Top 10 Startup Tips for Founders

Top 10 Startup Tips for Founders:
What Every Founder Should Remember
July 2022
Ed Lu
V1.6

Preamble
With 20+ years of financial operations experience, I have seen quite a bit over my career. As a long-time
exec in the CFO capacity across gaming and media tech companies, I have witnessed success and failure,
mainly through my close partnership with various founders. In addition to being an operator, I have advised
half a dozen startups (from pre-seed to late-stage) and angel-invested in 30+ companies. My observations
may be more applicable to gaming and B2C startups, but I hope my points generally resonate. Feedback is
essential to this ongoing discourse, so please don’t be shy to share your thoughts about my key takeaways
and insights! I fully expect to see this document evolve, and I look forward to sharing more. Stay tuned!
NOTABLE EXPERIENCES SELECT ADVISORY & INVESTMENTS
ABOUT ME

10 Things to Remember As a Founder
1. Product first
2. Track the right KPIs
3. Iterate fast and always be executing
4. Focus on quality/speed of decision-making
5. Don’t hire for scale too quickly
6. Design your company, not just your product
7. It’s always “game time”
8. High valuation is not the end game
9. Be humble, stay grounded
10. You don’t need a CFO (yet)

Product-user fit comes before product-market fit
You’re probably familiar with the idea of product-market fit, but what is the “market” anyway? Instead of
spinning your wheels trying to identify or define your precise market, be user-centric in your product
solution. Don’t think in terms of “market gaps;” instead, consider what your customer needs (and what they
don’t need). Find that product-user fit first before moving on to product-market fit.
Turn users into customers by being as specific and targeted as you can right off the bat. Your mission is to
identify the one thing that is unique and differentiated about your product—the one thing that makes it
stand out from your core customers. These early customers become your evangelists (through virality or
free marketing) and are crucial to shaping your product roadmap.
Even if the product solution appears niche, as long as the customers’ needs are real, you want to go
further in depth. Expanding into adjacent market opportunities is always an option, but doing so too
quickly/early leads to a diluted and undifferentiated product experience. You want to avoid splintered focus
until you’ve become the best at the one true differentiator that will make your product the go-to solution for
your customers.

Trend is your friend
Understand that “a rising tide lifts all boats.” When you have a new product idea, make sure you
sanity-check the overall market dynamics. Put yourself in a market that is both large enough (e.g., $10B+)
and growing fast enough (e.g., 10%+ CAGR) so you can be venture-fundable. You want to improve your
chances of finding that product-market fit, so you’re always better off with the trend on your side.
With a growing market come more opportunities to experiment often and quickly. Pivoting is more
manageable, and you generally have more time and “room” to operate to drive impact/traction. Your
natural market (i.e., TAM, SAM, and SOM) will be much larger and easier to reach. It’s about improving
the probability of gaining traction.
Naturally, every founder gets excited about the niche product solution they ideated. But while being highly
targeted and differentiated is great, entering a market with room for growth is just as crucial. For the
company to become a venture-backed scalable company, the keyword is scalable. Is your solution niche,
or is the market small? The difference can be make-or-break.

While you don’t want to ignore your competition, don’t get hung up on what others are doing. It’s easy to
get rattled when a buzzworthy article hits the press. At the startup stage, ideas are a dime a dozen, but
expert execution separates success from failure. As long as the market is big enough, there can be
multiple players (e.g., Uber/Lyft, Youtube/Twitch, Snapchat/Instagram).
You have two general groups of competitors: another startup or a large conglomerate. Another startup with
an extreme focus on execution is more formidable than a large conglom with a ton of resources. You can
never underestimate another startup’s drive. You have to assume they are just as hungry as you are. On
the other hand, a large corporation is often beset with politics and moves at a much slower pace; these
companies are victims of their past success and struggle with the Innovator’s Dilemma. You are not a
direct competitor to them, but you can become a future acquisition target.
Having competition is also a great way to stay motivated. We all sprint harder when it’s a race against
another runner. Competition provides healthy tension that keeps the optimal pressure on at all times. On
the flip side, if there is no competition, you should be somewhat worried that no one else sees the market
opportunity you see! Either you are way too early, or the market opportunity is uninteresting.
Don’t (always) mind the competition

Most companies fawn over engineers, and while they are essential (and generally get paid the
most), product leadership and direction are paramount to channeling your most expensive
resources. In other words, the engineering progress must work towards a product roadmap
milestone to be impactful. Engineering for the sake of technical prowess is generally a complete
waste of time.
Ideally, your founder-CEO is a product visionary and an exceptional product manager. You want
your founding team’s DNA to be product-obsessed and product-first. You want to strive to
become experts in customer psychology—you need to understand your customers’ needs
intimately. Build a product-centric company culture; otherwise, the product will likely become an
afterthought, and so will your company.
Focus on recruiting very strong product managers and designers that exhibit the following: high
agility, customer empathy, strong prioritization, and exceptional communication skills. The best
product managers fall in love with solving for product cycle, user churn, and user acquisition.
Product management unlocks engineering talent

