#Escape the machine
You wake up to the sound of the alarm on your smartphone. It's seven and you need to catch the DLR to Bank where you switch to the tube. Don't forget your headphones. The bring your own device policy just meant that the fancy startups no longer need to worry about giving their employees company laptops. Everyone's carrying their backpacks with their laptops, chargers, pens and notepads, the occasional smoothie and what you could call a west style bento box. You’re trying to avoid as much eye contact as possible. The lady next to you is on Instagram of course. You catch a glimpse of what she's looking at and you can't make out the appeal of those photos. You're in repeat mode running on autopilot.
It's the paradox of your routine. It keeps you alive, but at the same time, it's wearing you down from the inside. You try to take your mind off of it in the gym, at the pub, in the park, with friends, with your lover, your wife, maybe kids, maybe there's absolutely nothing you actually miss in your life, but there's the big catch. You walk down the street and when you look up what you see are skyscrapers filled with people just like you. Or are they just like you? Not all of them. There are ideas driving whole industries, people in charge, the ones who define the pace of the rest, ones with the big ideas. You have good ideas too, don't you?
You begin having daydreams of an alternate life. What if you were in charge - of something. In charge of a game-changing, #disruptive, Innovative $Idea. There is you and your own company, your own office, investors saying yes, your PA with the large glasses with thick black frames that looks cute. There are the public appearances, the ability to buy a multi-million pound, dollar or euro penthouse and look at the skyline of the town one quiet evening and be at peace with yourself. The type of piece only a self-made person lacking absolutely nothing can only have.
In reality, you have to make it to work before 9:00 am for the morning meeting. You have to make sure you wear The company t-shirt or that your shirt and suit look nice and representative. You do a little bit of small talk here and there, you drink your second coffee, reply to your emails, try to be funny on the company's Slack, you go through your tasks and/or the tasks of the people under you. Trello, Jira, Agile, Google Drive, spreadsheets, XD, Sketch, Overflow, more emails, Whereby, Zoom or ancient Skype over and over and over. You're beginning to slowly have a hard time concentrating. The seed of your obsession has already been planted. You look out of the window, you walk down the street to get lunch scheming, you scribble things down on pieces of paper, you make notes. The rabbit hole is in reach. This is your escapism.
You're going to #startup
Not "Michael Gray - The Weekend" - although it's a cool track.
The weekend hits and you have your nice little Moleskine notepad and Mitsubishi pen nicely positioned on your table. You canceled everything else.
A notification appears - it's your good old friend Netflix - your favorite show just released its new season. It can't hurt, can it! You'll watch just one part. Actually it was seven parts and it's now 5 pm on a Saturday.
Some of these services you're signed up to are like "anti-yoga" for your concentration efforts.
You might also be reading one of those 'smartass startup books' - stop now - throw the thing across the room, unless you're actually reading the digital version - please don't destroy any of your electronic devices. Find a better time to read one of those - like during your commute.
"I'll just do something on my laptop when I go to bed" is a nice thought. You get home tired and you feel like the best strategy to concentrate on the rest of your life is in your bed. The one thing I always needed when renting an Airbnb place was to have a nice table in my room - that was always my prime objective. Then again - it's never ideal to work where you go to bed is what I found out. There is something to be said about work-life hygiene. On the other hand, you might not be able to choose from. There are Starbucks, Costa, Pret and a ton of other places to go to and hang out while caffeinating yourself to oblivion.
#There be expenses.
From the very beginning.
"I need to get a new MacBook Pro and maybe a new iPhone to get me going." And why not throw in a new car lease or buying a new TV? The best thing you can do when launching a startup is to become indebted, have a ton of things to pay off every month and not be able to afford even the most basic things like a simple logo, domain names, basic server costs, business cards or some cheap shared office space and overall be able to afford to go on meetings.
It's always a bad sign to meet with someone who juggles expensive toys but isn't able to pay for an artist to do their logo or is looking to get the development done for free while typing on a three-thousand-pound laptop. Of course, you aren't able to do 'something' having no tools, but there is a golden path to take that goes hand in hand with your financial situation and your expectations.
A friend of mine compares the time and money put into CVs with the expectations of how much someone wants to make at a position they're applying to. If you're applying to a hundred-thousand-per-year position, but your resume looks like something pulled out of a dumpster than it won't strike a point. The same goes for business plans and your overall image. Again I'm not saying that you should overinvest, but be ready to put in the money needed to at least look professional.
