  39. 49 Bad recruits can kill your project in the early days
  40. 50 Hire people who are better than you
  41. 51 Hire people who you would feel comfortable reporting to
  42. 52 Choose employees like you choose your friends
  43. 53 Go for attitude over experience vice.com recruits people coming out of schools with no experience, because they have not been formatted by how things are done elsewhere, and will want to prove themselves
  44. 54 What you need to succeed in startups is not an expertise in startups.
 It’s an expertise in clients
  45. 55 Hire people who have options Good people will always have multiple options on the table. Convince them that you provide the best way to spend their precious time. People with options are not dependent on you as an employer, and will be more truthful
  46. 56 Look for people with no ego getting in the way
  47. 57 Retaining is less expensive than recruiting
  48. 58 Have an extremely high bar, hire slowly
  49. 59 Use trial periods for what they are: trial periods
  50. 60 Fire people who are bad are their jobs, create politics, are negative
  51. 61 Fire fast You will always take too much time to fire your first employee
  52. 62 Beware when you become a trophy employer. You will start attracting people who want to help themselves more than they want to help your project
  53. 63 Money is just one factor in employee motivation Others: experience, meaning, impact, network, etc
  54. 64 4 things that lead to better performance: Fairness: knowing that you're being paid a reasonable amount for your work so that money no longer becomes an issue.
 Autonomy: controlling events in your work life by choosing what you want to do and when you want to do it.
 Mastery: excelling at a craft that you enjoy and being recognized as a master by peers that you respect.
 Purpose: feeling that what your work is helping other people and changing the world in a positive way. http://www.inc.com/geoffrey-james/the-true-secret-of-employee-motivation.html
  55. TEAM Managing yourself 65
  56. 66 You are your most important ressource. Take care of yourself.
  57. 67 Behind every entrepreneur is a solid partner / family / assistant
  58. 68 Seek support from people who have been / are entrepreneurs Your friends working at large companies won’t be able to relate to what you will go through.
  59. FUNDRAISING 69 FUNDRAISING
  60. 70 Never ask investors to sign NDAs Sends a message you don’t trust them. Don’t send your pitch to people you don’t trust in the first place
  61. 71 Raise only what you need, as late as possible
  62. 72 Be honest about your past. Good investor will say “if you’re smart, those mistakes you made won’t happen again with my money”
  63. 73 Dumb investor: money
 Smart investor: money + network + visibility + experience
  64. 74 Fundraising is a milestone, not a success
  65. 75 Be confident, not arrogant. When asked how he recognises good founders, this is what Y Combinator president Sam Altman says: “Good founders become more humble as they get more successful”
  66. EXECUTION 76 EXECUTION
  67. 77 Work hard
  68. 78 A startup CEO’s challenge is to define what’s the Most Important Thing (MIT)
  69. 79 You can’t decide how long it’s going to take They say it’s usually 10 years
  70. 80 Do every possible job, especially the client facing ones The founder of Craigslist is still doing user support. Steve Jobs was famous for randomly answering clients’ complains.
  71. 81 Focus is one of the most important thing there is
  72. 82 Opportunistic ≠ strategic You can either pursue every opportunity - in which case you’re not really deciding where you’re going - or have a clear strategy and reject opportunities that don’t fit in. Opportunities will take you somewhere fast, strategy will take you somewhere far.
  73. 83 Employee effort ≠ entrepreneur effort Running 16h a day working for yourself is less tiring than spending 8h on a chair doing a job you hate
  74. EXECUTION Growth 84
  75. 85 Either you fail, or growth becomes your number one problem
  76. 86 “In many ways the startup journey is a downhill spiral of the CEOs quality of life by adding constraints - users, customers, investors, etc.”
 Noam Bardin, Founder, Waze
  77. 87 Let people control the ressources and priorities. 
 Let them know how success is measured
  78. 88 Make people feel like they are in startups inside a larger organization
  79. 89 Recreate diversity inside teams (designers + writers + programmers)
  80. 90 Make sure people don’t have to grow into leadership roles Large companies are filled with specialists who got promoted to management positions while having no such skills.