To be a data-driven company, you can track many metrics—but be specific about the ones that
truly matter. Practice a form of OKRs: Objectives are inspirational, while Key Results are
grounded and metrics-driven. As John Doerr expressed in What Matters,if you can’t change it,
there’s no reason to measure it.
Be careful not to track attractive but not very substantial metrics, otherwise known as “vanity
metrics.” While they may seem significant and leverage for PR or recruiting, they ultimately don’t
drive the business. Quick examples include the number of downloads (what matters is how users
convert), lifetime user count (instead of DAU and MAU), and company buzz (“quantifying” the
public attention).
Measure for impact, not activity. Don’t track inputs for the sake of fact-finding, but rather focus on
what inputs are critical levers to driving the most impactful output. Tracking activity is for project
management—while it’s crucial for your team, it doesn’t necessarily help you navigate your
business.
Don’t track vanity metrics

For product-market fit, measure: 1) Conversion, 2) Engagement, and 3) Retention (or the inverse, churn).
First, whether you are spending marketing dollars or not, track how users convert to your product. You will see
organics that make for excellent early-funnel conversion if you have a strong product-user fit. As you scale into user
acquisition, your CTR, conversions from downloads, and FTUE are vital for your ad campaigns.
Once the users are in your product, their level of engagement trumps all other metrics; engagement is usually
measured in minutes per session and total minutes per day. Learn to identify customer behaviors early. What are they
doing? What are they not doing? You want to see patterned user behavior emerge, exhibiting natural seasonalities
and fluctuations. These insights will help inform your future feature releases.
User retention is a close second to engagement metrics once users are in your product. Are your users returning after
the first install day, referred to as D0? Track D1, D3, D7 and D28 to start. Ideally, you want to see a D3/D1 ratio of
70%. And D1 can vary depending on the type of product you have, but generally, you want D1 at 30% for a more core
product and 60% for more casual products. Standards may vary based on industry.
Obsess over these metrics

Monetization can wait (for now)
While you don’t want to ignore monetization from your product design or business model, it does not need to be the
priority before product-user fit. Why? First, you want to gain traction from your users and ensure your product is
engaging and retentive. While the current recession has investors asking for revenue traction, you don’t want revenue
generation to shortcut the user experience and create friction to user onboarding. Doing so would be trading
long-term user growth and scale for short-sighted revenue. Get the users hooked first, have them bring in their
friends, then test their collective wallets.
If you can come up with monetization that helps engagement, by all means, implement it immediately. You can
experiment with early monetization concepts by actively talking to your user community and A/B testing all sorts of
pricing models (e.g., freemium, free trial, limited-time access, or subscription.). Even if you are not monetizing,
showing signals and how you’d monetize is incredibly powerful for investors. And you want your idea to be well-vetted
with the community, so it’s not theoretical but truly actionable when you “flip the switch.”
Remember that monetization should be the highest form of engagement from your users. If your product solves a real
need, your users will gladly pay. And once the users pay, they will have a vested interest and should engage and
retain better than non-payers. Monetization, in turn, becomes the pivotal factor for long-term retention.

If you have strong metrics, you could take your time with profitability. In particular, if you see high ARPU,
strong engagement and retention, or LTV:CAC well over 3x, these are all excellent reasons to continue to
operate at a loss. If the per-unit cost of marketing (i.e., paid, non-paid, viral) and monetizing that next
customer is so efficient, lean into business growth—especially when your competitors appear
conservative. Gaining market share during a downturn is the ultimate (winning) contrarian strategy.
That said, operating at a loss has to be a choice. In other words, the business has to demonstrate the
ability to generate profit, but you’ve opted to invest in growth instead. And very importantly, your losses
cannot widen as your business scales—this is a sure sign to revisit your unit economics. In a period of
hypergrowth, LTV:CAC ratio at 1.5x may be acceptable if it means gaining a significant step-up in market
positioning and long-term customer retention.
While this concept may be controversial during the current recession, where investors are advising
portfolio companies to target a Burn Ratio of 1, you could argue that getting to profitability at the cost of
significant market growth is myopic. You need to be playing to win (big) vs. just playing “not to lose.” Once
you reach product-market fit with solid unit economics, shift your focus to cornering the rest of the market.
Strong unit economics trump profitability

3. Iterate fast and always be executing

Time is your most sacred currency
It all boils down to time, precisely how much time you have to execute against any given opportunity. Time
is “engineered” through 1) the people you hire and 2) the capital you raise. These two factors work
symbiotically to create “energy” in the form of person-hours and are directed towards your company
strategy. The more “shots on goal,” the greater your chance of producing traction. In turn, traction allows
you to manufacture future time (e.g., more funding, revenue generation, or hiring more talent). The
process subsequently repeats itself, but you can never replace the time you’ve already spent. Guard it with
care, and be deliberate about how it’s deployed!
It’s best to get quick results, even if they are negative or less than desirable. As Reid Hoffman famously
said, “Prioritizing speed over efficiency—even in the face of uncertainty—is especially important.” You
want to learn what works (or doesn’t) rather than be stuck in continuous “what if” debates. Failure comes
from not knowing what to do next, which wastes valuable time. Negative feedback from users closes one
door but opens another; it can be as subtle as a slight feature adjustment or as dramatic as recasting the
entire business model or product solution. Many startups have become behemoths due to timely pivots
(e.g., Instagram, Twitch, Discord, Slack, Twitter), but they all made the most out of their limited time (and
runway).