There seem to be a lot of opportunities to get you off the ground - at least in startup capitals.
I have seen specific incubators emerge. They find - let's say ten 'idea people' - let's call them 'CEOs' whereas they are specifically looking for SaaS ideas to fund. The first round of funding should keep a CEO, CTO and whatever other role is necessary afloat for around three months after which they throw away half of the startups with the usual "let's keep in touch - we will continue to support you" bullshit. I've noticed that some of these incubators are active in finding personnel for these startups through conventional means - the usual LinkedIn job-posts and all that. There is a bit more hand-holding and financing involved than some other spaces I've seen that most try to elevate already semi-complete teams. It seems that the creation of a startup has been boiled down to a standardized process. The idea of some people still seems to be that if you invest 50k into ten ideas than one of them might make you a million. The umbrella organizations that end up with a short-list of baby-startups are keen on keeping them alive for as long as possible. No one wants to see a batch of mini investments all go bad resulting in a zero-portfolio. (To be honest, a zero-portfolio is a no-go - because there is usually intervention and more hand-holding if there's a chance of that happening) The approach of venture capital funds when you approach them directly is different in that they actually have a huge filter and they are expecting you to have a level of expertise beyond what you would find in a project just entering an incubator - Although these are usually just two sides of a coin - you expect that at the end of your "incubator journey" to be introductions to investors and VCs. All these things go hand in hand. Many founders do the mistake of "approaching VCs" in baby-stages, no-introductions, very little planning - that's just spam, but more about that later.
There are programs and money to tap into, but you have to make the best of the time you're given. I've seen one too many startups attend an incubator to just end it with very little continuation afterward.
Incubators and in your later stage - accelerators - are a good way to put you on the map and get you in touch with "people from the startup industry" if done right.
But literally nothing is a "magical solution".
#Ride the bubble
I wonder how much money is spent by the earliest of early-stage startups that you never get to know - those that never actually "start-up". The apps that don't come up in search results or are so far down the line that you can't really botter scrolling. How many websites get abandoned after a few months and how many hundreds of thousands, millions or tens of millions of lines of code were written that just lay waste on BitBucket or on some external hard-drives. How many hours spent in Starbucks, Costa, Nero or the like scribbling, planning, staring at the screen. Researching, thinking about the right name, the right domain name, colors, searching for co-founders, listening to podcasts and reading motivational books by self-proclaimed experts on success.
Whole parts of industries exist to service idea creation and getting "in the zone". I would like to know what the percentage of occupants of shared office spaces are early-stage pre-funding startups. We recently got to witness the bubble surrounding WeWork burst with a lot of talk about SoftBank and overall valuations in startup land. As with former bubbles we suspected that some valuations were too ambitious, but we played along. In fact, the high valuations of Uber or WeWork were brought up at many meetings as examples to look up to regardless of these businesses losing money - I was part of such meetings where these valuations were essential to "the pitch". This time in the years prior to 2019 we got to witness a type of bubble similar to the .com bubble in some aspects, but not yet bursting as there are still investors willing to pour money into ideas burning through billions.
In the year 2012, I found myself in Berlin. Then I witnessed a bubble that many even today didn't realize has already burst. We have been living in the late stages of the app-craze when the mere fact that you were making a mobile app was considered impressive regardless of many details. The idea was that your smartphone will be the only thing that matters. In a few years afterward, we found ourselves in the short-lived VR hype that didn't manage to deliver. I would argue that in the last years we've seen a shift towards industries that seem safer like fintech, healthcare or mobility. In between, we had the blockchain bubble and ICOs as Bitcoin price was around 20k. Investors must have already become wary of anything that says "AI" or "blockchain" just to make an idea sound investable. As I'm writing this during the last days of 2019 I get the feeling that not much has changed - there will always be startups that are genuine and just happen to be doing the right thing in the right way at the right time and there will be startups that are just riding the bubble. The ones that survive will be the ones that had a vision regardless of the fad.
#I have to move fast
Healthy paranoia huh?
There are ideas that strangely get triggered by mass because of some similarity in media we consume, international or local happenings, advancements in technology. There are examples of inventors coming up with the same invention, mathematicians or physicists arriving at the same conclusion at the same time unaware of each other.
But that's not exactly us. In the startup land, you can sense revolutions coming. Sometimes long in the making, a ghost of a revolution (Gustav Landauer - Die Revolution) materializes at multiple places, but in different forms and it's up to independent factors which representative of the revolutionary genes survives.