  81. MARKET 91 MARKET
  82. Peter Thiel: “You want to be the last mover, not the first” Google is the last search engine. Facebook is the last social network (for now at least). 92
  83. 93 Find a small market inside which you can have a monopoly Amazon started with books, expanded to commerce in general. Lending club started with peer to peer loans, now expands to lending in general. Uber started with taxis, will expand to everything related to transportation.
  84. 94 There are more opportunities now than ever (finance, health, insurance, industry, transportation, logistics). The digital revolution is just starting.
  85. 95 Don’t be ahead of your time. Answer a simple question: “why now?”
  86. COMPETITION 96 COMPETITION
  87. 97 Competition means there is a market Rejoice!
  88. 98 Worry about a competitor only when they have a superior product
  89. 99 Don’t worry about competition from big companies
 They are not reactive, slow, and complicated.
  90. 101 “Google/Facebook/Amazon/Apple could do this in 5 minutes” True. Just didn’t happen with Airbnb, Uber, Zenefits, Dropbox, Snapchat, Square, Pinterest, Spotify, Jawbone, Box, Lending Club, Evernote, Eventbrite, etc
  91. 102 “Google/Facebook/Amazon/Apple will launch a similar service and kill you” Google buzz (2010) to compete with Twitter (2006) = shut down
 Google Knol (2008) vs Wikipedia (2001) = shut down
 Google+ (2011) vs Facebook (2004) = partial shut down
 Google keep (2013) vs Evernote (2008) = 10M vs 100M+ users
 Facebook Slingshot (2014) vs Snapchat (2011) = sling-what?
 Amazon Wallet (2014) vs Square (2009) = shut down
  92. 103 Even young companies can get complacent quickly
 (Skype should have been Whatsapp)
  93. 104 “No candle-maker has become a bulb manufacturer, no carriage-maker has become a car producer, and the post office did not invent the email.”
 Marc Giget 
 http://perspectives.pictet.com/2013/06/19/interview-with-prof-marc-giget/ Radical innovation rarely comes from incumbents
  94. 105 The real problem is standing out
  95. 106 Build the right media mix
  96. 107 Evolve your mix over time Paid Owned Earned t = 0 Paid Owned Earned t = 1 Paid Owned Earned t = 2
  97. 108
  98. MONEY & RISK 109 MONEY & RISKS
  99. 110 People who don't pay you will treat you like shit
 People who pay a lot will show a lot of respect
  100. 111 Don’t disregard money. Money is a form of validation.
  101. 112 Money can’t buy happiness.
 But it can buy freedom to pursue your projects
  102. 113 Entrepreneurs have more job security than employees The 85k employees company I was working for in 2001 shut down in one week because 20 guys had shredded some papers in Houston. As an entrepreneur, I can work on week-ends, call my contacts and ask for business. Employee does not control anything. Entrepreneur does.
  103. 114 21st century job security = network + reputation
  104. 115 time money employee entrepreneur Employees laughing Entrepreneurs laughing Employee vs (successful) entrepreneur - salary evolution
  105. SUCCESS & FAILURE 116 SUCCESS & FAILURES
  106. 117 Success is multidimensional
 Money
 Fulfilment
 Experience
 Independence
 Impact
 Status
 Network
 Family
 Legacy
  107. 118 Money is a consequence, never the objective
  108. 119 Zuckerberg could have sold Facebook 500 times. His motivation is not money. Facebook has had countless offers: an unnamed investor offered $10 million in June 2004, Friendster was interested in a purchase, Google offered to buy or partner in the summer of 2004, Viacom offered $75 million in March 2005, Myspace wanted to buy in spring 2005, News Corp (Myspace's parent company) wanted to in January 2006, Viacom came back in 2005, NBC was also interested soon after, Viacom again made an offer of $1.5 billion in 2006, Yahoo offered $1 billion in June 2006, AOL also considered $1 billion soon after, Yahoo came back again at the end of 2006, and finally Google offered $15 billion in 2007. http://www.zdnet.com/article/mark-zuckerberg-was-planning-to-sell-facebook-in-july-2004/
  109. 120 Media buzz is completely disconnected from success Journalists just don’t have time to look at the real numbers.