Test early and verify relentlessly
Beware of scope creep when it comes to MVP definition; learn to be disciplined in building
sufficient features to test the key differentiator of your product early. What you learn from your
MVP release will dictate how you A/B test the next set of assumptions. That’s why you are
encouraged to launch MVP early.
“Fail fast and fail early” is largely true, and it’s equally important to be honest with your results.
The key to failing fast/early is doing so in a way that genuinely informs your path forward. Failing
has to spur learning and generate subsequent action plans; if it does not, failing fast and early
will be pointless! Learn how to “fail well.”
Adopt an “early and continuous verification” mentality. As you seek out answers early on, always
verify that the answers hold/scale over time. It goes for product-market fit, talent capability,
fundraising options, org structure, and much more. Be careful not to fall in love with early
indications and naively think that the metrics or systems will scale linearly. If you are
hyperscaling, don’t be surprised if your product (and company) changes every 6 to 12 months!

Ruthlessly prioritize
Ideas are commonplace, but the execution is everything! Be careful not to try to do it all—instead, focus on
doing a few things well. As Steve Jobs said, “People think focus means saying yes to the thing you’ve got
to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that
there are. You have to pick carefully.”
Be disciplined about how you prioritize. Focus on what truly moves the needle for the company in every
decision you make. Rather than measuring efficiency, emphasize effectiveness and impact. It all comes
down to the things we choose to spend our time on, and given our limited time and capital, we have to
maximize the drive we put into the few things we deem essential. If need be, force rank against the
magnitude of the impact you can make, and learn to be comfortable slimming down your goals.
The best organizations figure out how to innovate even in a resource-constrained environment—after all,
having excess time or capital may not actually be beneficial for focus. By prioritizing and not funding every
idea, you will see fantastic outcomes emerge from the few things you decided to focus on. Be aware of
employees who simply “check the boxes” by creating unnecessary work for one another—they’ll only slow
the company down in the long run.

4. Focus on quality/speed of decision-making

Decision-making is a form of focus
Decision-making forces you to prioritize what is essential. The Latin roots of the word “decide” comes from de (which
means “off”) and caedere (which means “cut” ): to “decide” literally means to CUT OFF everything except the things
that matter most. Therefore, the process you use to make decisions is vital. Do you have a consensus-driven culture?
Is it always a top-down decision? Do you reference frameworks such as SMART or RACI? Ultimately, there are only
two broad types of decisions: reversible decisions and irreversible decisions.
Make reversible decisions quickly—chances are, no matter what the outcome is, you will learn from the decision, and
the consequences are not as grave as they may seem. The speed of decision-making is more valuable than the
decision itself. (e.g., What color should the radio button be? Should we create a presentation or a Word doc? Should
this be an in-person or virtual meeting?) Don’t sweat the details that do not have a permanent impact and can be
quickly changed.
For irreversible decisions, take your time and interrogate the topic daily, maybe even away from your desk. Seek
external advice and insights by leveraging your advisors, investors, and even your customers. (e.g., How do we
monetize? Which day of the week do we launch? Do we try to optimize D1 or D30 retention?) Make these decisions
with logic, rationale, and evidence, and ultimately trust your business instincts once you’ve carefully considered the
first and second-order consequences. Make reversible decisions as soon as possible and make irreversible decisions
as late as possible.

The reality of decisions
Don’t fall prey to “resulting,” or use a positive outcome to justify the decision you’ve made (or worse yet, to justify
continuing to make the same decision in the future). The focus should be on how you made your decision (i.e., the
process), the quality of the decision, and whether it was a good decision, irrespective of the result. Put differently,
understand why you are good. Sometimes the result is positive due to great timing or luck, but don’t confuse that with
a great decision. Also, watch out for opinion-based decisions; you need to rework those opinions logically,
supplemented by data and concrete evidence. Over time, that will improve the probability of outcomes being in your
favor.
Understand the difference between urgent vs. important decisions. Not all decisions are urgent and important at the
same time. Often, you will find that urgent matters aren’t the most important, and the most important decisions tend
not to be that urgent. Get in the habit of knowing which important decisions you want to make yourself and which less
critical but urgent decisions you wish to delegate to others. When you make that decision, lean into courage and
understand that you may sometimes be wrong. But once you’ve made that decision, you will unblock ambiguity and
anxiety, and you’ll get to make another decision based on the previous outcome.
And remember: NOT making a decision is often the worst decision, as your decision is to stay unfocused and “live in
the noise.” While that may feel comforting to “hide” from the inevitable fork in the road, know that all you are doing is
delaying feedback and progress.

How to make good decisions (inspired by Ray Dalio)
1. Simplify! Prioritize your decisions by first removing the unimportant or irrelevant details. Be clear on
what decision you are trying to make.
2. Use logic-based (and not opinion- or emotion-based) methods to ballpark the “expected value” of the
decision. Treat the decision as a bet such that you understand the probability of reward if you are
correct and the likelihood of penalty if you are incorrect.
3. If the “expected value” of your decision is positive, it’s a good decision. But even with a positive
expected value, certain decisions (e.g., financial, investment, quantitative) benefit exponentially
more with additional data or expert inputs. In other words, the more right you are, the bigger the
reward. (These tend to be those irreversible decisions!)
4. That said, don’t confuse possibility with probability. Possibility has ZERO expected value!
5. Always weigh the value of adding more information to decide vs. not deciding at all. You will find,
more often than not, additional information does not improve the probability of the outcome.
6. When you are stuck, consult experts who are “believable” based on their experiences and
qualifications. Don’t rely on opinions or input from unproven sources or hearsay; root yourself back
on logic, data, and evidence.