The tech industry is especially prone to monopolization. It might be because of the nature of various products. You are not tied to using an online portal if it begins being a pain. If a competitor to Airbnb, Tinder or Twitter materializes and you find it better suiting than you have no reason not trying it out. And exactly this potential fluidity is part of "the pitch". Everyone began as an unknown small player, so why couldn't you. Although that might be true in theory there are products that have a market dominance so substantial that in most cases you can't just replicate their basic functionality, slap a different name on your product and expect to start acquiring millions of users as they move over to your service. To avoid competing on the (same level playing field) startups often choose to exist in niche areas to not compete with the market leader directly.
So what if you happen to find yourself at the right place at the right time where you're not trying to (fight a giant) right away. You have some time as the already established "conservative" corporations are constantly laughing at the newcomers and protecting their vintage assets. In the last months, I looked more closely at Tesla - it's been an example of a company being bad-mouthed by every-other tech journal while more or less quietly and with focus building a Gigafactory in Shenzhen. I have read articles about how insane their plans are to build another Gigafactory in Europe. The automotive industry is a daily reality in my hometown as I live close to a PSA plant spitting out Peugeots and Citroens. Recently I began seeing the first electric car produced locally on the road - maybe as part of testing or maybe these were just generic purchases as there were some government grants being handed out to EV buyers. I have seen how large brands such as VW are dealing with R&D, approaching everything either in hand-gloves outsourcing not just software development but also their manager’s responsibility as is usual in these giants while on the other hand producing quirky concepts, cars with glass doors and futuristic interiors without a steering wheel. They're protecting their old assets - the old industries which made them tremendous profits up until now. Just a few years more is the wish of the managers at these places. This is all while R&D is really R&D at companies like Tesla and the plan is to dominate the future, not to try to extend the life of old technologies. The moment it becomes obvious what direction the World is heading some large corporations go into a buying spree - they allocate vast resources to purchase startups here and there working with external consultants and hiring upmarket legal firms to determine valuations. Their largest limitation is that they usually try to employ the same conservative stiff bureaucracy across the whole business - manuals, standards, processes for processes. When this is overkill it becomes limiting to R&D and the growth in innovation seen in the company purchased falls sharply and all the talk about synergies - the little guy benefiting from being part of a larger family and the larger family benefiting from having a hyped young tech company under its wings - all that just becomes a motivation tactic. But that is The exit founders are hoping for - to be noticed by the larger guys with deep pockets. For some time you might have hoped that the larger guys wouldn't notice you - you thought you should be threatened by them, that they'd try to copy you as soon as they'd set sight at you. That was when you still believed you could do it on your own and make profits faster than you burned through your investments. But things changed. The same white-shirts and black suits you were hoping to fight in the years to come have now desks at your office or maybe you relocated to their corporate offices to optimize and you are surrounded by less-effective spreadsheet-filling highly paid yes-sayers with only the appropriate opinions. You might have noticed how the older generations sometimes get overly excited by technology whereas you take it for granted? Your dad or grandpa being flabbergasted by the “Internets” and all that you can do with a tablet. It's all magic and you must be a genius to know how to use all those swipes and pinch-zooms and how could they have put all this into such a small form-factor. At first, it feels good, you have hope in the old geezer and you have a sense of importance. Then as you sit down in the old squeaky chair in the living room sipping tea from a vintage cup it strikes you - all this amazement with technology and your skills have an element of a bitter taste to it - you sense envy coming with all the praise. It is not your job to pull the old generations to a new world, but to be the front-runner amongst your own age-bracket. You can't forever be explaining touchscreens and apps and how to use the internet to someone. There's a similarity in how this and being acquired by an "old-industry" company feels like.
At the start they'll find your people "cool" bordering with "cute", but they can't give you special treatment forever. You were promised autonomy, growth riding on the back of synergies and whatnot, but you've been converted into mere employees like any other one of the thousands who already worked there.
You wouldn't relate to this if you're just now launching your startup and if this is indeed close to your own situation then you must have made some good decisions - most don't get this far.