  110. 121 People always underestimate the role of luck
  111. 122
  112. 123 Life is a marathon, not a sprint
  113. 124 The only way to last is to be ethical and respectful
  114. 125 Compromising with your values is dangerous
  115. 126 You won't be good when you go against what you like
  116. 127 Sometimes you win, sometimes you learn
  117. 128 Good decisions come from experience
 Experience comes from bad decisions
  118. 129 The point is the journey
  119. TOOLS 130
  120. 131
  121. 132
  122. 133 Gain Creators Describe how your products and services create customer gains. How do they create benefits your customer expects, desires or would be surprised by, including functional utility, social gains, positive emotions, and cost savings? Do they… Create savings that make your customer happy? (e.g. in terms of time, money and effort, …) Produce outcomes your customer expects or that go beyond their expectations? (e.g. better quality level, more of something, less of something, …) Pain Relievers Copy or outperform current solutions that delight your customer? (e.g. regarding specific features, performance, quality, …) Make your customer’s job or life easier? (e.g. flatter learning curve, usability, accessibility, more services, lower cost of ownership, …) Create positive social consequences that your customer desires? (e.g. makes them look good, produces an increase in power, status, …) Do something customers are looking for? (e.g. good design, guarantees, specific or more features, …) Fulfill something customers are dreaming about? (e.g. help big achievements, produce big reliefs, …) Produce positive outcomes matching your customers success and failure criteria? (e.g. better performance, lower cost, …) Help make adoption easier? (e.g. lower cost, less investments, lower risk, better quality, performance, design, …) Rank each gain your products and services create according to its relevance to your customer. Is it substantial or insignificant? For each gain indicate how often it occurs. Describe how your products and services alleviate customer pains. How do they eliminate or reduce negative emotions, undesired costs and situations, and risks your customer experiences or could experience before, during, and after getting the job done? Do they… Produce savings? (e.g. in terms of time, money, or efforts, …) Make your customers feel better? (e.g. kills frustrations, annoyances, things that give them a headache, …) Fix underperforming solutions? (e.g. new features, better performance, better quality, …) Put an end to difficulties and challenges your customers encounter? (e.g. make things easier, helping them get done, eliminate resistance, …) Wipe out negative social consequences your customers encounter or fear? (e.g. loss of face, power, trust, or status, …) Eliminate risks your customers fear? (e.g. financial, social, technical risks, or what could go awfully wrong, …) Help your customers better sleep at night? (e.g. by helping with big issues, diminishing concerns, or eliminating worries, …) Limit or eradicate common mistakes customers make? (e.g. usage mistakes, …) Get rid of barriers that are keeping your customer from adopting solutions? (e.g. lower or no upfront investment costs, flatter learning curve, less resistance to change, …) Rank each pain your products and services kill according to their intensity for your customer. Is it very intense or very light? For each pain indicate how often it occurs. Risks your customer experiences or could experience before, during, and after getting the job done? Products & Services List all the products and services your value proposition is built around. Which products and services do you offer that help your customer get either a functional, social, or emotional job done, or help him/her satisfy basic needs? Which ancillary products and services help your customer perform the roles of: Buyer (e.g. products and services that help customers compare offers, decide, buy, take delivery of a product or service, …) Co-creator (e.g. products and services that help customers co-design solutions, otherwise contribute value to the solution, …) Transferrer (e.g. products and services that help customers dispose of a product, transfer it to others, or resell, …) Products and services may either by tangible (e.g. manufac- tured goods, face-to-face customer service), digital/virtual (e.g. downloads, online recommendations), intangible (e.g. copyrights, quality assurance), or financial (e.g. investment funds, financing services). Rank all products and services according to their importance to your customer. Are they crucial or