5. Don’t hire for scale too quickly

How to scale properly
Hire player-coaches, not just coaches. Hire talent with strong execution DNA and pattern recognition for
scale. You want the early employees to be hands-on doers but can also coach/delegate as the company
grows. You are seeking experience and expertise as well as self-motivation. Your early employees will set
the tone for your company’s culture, so be intentional about how you curate your “core” team.
Big-name execs generally do not work well in earlier stages because they are accustomed to the rhythm of
a larger organization. They tend to reflect how big companies work: frequent/large meetings, slower
communication cadence, and focus on activity and progress but not necessarily on impact. Worst yet, they
may also thrive in company politics! The big-name execs typically want much larger and hierarchical
teams, so they might unknowingly bring hiring expectations that the company isn’t ready for.
You don’t want to find yourself growing too quickly, as headcount growth is only loosely associated with
success. Sometimes, it’s not even correlated! The more people you have, the more (people) problems you
will have—THAT is definitely related. Be formulaic with your headcount by focusing on the ROI for each
hire. In other words, ask yourself what kind of tangible or even intangible output the company will receive
by hiring this next set of employees. Use that as your guiding light to unlock growth.

The first HR person is usually overlooked
An HR-oriented employee, sometimes called the Office Manager, is one of the early key roles when the company is
sub-50 in headcount. As “small” as this title may be, they tend to be the person who does everything for the
employees and the founders—they are simultaneously the EA, head of HR, head of IT and Facilities, and the culture
ambassador.
This person will shape a good portion of your culture. The company at this stage is small enough that there is heavy
reliance on this person to execute and make decisions. Be very selective and careful in hiring for this role. Find
someone who is organized, has high integrity, and thrives on being a jack/jane of all trades.
In today’s remote/hybrid work environment, this role no longer exists in its original form, but the functions that need to
be addressed remain as crucial as ever. Instead, perhaps this is a Chief Of Staff, VP of Operations, or someone in
People Ops. Ask yourself the following questions (you want to answer in the affirmative):
● Can this person help the organization make tactical decisions in the absence of the leaders?
● Can this person execute projects and day-to-day tasks? Can this person be detail-oriented?
● Does this person like talking to or connecting with people? Do they uphold the company’s values?
● Does this person have common sense, and can they problem-solve with efficiency?
● Can I trust this person?

Hire fast, fire fast?
The playbook looks more like “interview aggressively, hire slowly, and fire fast.” Hiring fast is undesirable because you
don’t want to be sloppy with your hiring process. Don’t firefight by plugging holes you have today with the wrong
people, and don’t compromise your culture and values to get the job done by hiring out of desperation. Remember:
great people reinforce and add to the culture you want to build, so start the interview process early (even if it’s
informal), anticipate the lead time, and find people who are genuinely the best fit for your forward-looking operations.
Don’t hire only for today’s immediate needs; try to anticipate your organizational requirements 12 to 18 months out. It
takes at least 3 months to understand whom you’ve hired on a human level, so don’t make premature commitments.
The right talent will not only solve your problems today but also anticipate what the next 6 to 12 months look like; they
are the ones who will always be ahead of the game and prepared to rise as leaders. By hiring with forward
anticipation, you will have ample time to evaluate. New employees tend to fall into one of several categories:
1. Rockstars, the top 5-10%. Reward them handsomely with a career path, promotion, and compensation. They
will form your “core” team over the foreseeable future.
2. Average and solid, representing the majority. As the company grows, you will continue to need their
contribution, but you will likely have to layer them with stronger senior talent in the future.
3. Non-performers, the bottom 5-10%. It would be best if you gave consistent feedback and had active
conversations to performance manage them out. Fire them fast!

How to excel in hiring
Match the candidate to the design of the role. Actually write a job description! Look for value alignment in addition to skill sets and
abilities. Strong candidates must put their egos aside and self-assess with clarity and objectivity. When possible, simulate the work
with written tests or mock meetings. Look for the intangible factor of self-motivation and hunger. Sometimes it’s worth hiring
someone with less experience but a great “athlete” with tremendous character.
Always hire people who are smarter than you, not just similar to you. In psychology, a concept called “liking” (by Robert Cialdini)
essentially spells out how we naturally gravitate to people who remind us of ourselves. That can be dangerous for the company. You
want diversity in thinking and background with alignment in baseline values. Hire domain experts who are great cultural assets, and
give them ample room to be the best version of themselves. Investors bank on teams first, not necessarily on ideas or products.
Great teams outperform great individuals (and execute much quicker than individuals).
Do use a recruiting agency, especially reaching specific talent. While it may be costly, you want to broaden your exposure, and
some strong candidates only work with headhunters. When you scale to hiring 5+ headcounts per quarter (per recruiter), you can
hire in-house, full-stack recruiters that will source, recruit, and onboard as a one-person shop.
Learn to be a great interviewer. Here are some excellent questions that go beyond the basics. And always leverage reference calls.
While candidates will give you only positive references, key questions to ask are, “If you had to pick, what’s one area you’d like to
see this person improve in?” and “How do I, as their future leader, bring the best out of them?” You will learn how to best position
your new hire for success, and in turn, you’ve also saved yourself a ton of onboarding time.