It's fascinating how the startup journey progresses. There are those who will tell you that they'll be larger than Amazon and those who point out with a serious look on their faces that they're the next Steve Jobs. Business plans which begin ambitious - stating that the market they're entering is tens or hundreds of billions of dollars in size. Are you stating that you'll win the market for yourself or that your aim is to be one player amongst many? The more experienced people who become founders are often more realistic, but their estimates are still fiction and so they assume winning over some percentage of the market. Check which direction the wind blows - is it five percent, or maybe more like ten? Those who made it through the prototyping and funding process, but didn't take it any further even with some customers scale back even more. If nothing else then at least one of the big guys notices us. If not even that then it's the end of their journey. The clock won't stop ticking.
Is just a number.
But a cool one.
It's being tossed here and there on meetings. You can find it in any other pitch deck. You are kind of rich if you have a million dollars. Your video is trending if you have a million views. You're doing something right if you have a million followers. To have a million users must open up many doors. A million downloads and the buzz generated by it. Will your servers be able to keep up? Will you be able to pay for the bandwidth, the storage, and the processing power? Your inbox will be exploding. Surely once you hit such numbers investors will be throwing bags of money at you.
Why not throw in that you'll be an essential part of a multi-billion or even trillion-dollar industry? Woah! That's a lot of zeros and zeroes are cool I guess.
What are your assets, access, connections, and insight worth? What's your advantage and what is it worth? Of course, you can only estimate and it comes down to how well you can make your case.
It's a natural meeting shortener if you can't make a strong enough case.
In 2020 as it stands you just need to look at the stock market to realize what's the meaning of valuations in startup land. There are stocks that are disconnected from reality ten times over. Stock prices are a game of confidence - a prediction of the future rather than they usually are a realistic estimate of a company's worth. So there's stock market capitalization, hypes, revenues and growth and all these should naturally somehow be connected, but it turns out that buying shares is like buying "currency" with a company's brand on it. We live in a World of runaway stocks and trillion-dollar brands and that's exactly what they are - "brands". Here "belief" and "trust" come to play more often than logic. Emerging startups often compare themselves with these publicly traded companies and their stated value seems inflated, but there's that argument that there are players on the market worth a thousand times more.
But that's just a fact. Not good, nor bad.
Startup valuations are usually fiction - an estimate thrown around here and there and we live in a world where stock market capitalization is disconnected from revenue. I'm not suggesting that you do not use the knowledge of this fact to your advantage, but that there's both a smart and a naive way of doing so. Optimistic valuations and the pointing out of billion-dollar markets are there to be used as a means to support your plan and not to be the epicenter of it on which you base everything else - if it is then you risk your pitch sounding substanceless.
At the end of the day, you are selling a "potentiality". You're expected to over-exaggerate, but if it's too much you'll come by as naive.
I realized that during my writing this I began treading more in the area of psychology and less in what people would expect - you are often presented with opinions like - "you didn't use this technology" or "you didn't implement this process". If I boil it down than going down the path of a "specific implementation" is less of a startup killer than not having "adaptability", "openness" and in general #peopleskills. If your adaptable and open than you'll realize where you made a mistake and you'll fix it anyway. If you get too agitated, you don't know how to lead a meeting or you get super mad if someone raised a point then you'll just keep on failing.
#Bulls, Bears and Pigs
Whereas pigs will be slaughtered.
I'm applying a trading analogy on the startup town to describe not only the naive founder. In many aspects of life, you have a few types of people. There are those who are smart and know they are, those who know they aren't smart, but are still confident and then there are the ones that aren't smart, don't know about it, but are confident. You are naive if you "don't know that you don't know". It's similar to the crowd that is called "pigs" in the trading community - mindlessly following what everyone else does, panicking and losing money in the whole process.
Of course, it's best if you're smart, you know about it and you’re confident. You radiate success. You're just stating facts, not making stuff up, not stumbling. You have done your research, you've been at the right place at the right time, you have the right background, the right knowledge, and connections. You don't need to "fake it".
But you could. "Faking it" is also an option.
You can also navigate startup town if you "know that you don't know", but you're able to charm and manipulate your way through different doors and situations. Be convincing to "make a case", be convincing to "get co-founders on-board", investors, clients - keep on convincing until you exit or until there are enough actual smart-heads around you to validate your endeavor.