trivial to your customer? Gains Describe the benefits your customer expects, desires or would be surprised by. This includes functional utility, social gains, positive emotions, and cost savings. Which savings would make your customer happy? (e.g. in terms of time, money and effort, …) What outcomes does your customer expect and what would go beyond his/her expectations? (e.g. quality level, more of something, less of something, …) How do current solutions delight your customer? (e.g. specific features, performance, quality, …) Pains Customer Job(s) Describe negative emotions, undesired costs and situations, and risks that your customer experiences or could experience before, during, and after getting the job done. What does your customer find too costly? (e.g. takes a lot of time, costs too much money, requires substantial efforts, …) What makes your customer feel bad? (e.g. frustrations, annoyances, things that give them a headache, …) How are current solutions underperforming for your customer? (e.g. lack of features, performance, malfunctioning, …) What are the main difficulties and challenges your customer encounters? (e.g. understanding how things work, difficulties getting things done, resistance, …) What negative social consequences does your customer encounter or fear? (e.g. loss of face, power, trust, or status, …) What risks does your customer fear? (e.g. financial, social, technical risks, or what could go awfully wrong, …) What’s keeping your customer awake at night? (e.g. big issues, concerns, worries, …) What common mistakes does your customer make? (e.g. usage mistakes, …) What barriers are keeping your customer from adopting solutions? (e.g. upfront investment costs, learning curve, resistance to change, …) Rank each pain according to the intensity it represents for your customer. Is it very intense or is it very light.? For each pain indicate how often it occurs. Describe what a specific customer segment is trying to get done. It could be the tasks they are trying to perform and complete, the problems they are trying to solve, or the needs they are trying to satisfy. What functional jobs are you helping your customer get done? (e.g. perform or complete a specific task, solve a specific problem, …) What social jobs are you helping your customer get done? (e.g. trying to look good, gain power or status, …) What emotional jobs are you helping your customer get done? (e.g. esthetics, feel good, security, …) What basic needs are you helping your customer satisfy? (e.g. communication, sex, …) Besides trying to get a core job done, your customer performs ancillary jobs in different roles. Describe the jobs your customer is trying to get done as: Buyer (e.g. trying to look good, gain power or status, …) Co-creator (e.g. esthetics, feel good, security, …) Transferrer (e.g. products and services that help customers dispose of a product, transfer it to others, or resell, …) Rank each job according to its significance to your customer. Is it crucial or is it trivial? For each job indicate how often it occurs. Outline in which specific context a job is done, because that may impose constraints or limitations. (e.g. while driving, outside, …) What would make your customer’s job or life easier? (e.g. flatter learning curve, more services, lower cost of ownership, …) What positive social consequences does your customer desire? (e.g. makes them look good, increase in power, status, …) What are customers looking for? (e.g. good design, guarantees, specific or more features, …) What do customers dream about? (e.g. big achievements, big reliefs, …) How does your customer measure success and failure? (e.g. performance, cost, …) What would increase the likelihood of adopting a solution? (e.g. lower cost, less investments, lower risk, better quality, performance, design, …) Rank each gain according to its relevance to your customer. Is it substantial or is it insignificant? For each gain indicate how often it occurs. strategyzer.com The Value Proposition Canvas Value Proposition Customer Segment The makers of Business Model Generation and Strategyzer Copyright Business Model Foundry AG Produced by: www.stattys.com
  123. 135
  124. 136 “The best way to predict the future is to invent it”. Alan Kay
  125. 137 Thank you: Sam Altman, how to start a startup
 http://startupclass.samaltman.com/ Hugh MacLeod, cartoons drawn on the back of business cards
 http://gapingvoid.com/ Strategyzer, helping CEOs operate like surgeons
 http://www.strategyzer.com
  126. Get in touch @laurenthaug
 ch.linkedin.com/in/laurenthaug 138

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