6. Design your company, not just your
product

In fact, build your company like it’s a product
Similar to finding that perfect product-user fit, you are also looking for the ideal company-talent fit. Just like you have a
product roadmap, you also need a culture roadmap. Your company has to represent your culture AND “fit” the
available talent—and you need to be deliberate about what your company is and isn’t. Knowing what your company is
precisely (or what you want it to be) will help you filter your hiring quicker.
Just as you would review product progress, constantly study your talent pool and org structure. As you scale, assess
your people and anticipate potential talent gaps in your “org design” reviews. You can also hire for culture-add and
look for diverse backgrounds, thoughts, and perspectives to stimulate your company’s growth. Being proactive will
save you much pain in the future to avoid stagnated engagement, sudden departures, or even the beginnings of a
toxic work environment.
Be judicious when you hire your first executive, which typically happens as you ramp the company during the
“scale-up” phase. The right executives will likely come highly recommended by your team/Board and attract a sizable
following of great talent that otherwise would have remained out of reach. These types of execs will magically reduce
your stress (or even burnout) by leveraging their domain expertise to offload the tasks you loathe doing. The best
executives will also internalize your vision/mission as their own and help amplify the appropriate culture/values as
your company scales. As John Doerr said, “we need teams of missionaries, not mercenaries.”

What is culture, anyway?
Culture is the collection of values demonstrated and exemplified by the founders and leaders of your organization.
Culture is not a set of beliefs but rather a set of actions. It’s how you treat each other on a daily basis, how you talk to
one another, and how you embody these values in everything you do.
Hiring HR does not mean fixing or changing your culture; HR simply operationalizes the culture that the leaders have
already established. HR supports and amplifies the culture you are building through programs and processes.
Culture exists on Day 1, even if you don’t see it. If you must, reorg the company to fix a culture that is getting away
from you! After all, there’s nothing worse than a deteriorating culture that everyone can sense, but no one is doing
anything to change.
Accept the fact that your company’s culture may very well change over time as the company grows. Just as strategy
continues to morph over time in service of the vision, your culture will also shift to accommodate more (diverse) talent.
Change is not always bad, but ignoring the conversation of change will always be detrimental to the culture. The best
companies are living organisms that continue to evolve and adapt over time.

How to think about business operations
Beyond culture, the design of the company also needs to include the basics of long-term vision (a 3- to 5-year plan)
and short-term KPI-driven goals. Memorialize your vision/mission, values, and operating principles, all of which should
reside in a set of “founding documents,” sometimes known as a charter. These documents should stand the test of
time and be subject to annual reviews/refreshes. Share these out broadly to your company, especially as you scale.
Remember: you must repeat yourself seven times (and in seven different ways) for the message to stick!
Conversely, your near-term goals should be measured quarterly or at an even shorter timeframe (i.e., monthly,
weekly, daily), depending on your business. These KPIs are the inputs that drive the goals you are trying to achieve
for the year. They need to be measured and scrutinized without bias, and the learnings you draw should provide
incredible insights for your go-forward strategy. Depending on material events that may take place (e.g., new product
launches and acquisitions), KPIs can change quite dramatically as long as they serve the larger strategy and vision.
With the addition of new employees and the growing headcount, your business operations will need to adapt.
Whether it’s systems, processes, or communication channels, you must (re)build “ways of working” every 6 to 12
months. You are striving for full accountability across the board to ensure every employee feels like an owner of the
business. Treat the design of your daily operations seriously, and you will experience fewer growing pains.

7. It’s always “game time”

“Wartime” vs. “Peacetime” companies
You might have heard of the “Wartime CEO,” a term coined by Ben Horowitz that describes the type of CEO who is
always “paranoid” and “fending off an imminent existential threat.” These CEOs break from protocol when necessary,
obsess over minute details, and demand “strict adherence and alignment to the [company’s] mission.”
You could also look at this as “game time”—the pace is fast, there’s no time to rest, and everyone has to be operating
at peak performance with their eye on the collective goal. Startups can be disorganized, emotional, and intense—it’s
always game time, and your leadership team must act accordingly. Don’t over-design processes and introduce
complex frameworks too early; instead, build only “minimum viable processes” that streamline communication.
Unfortunately, racing against time to reach product-market fit will be a little chaotic. You may only sometimes get it
right, have proper documentation, follow processes, or make every employee happy. But as long as you are reflective,
open-minded, and receptive to feedback, your good intentions will always rise above the commotion.
What happens when you finally solve the product-market fit to reach market growth? Sadly, you don’t get to
rest—instead, your immediate next step is to figure out how to scale to corner the rest of the market and subsequently
look to expand into adjacent markets. To become a truly dominant company, one must continually innovate and
evolve its product offerings to stay ahead of the curve, so learn to embrace the constant turbulence of growth.

Startup budgets can be tricky
How do you run a budget in a fast-moving startup? In general, budgets guide how you want to deploy your capital
structurally, but they are not absolute by any means. While more mature companies measure performance against
budget, in a startup, you want to root your spending decisions in an ROI framework.
Essentially, spend your capital on people and activities that drive the most significant impact—this generally falls
under hiring (and retaining) key talent, finding product-market fit, and acquiring users, with some customary tech
infrastructure footprint expansion. You don’t want to be penny-wise and pound-foolish in your financial decisions, but
of course, your runway is also of utmost importance. Spend judiciously with a level of urgency around making an
impact so you can level up, show the metrics and traction for the next fundraise, or hit profitability.
What’s more important than budgets? Roll-forward forecasting! In other words, how far you can see into the future
based on what you know of the past (i.e., what you can “roll” going forward). Typically, this is modeled on product
growth, user retention, marketing effectiveness, and other critical activity inputs such as headcount and additional
run-rate costs. Beyond just cash runway, you want to be able to picture what revenue (or P&L) profile you are
approaching, so a financial framework supports the strategic/equity narrative. Get help to build a model that acts as
an execution handbook for the company, including non-financial inputs that drive a scenario-based financial outlook.