There's been quite some talk about Theranos lately. It's been made into an example of unethical business practices. I tend to believe that Elizabeth Holmes's plan was to "fake it" until she'd actually make things real. I experienced these types of practices first hand and they're risky. I guess Holmes thought that she could actually pay for progress to be made faster than how fast reality and expectations would catch up with her. We might see similar documentaries and framing in the case of WeWork and Adam Neumann with the difference that his decisions probably didn't endanger as many lives. I am not endorsing these practices, but merely pointing out that they exist and not always lead to the co-founder of a startup being ousted, prosecuted or ridiculed. I bet that there's a Theranos and WeWork out there that "faked it" in a type of way and for an amount of time that had them actually buy themselves into enough knowledge and/or game them enough time to apply business practices that actually worked and weren't unethical. It's the "fakers" who aren't good at their game that leave a stain on the streets of startup town.
In case that you "know that you don't know", but you still want to enter the scene, but you're not willing to bullshit the World you're actually setting yourself up for hard and honest work. Buckle up and start learning - it's like attending college. You can spot these types by how humble they are - they attend startup events, panels with VCs and seed camps to Learn and not just to have their perception validated.
It might be really hard to come to a point where you're willing to change strategy after discovering you were on the wrong path. We gravitate towards a bit of bullshitting to not need to backtrack. Why? Because it's simpler and often we hit resistance in our own ranks if we highlight that we've been "doing something the wrong way for the last months". "But we invested so much time into it" is the enemy of adaptability. Isn't it a type of nostalgia? Cute little past time endeavor, but a natural startup killer.
#We're all highly dedicated.
Just that no one else except you seems to be putting in any work.
Don't mistake co-workers and co-founders for friends and vice-versa. "It'll be so much easier working with Jenny. Jenny's a friend." And Jenny might have expressed interest in what you're up to, but for her, it might just sound like a playful endeavor lacking deadlines and structure. In any community, it might irritate the socks out of you if someone writes "I just did this for fun" realizing that they made millions. It must be nice doing this "just for fun" and not feeling any peer pressure, the potential of looming financial instability and the rejections on each corner. You long for being that one person plowing through this endeavor with a smile on their face.
Is there something wrong with me that I can't just enjoy this for the sake of it?
You see this divide often in the Indie Game community. I guess you can reach success either by just outright being talented and the process just being fun, but kind of feels almost automatic to you and you can, but don't have to reach success by hard work. Finding a niche and being different is somewhere in-between.
I don't understand CEOs who want to necessarily manage product development, design and sales on an atomic level even though they are surrounded by talented co-founders.
#Let me self-improve You
There has been a shift that happened sometime over the last few decades.
We dismiss self-improvement and creativity if it's not backed by external validation.
You are no longer building a model train just for your own happiness, but there's this thought in the back of your mind that you'll make a YouTube video of it. We are obsessed with the idea of creating both physical and digital "things" that are easily reproduced and where every copy is the same. I've seen the "sole maker community" be a bit looked down upon by the "SaaS/App" startup community because it fails to understand why on Earth would you be creating something only for yourself.
I adore Simone Giertz and others who just "do stuff" - who have their own workshop and just want to mess around with things and be creators for the "creation's sake". There are too many "creators" in the startup community who label themselves creators, but it's just a human-skinsuit.
I don't even think that any of us can be "pure at heart" or have "simple intentions". Cyber puritanism is hard to find. "I'm just doing this because it's fun" no longer exists, because whatever we do - at a certain point we think to ourselves that because there are YouTube, the App Store, Steam and all other digital distribution platforms that there can be others benefiting from our work. Then there comes a moment when we surpass the Event Horizon and we're no longer doing something because "it's fun", but only because of the potential audience.
("Hello everybody out there using minix -
I'm doing a (free) operating system (just a hobby, won't be big and professional like gnu) for 386(486) AT clones. This has been brewing since april, and is starting to get ready. I'd like any feedback on things people like/dislike in minix, as my OS resembles it somewhat (same physical layout of the file-system (due to practical reasons) among other things).
I've currently ported bash(1.08) and gcc(1.40), and things seem to work. This implies that I'll get something practical within a few months, and I'd like to know what features most people would want. Any suggestions are welcome, but I won't promise I'll implement them :-)
PS. Yes - it's free of any minix code, and it has a multi-threaded fs. It is NOT portable (uses 386 task switching etc), and it probably never will support anything other than AT-harddisks, as that's all I have :-(."
— Linus Torvalds
A few decades later you can't go on the internet without your request going through a hundred Linux servers.
"As we sit here, in the year Two Thousand and Eighteen (better known as "the future, where the robots live"), our beloved Linux is the undisputed king of supercomputing. Of the top 500 supercomputers in the world, approximately zero of them don't run Linux (give or take...zero)."