Highs are high, lows are low
No matter what, always remember to look after your mental and physical health. It is a marathon, not a sprint—though
you may feel the need to sprint the entire way. That’s the nature of fast-executing startups, but it’s paramount to
maintain a swift and sustainable pace. Celebrate the wins, as small as they may be, and embrace the setbacks. Don’t
allow the emotions of the company to get the best of you. As Reid Hoffman described, running a startup is like
throwing an airplane off a cliff and fixing it on its way down; the default outcome is a failure if you run out of time.
Miraculously, great startup talents will actually thrive in this rollercoaster chaos. It doesn’t mean they enjoy
disorganization or lack process thinking; they are somehow energized and motivated to problem-solve,
decision-make, and declutter the mess for everyone else. They will simplify the complexity and shine under extreme
circumstances, so make room for talent like this to capitalize on the highs and pick you up from the lows.
One great way to counter the emotional voyage is to build a support group of high-character people, preferably with
similar life journeys. In addition to the amazing startup talents, find an executive coach who can bring context and
introspection to keep your head and heart in the game. Network with other founders and execs in similar industries
and add board members/advisors with deeply relevant experiences to help pattern-recognize and mentor you or your
leaders. Be open and share your highs and lows, and you will quickly find that you are not alone!

8. High valuation is not the end game

Overvaluation is a curse
The valuation S-curve is real. At some point, the sizzle will be worth more than the steak. Every company goes
through the “hype cycle” where, moments after a successful product-market fit, the fanfare around the company is so
high that the valuation trades far ahead of the actual value. Sometimes this is driven by investors’ FOMO, sometimes,
this is the founders’ bravado, and other times, it’s just pure timing in the market. No matter the reason, overvaluation
will come back to haunt you.
When a company is overvalued, expectations will change. Most employees will believe the valuation and think their
job is done. With overvaluation comes overfunding, and the overabundance of resources will create inevitable waste.
The company will now believe it has infinite time to explore all possibilities, and that generally devolves into a lack of
focus and a sense of urgency. It will lose its edge and anchor, and forget that the mission is far from over. Meanwhile,
your new investor is looking for that minimal 2-3x step-up on the next raise. If growth does not meet expectations,
investor impatience will lead to time horizon shifts and extreme management pressure (or even changes)!
With this in mind, it’s much better to find a fair valuation with fair terms that allows you to retain control. As Naval
Ravikant reminded us, “valuation is temporary; control is forever.” Onboard beneficial investors who can provide
strategic and long-term support; they will take the long view when things go exceptionally well or poorly. Ultimately, it’s
about creating a win-win situation for both the investors and the company. You want long-term success, not the
short-term, feel-good valuation story!

Engage investors early, you never know
Raise money when you can, not when you think you need it. Often, founders don’t think they are ready to talk, but
trying to hold out for the most optimized valuation or terms generally does not work. To get the deal terms you want,
have an investor preempt by proactively leading the round. While you can always run a process, you don’t want your
pitch meeting to be the first time the investor meets you. The process often takes longer (easily 6 months or more), so
start floating the conversation early. As the saying goes, ask an investor for advice, and they give you money, but ask
them for money, and they’ll give you advice.
You will need to understand investor psychology and the type of investors you’re dealing with. Pay attention to the
stage, sector of focus, and specific background of the investor. You will need a champion inside the investment firm to
be your sponsor. When you approach a firm, understand exactly which fund they will deploy capital from—you want to
be early/mid-fund cycle to ensure sufficient room for follow-ons.
Be ready to articulate the amount of capital you need and how you’d deploy that money efficiently and wisely.
Demonstrate your confidence and any supporting evidence in achieving various milestones and “roadmap” out your
future fundraising. Have an idea of at least 3 investors you could raise from after the current round. And remember,
fundraising is not a one-off transaction—it’s a multi-year process of building a relationship with someone who will
ideally be a strategic value-add and your biggest supporter, so make sure you also do your diligence on the investors.

When you raise equity, you can leverage debt
Commercial banks are your friends. When you raise your equity round, always start a conversation around
debt financing. Debt can appear in many forms, from asset-based lending to venture debt-like structures to
a line of credit. The debt instrument is to help accelerate growth (user acquisition, M&A, partnership
upfronts, receivables factoring), but at times can also act as an insurance policy. If you are ever in need of
capital to bridge you between equity fundraising rounds, this will come in handy.
When not to use debt? Do not treat this funding purely as equity! Remember that debt has to be repaid
generally with cash, so be creative and negotiate for flexible terms. Strong commercial banks that
understand your sector will be friendlier, so do your research and build your relationships early.
Underwriting is typically a lighter process on the back of a VC’s diligence, so make sure you call the
commercial banks immediately after your equity raise!
Remember that there’s good vs. bad debt. Knowing what terms to negotiate and when to use debt in the
first place is critical. At its best, debt can reduce your equity needs and be a very cheap cost-of-capital
financing option that protects your dilution while acting as a catalyst for your growth. But if you misapply
this instrument, you can create an unnecessary burden that may financially handicap your growth.