Linux and Supercomputers
by Bryan Lunduke on November 29, 2018
#My boy/girlfriend stands 100% behind me
During my first startup, I needed to often travel to the UK and initially stay at a friend/co-founder's house. First for just a few days at a time, but then came the need for me to stay over for a few weeks. We had very little cash on hand, but I needed to stay over for talks with investors.
Well, my friend's girlfriend didn't think it was ok for me to stay over for so long even though we were attending second or third rounds of meetings and already had offers on the table. Oh the subtle passive-aggressive signals on display like her shoes not inside, but right outside of the apartment's door to symbol that she's not feeling at home at her own home. Discussions and reassurances. How far is your partner willing to go? Are they willing to take the potential financial hit of you moving to Startup Town? You both have a certain type of life, expenses, friends, maybe loans. You might be willing to scale back, but are they too?
#Things happen automatically
No, they don't.
#We just need to build the app
Just that no one else except you seems to be putting in any work.
Let's reduce decades of software engineering craftsmanship into a trivial task, one of the simpler things that need to be done on the path of your success. Anyone can do it. In fact, you're thinking to hire an offshore agency to do all the work to save cash. You're thinking of using one of those websites where you post a job and choose the cheapest developer.
One of the differences between technical founders and non-technical ones is that the technical ones often tend to see the value of a product in its technical challenges where the non-technical ones in the idea regardless of the technical details. Things are again not black and white and a unicorn's colors tend to gravitate towards the rainbow.
I met people who were creating something rather as a tribute to their craftsmanship and less based on a market need. For instance, a software engineer might tend to make a tool that does the exact same function as a number of tools out there, just in a different programming language or using a different architecture regardless of advantages or disadvantages to the "user".
Technical founders tend to get lost in the complexity of their solution and find elegance in it often forgetting the form and function visible to the users. Non-technical founders, on the other hand, tend to overvalue or underplay certain bits and pieces of technology developed. For them, the bottom line is often equal to the right colors and the size of the font. It's best not to downplay either of these worlds, but to combine them to create the best possible product.
Saying that you "just need to build an app" or "just need to build the software" is the same as opening a restaurant and stating that you'll "just need to build a kitchen" and "just need to find a good cook". The same trivialization is dangerous when talking about "going to market". Then we'll "just sell it" or we'll "just put up ads". Neither of these things exist in a vacuum. Your product isn't your software alone neither is the software just an inconvenience which you have to fund and the product is the idea and the marketing strategy - it's all these combined.
I have worked on projects with a horrible feature creep either as a developer or product owner. In my job as a product owner, it was made clear to me that if I want to keep getting paid than I should pretty much implement everything the CEO wanted regardless of the CTO, developers experiencing a rolling burnout and just insane delivery expectations. If the position of the CTO is reduced to only being the highest-paid developer, have the most responsibility, but be completely ignored when it comes to timeframes and what's realistic than the title is purely virtual. A product is never perfect in its first iteration (in its first release) - you can argue that it's never really "perfect" - we can just try improving step by step. Chances are that you won't have all the features you envision in the first release and if you keep on postponing the release and adding new features and changing the product than you might miss every opportunity on the market you have and you'll alienate your developers. You won't just make a release and then it's a static animal living its life - you improve step by step in unison with your customer’s expectations, your vision, R&D, estimates - breaking down ideas into phases. You can't ridicule everything, you can't say yes to everything either, you can't push your people forever. Not understanding these things is a kind of "Fermi paradox" type firewall in startups. At the end of the day, you might just want to sit down with your co-founders, figure out what's important, what not, prioritize and figure out how to proceed bit by bit.
During my business trip to San Francisco, I have witnessed something that I'd witness multiple times in the next years - the Sales team trash-talking the Development team. I have witnessed the same thing before when sitting down with the developers. "The guys in San Fran don't know jack about software development" while the sales guys thought that the developers were "just slacking off & didn't know jack about sales". So both teams reduced each other's craftsmanship to something they perceived was more an obstacle rather than a fundamental asset. They didn't try to do calls, sit down with each other and try to explain why one thing takes longer to develop or why this or that request or idea came from the sales team - they were just in a constant "grudge-state". Back then I had a simple solution - I sat down with the owners of the company and I was open about the dynamic and that people should just get together, sit down and try to explain things to each other. That fundamentally there were no "slackers" in the business, just people who felt misunderstood. Back then it totally didn't work out. The whole development team in San Fran was laid off and the contract with the offshore developers was canceled by part because key people were alienated and started acting against the company. It was all toxic in the end. All you can do is try your best.
#It's my way or the highway
Successful startups are filled with engineers who believe that it was their specific choice in software architecture, programming language or way of running development that led to the company's success and that any other choices would have led to a disaster. In fact, these folks can be quite dogmatic about it, even in cases where you could have come to the same outcome have you gone down different routes. Trends and cool factors - whatever technology you mention, be it React Native, PHP, Python, Swift, Objective C, Flutter or anything you can think of there is a room, a crowd of people in this World for whom mentioning one thing equals to poison whereas for a different crowd it is the only possible path to success. The same companies might also be filled with salespeople who believe that if it were not for their specific skills and different approach the company would long be a downer. It's for the specific touch, the suit, the different articulation, making your presence be felt in meetings, the correct smile, the correct response, never saying no. All of this but with their little bit of #different. The thing is - in most cases a company's success isn't based on a single decision, but a whole myriad of them. It's often this false tagging of decisions and outcomes as only causation where in fact things (a successful outcome/s) are a combination of causation And correlation. One can't exist without the other. A salesperson in a successful company might think that they could sell snake oil - they believe they're that good. But selling snake oil would put them in the same category as the usual modern online scams. You sell the right product or at least a good enough one at the right time to the right audience or an audience that can be swayed for the right amount or at least an amount you can justify. If you have the right product that works and you're approaching a potential customer that's having a pain you can solve than off course ýou have a shot, otherwise you'll struggle and die a painful death. When it comes to software there is a number of integrated development environments, programming languages or software architectures you can use to get to an almost equal outcome, but truth be told in most SaaS products the customer doesn't care about what architecture you used as long as the thing is fast and reliable. You make choices that best suit your way of thinking, your organization structure and knowledge base. It's easier to see your codebase be utilized in a product used by millions if the product idea and execution were spot on.
"So you're saying that it doesn't matter what technical stack I use?" Not at all, that would be silly. I just recommend you not be too dogmatic - don't blindly follow every trend, nor get stuck in the past just because of some nostalgia feeling nor use different technology than the rest of the industry just for the sake of being different. Keep your eyes open - take a deep breath and look at things from a distance. I'm also not saying that you can be a bad salesman if the product and the underlying company support is good - what I'm saying is that you shouldn't become stagnant because of your successes.
What about less successful startups? Places where people cling to bad decisions, places of a slow painful burn of resources.
In 2017/18 I have witnessed the end times of an in destination app startup that was once successful in raising money and not only once. At the time I was asked to get involved the company has already burned through its last bits of investment. What happened? Imagine that you're a "CEO" of a company that never turned a profit. You hire a young ambitious CTO and a couple of other people into the team - someone for social media, sales, biz dev - you essentially fill all the positions you deem would make the company whole. The office is young, the companies next door are all also startups, there are Friday evening events and talks during the week and sometimes free breakfast - your landlords are making sure you feel comfy. You have very little product development experience and although you already have an app in the app store and real-life users you were told by your new "Chief Technology Officer" that you have to invest in a complete refactoring of the whole product. They almost make it sound as if the fact that the app even runs is a mere coincidence. Your last round of funding got you half a million pounds. You're optimistic that the refactoring of the app will only take a few weeks and that with all the new shiny features to be developed afterward you'd be able to convince everyone of your superiority. Fast forward a year and you were left with an unusable half-refactored crashing app that barely compiles. You have spent all your money on the last pence. There is no CTO, there is no "team" to talk about. The only person you're hiring is for sales, but you don't have much of anything left to sell. You're burning the last money from a mini round of funding, but it's only in the tens of thousands. You think back - what mistakes did you make? Well clearly you didn't just make one and you are quite simply not good at planning. You haven't checked on the progress of the whole refactoring effort by your late CTO, there was no agile, too few checks and balances and you kept employing a bunch of people in funny positions who didn't bring the brand anything and thus wasting hundreds of thousands in the process. There were no new releases, no PR, no exciting new ways to sell your app, no plan for an exit, no nothing. You became a zombie who only has an office because your landlords wanted to compete with WeWork by giving out space for free just until you get back on your feet again. Last time I checked there was some new development going on at the same spot as the old office building of this startup. Probably yet another skyscraper to make London's skyline prettier. Mine was probably one of the very last invoices that got paid out and truth be told there was not much I could have done. There are stories just like this happening all the time all around London, San Francisco or Berlin. You get caught up in the gravity well of someone's dogmatism, but you're to be blamed for not questioning it in the first place. You don't (didn't) take a moment to look at the state of affairs in your company honestly.