Don’t be a jerk, don’t be arrogant
Your reputation is your greatest social capital. If you achieve success, don’t deviate from the principles that got you
there. Always do right by your users, investors, and employees—never compromise on integrity, honesty, or values.
Be aware that the minute you achieve success, you will invariably attract attention, some of which can be negative
influences. While scaling yourself is essential, that doesn’t mean you get to act like a jerk and treat others with
arrogance. Remember your humble beginnings and cherish those who helped you along the way.
It’s also important to keep in mind that success can be fleeting; it’s often a function of timing and luck. One day you
can be on top of the world, and another day you can witness it all crashing down in slow motion. Your success is
undoubtedly well-deserved, but don’t treat your most valuable assets (your team) any differently because of it.
If you experience failure, know that entrepreneurship is a long game. If you can protect your personal brand, your
failure will fade into battle scars demonstrating character and experience. If you become the worst version of yourself
after a setback, you can forget about your next venture. Investors don’t always bet on success, they sometimes bet
on experience, but they always resonate with strong personal stories. How you handle your misfortunes will dictate
how investors see you today and in the future. As Winston Churchill said, “Success is the ability to go from one failure
to another with no loss of enthusiasm.”

Evolve your leadership
Leadership is an evolution with an endless learning curve. Not only are you growing, but the company you’ve built is also changing
over time. Be willing to work on yourself so you can scale—this often involves finding a coach or advisor who can provide
constructive feedback and support. Understand that you must get ahead and transform as a leader if the environment changes. If
you do not, the Board will ask to replace you with a professional manager at some point.
The biggest roadblock to scaling yourself is your willingness to delegate. Learning to do this requires hiring people you can trust and
focusing on three things: leveraging your unique talent, hiring leaders, and managing your exec team. Always focus on the singular
thing you can uniquely do for the company that others cannot; this should consume 50%+ of your time, and ideally, it is product
vision and execution. Matt Mochary has a time audit method that uncovers your “Zone of Genius.” Beyond that, you are spending
30%+ of your time recruiting your senior team so you can adequately delegate/scale, and the company can expand with strong
functional leaders. You must continue to be the culture evangelist and ensure your direct reports work well together. You must build
a strong, strategic Board and invest time to foster that relationship.
But no matter what, be honest with what you know and don’t know. Vulnerability is one of a leader’s most powerful attributes: It
humanizes you, gives you credibility, and demonstrates genuine authenticity. If you need to, ask for help from your investors.
Nothing is worse than trying to over-manage your Board to the point where they have no clue how to help the company. Don’t ever
surprise your Board—always operate with a level of transparency that creates trust. You want your Board to be on your team,
fighting the same battles with you through the good and bad times.

Surround yourself with great people
Big names and impressive credentials don’t always mean these people will be great for you or the company. Be
discerning about the network you are creating. Subject matter experts that don’t share your vision, value, or culture
can create fissures in the dam. Look for both capability AND character.
A lot of it comes down to principles and integrity. Great people will support you, but they’ll also push you with honest
feedback, especially when you need to make tough decisions. They will help you figure out what’s right and not just
say “yes” to you because that’s the easier, non-controversial answer.
And that includes your Board! If you don’t have upstanding people on your Board who will complement and challenge
you, this can have a long-term drag on the company’s performance. In addition to typical governance duties, your
Board should engage in strategic discussions, assist with fundraising, and connect you with the right people, partners,
and companies. Create mutually beneficial wins for your network, and those very people will forever support you.
If you can, bring on angel investors who can offer strategic help. More valuable than the check they write, they can sit
on your advisory Board and offer guidance, connections, and strategic thinking. Sometimes, they can even help
mentor functional leaders or eventually parachute in to help scale the business during times of change. Angels can
represent strong signals for certain investors and usually are motivated to make warm intros for future funding.

10. You don’t need a full-time CFO (yet)

Typical questions a startup CFO receives
● Can you help me fundraise? Which investors are you familiar with?
● How do I improve my pitch deck? What are investors looking for?
● What sort of traction do I need to show before I talk to investors?
● What do I need to be able to raise X at Y valuation?
● How much money should I raise and why? How should I think about dilution?
● Should I raise a convert note (or SAFE/SAFT) vs. a priced round?
● When should I leverage debt, and how does that work with equity?
● Do I raise from a strategic or a financial investor?
● How can I scale the company with my current strategy?
● Should I monetize my product/service or wait until I reach scale?
● I have some metrics, are these good enough, and how do I improve them?
● Should I spend more on marketing? If so, what % of my Opex or Revenue?
● How do I scale without losing culture, speed, or quality?
● What biggest lessons did you learn from your past companies?
● What is a CFO? When do I hire a CFO? What makes a CFO great?

So, what is a CFO?
A CFO is not an accountant, and it’s not someone who creates financial reporting. This person isn’t your tax advisor,
and certainly does not act as your auditor. There are several archetypes of (early-stage) CFOs:
1. The “CPA”: Highly precise and disciplined in tracking revenue or expenses, addressing compliance and
reporting needs (i.e., accounting-focused, former controllers).
2. The i-banker: Largely external-facing, connected to (and trusted by) investors, and well-versed in corporate
finance (i.e., former investment bankers or VC/PE).
3. The growth strategist and operator: Deeply understand market positioning/dynamics and how the company can
grow/compete, including acquisition and partnership opportunities, while behaving almost like a COO (business
operations leader carrying out and supplementing the CEO’s vision/strategy while operating cross-functionally).
The third type tends to be the most valuable and has the broadest remit, especially if they come equipped with
extensive industry operational experience. Someone who is growth-oriented, has strong pattern recognition, and can
operate at the intersection of strategy and operations will supercharge your company’s growth. Hire the right type for
the right stage, pairing your CFO with the proper growth trajectory of the company.

When to hire a CFO
For starters, you need to take care of the non-CFO financial tasks before considering bringing on a CFO. That means
competent bookkeeping, clean records, and sufficient compliance (e.g., reporting, banking). Often, you can outsource
these duties to accounting firms (e.g., Kranz, Armanino) or platforms (e.g., Zeni, Pilot) before transitioning to full-time
in-house accountants. Even at pre-revenue, get your accounting done quickly and correctly by outsourcing as much
of your administrative work as possible.
When it comes to fundraising strategies, business growth, or other strategic maneuvers, that’s when you can consider
bringing in a part-time strategic CFO advisor or a full-time CFO. Typically, full-time CFOs should only be hired after
Series B/C, especially when there is credible product traction, scaling revenue, and company growth (75+ headcount).
The functional coverage of a CFO can be narrow or broad, even as expansive as “all of G&A,” including FP&A,
Accounting, M&A, Biz Ops, Legal, HR, Talent, and IT/Facilities. If you are IPO-bound or a late-stage mature private
company, it can be more concentrated on FP&A, Accounting, Investor Relations, and Corp Strat.
Beyond functional expertise, you are really looking for a strategic business partner and someone who amplifies the
effectiveness of the entire leadership team. Your CFO is typically the #2 executive, so set your bar and expectations
high for character, personality, and fit. Whether the CFO is on your Board or not, this person will frequently interact
with the investors, acting as a second voice to the CEO and occasionally as a counterweight. Don’t hire the CFO who
is “just fine”—hire the CFO who makes the entire company and yourself better.

Specifically, what makes a great gaming CFO?
Gaming CFOs need to be responsible for building business strategy and an operational “playbook” to drive the business, preferably
a profound understanding of how the game/product can engage/retain, and monetize. Namely, this requires sound understanding
and modeling of all relevant factors that feed into user acquisition, user engagement/monetization, and the cash flow associated
with cycling profits into more user acquisition. A great CFO understands the unit economics of cohorts and lives by LTV:CAC metrics
that feed into financial metrics and daily operations.
Great gaming CFOs work very closely with the marketing team, which typically deploys the largest budget, possibly more
substantial than the company headcount cost. There is a triangular relationship between marketing (how to acquire users), finance
(how to fund user acquisition), and product (how to continue engaging and monetizing users). How one handles that delicate but
intricate balance can make the difference between a good company and a great company—and a great CFO is pivotal to how fast
this flywheel turns.
Beyond the metrics and model-building, great gaming CFOs are also data-driven storytellers complementing the founders and CEO
well. They will seek out inorganic growth opportunities to supplement or accelerate the overall equity narrative and financial
performance. While the job is about financial discipline, great gaming CFOs understand when to fast-follow promising results in the
make vs. partner vs. buy matrix. After all, gaming is generally susceptible to hit-based outcomes, so great gaming CFOs know when
to relax the guidelines in pursuit of creative work that could very well be the next billion-dollar idea.

Exec Summary
1. Product first… as customers’ needs will define your company.
2. Track the right KPIs… not just the “attractive” metrics.
3. Iterate fast and always be executing… you’re in a losing race against time.
4. Focus on quality/speed of decision-making… not necessarily on results.
5. Don’t hire for scale too quickly… you can only see 12 to 18 months out.
6. Design your company, not just your product… be intentional with your culture.
7. It’s always “game time”... learn to thrive in the chaos.
8. High valuation is not the end game… instead, build a sustainable business.
9. Be humble, stay grounded… for your reputation is your greatest social capital.
10. You don’t need a CFO (yet)... instead, find yourself a strategic advisor!

Questions?
Please reach out with any questions or comments, and I’d love to continue the
conversation offline. I am particularly fond of Gaming, Creator-as-an-Economy, Gen Z
apps, and Web3 / GameFi projects. I also have learned over time to surround myself with
people who exemplify the values I live by. I am energized by high integrity, relentless
personal growth, magnetic inspiration, joyful positivity, and courageous authenticity.
If you are an operator, what do you think I’ve missed? If you are an investor, how could
this help with your portfolio companies? If you are a founder, I hope some of my
observations resonate with you. And if you find yourself needing some help, I’d love to
lean in! Please reach out, and I look forward to future conversations.

Great Startup Resources
The Hard Thing About Hard Things - Ben Horowitz
The High Growth Handbook - Elad Gil
Blitzscaling - Reid Hoffman, Chris Yeh
Measure What Matters - John Doerr
Secrets of Sand Hill Road - Scott Kupor, Eric Ries
Principles - Ray Dalio
Thinking In Bets - Anna Duke
Influence - Robert Cialdini
Innovator’s Dilemma - Clay Christensen
Obstacle is the Way - Ryan Holiday

Top 10 Startup Tips for Founders

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