#That won't happen to me
I am different, my team is different.
I will see things coming.
I will always manage to raise money.
I will never give up.
I will change the World.
Alright, space cowboy.
#We can't turn around now
We have already spent [insert amount] of money on our idea. We can't change it now.
Imagine spending years of your life building up an idea just to have it not take off. Tens or hundreds of thousands of dollars, euros or pounds (pick your currency), endless evenings spent doing whatever you did just to see the end result be insignificant. Insignificant page visits, downloads, insignificant PR, almost no interest by anyone.
But you have spent all that sweet sweet hard-earned money. There have been no vacations in the last years, you're in debt, you had almost no social life working on your startup every evening.
You can't throw away all that work done on the backend, you can't change the design now, the app or website have been so expensive. You have to make this work. The reason why things don't work is only funding. Nothing but a lack of funding. If you only had more money.
The problem is that an idea’s worth can seldom be valued by the amount of funds and hours you have already put into it, but rather by the iterative successes you have made. The fact that you have spent let's say a hundred thousand dollars on your website or app doesn't mean that it's worth must be at least that amount. It doesn't mean that the codebase is worth that amount, nor that the technology can't be replicated for much less.
The best practice of the startup land tells us that you should validate your idea and the way you execute in small iterative chunks. If you make a step in the wrong direction than backtrack, just make sure that you don't make a hundred steps and only then look back. This is actually one of the most common similarities between companies that I've witnessed fail - they haven't recognized and tried to turn around mistakes early on, instead, they let the mistakes become part of their structure growing like cancer. A too reactionary approach to leading your business and product development might be met with opposition by your development team. I've seen this happen quite often. You make a decision and in a week or two, you realize that it was a bad bad decision. Your developers have spent two weeks doing something that you now view as a mistake. Let's discuss the whole idea of actually validating ideas before spending time on them later. The fact is that you want to backtrack, but you met with opposition.
#I just need to move to L.A.
Or London, San Fran or Berlin - pick your dream city.
A generic idea is often picked up by a large crowd.
Success stories are addictive. Similar to how two buses filled with the prettiest girls and boys from all over the US come to L.A. every week in pursuit of becoming a movie star there are coffee-shops and trendy shared office spaces filled with founders working on their Macbooks in London or San Francisco.
For example - to create a new social media network you can't expect to just make a feed of messages, add likes, comments, put on different colors than Facebook, package the whole thing into an app and expect it to take off. These ideas have been explored and reused hundreds of times. There are hundreds of millions or billions of users on the top networks. Imagine trying to tackle Mercedes-Benz with just a small custom car workshop. You might argue that things work differently online. We all got fed by the image of a college dropout changing the world with software, but those cases are rare. That's why most people can name the top entrepreneurs of our times on the fingers of their hands. Those entrepreneurs got extremely successful by tackling the right problem at the right time using the right tools.
Even recent success stories like Tik Tok can't really be used because of the massive backing it had to get to where it is now. It's a product created by a company with deep pockets.
Are you tackling a problem or are you just being inspired by some large successes while not really solving any need that there's on the market? The startup town is similar to a film-making town. Digital company founders are in a club similar to aspiring actors, DJs or painters. Millions look up to a few success stories. Don't forget that there's more than one way to succeed. There is more than one problem to attack.
"Find a need and tackle it" is often highlighted in accelerators and workshops as a '101' type fact. By making this set of analogies I wanted to point out that things aren't always that straight-forward. In this case - in the example of social media startups you might think to yourself that you are solving a need, but there is more than that angle - hence my Mercedes-Benz vs custom car workshop analogy. You want to find a goal that's on one hand achievable by you, but not achievable by many others either in time or in a specific way. Stand out by goal, execution, and timing, but also by achievability based on your specific set of skills.
(Btw. I'm sure I heard the analogy of busses filled with the pretty boys & girls coming to L.A. on some podcast.) It's interesting how we live in a world where comedians are our best contemporary philosophers.
#Then we'll find a VC
It'll only take a couple of weeks.
What exactly is a VC? What do you mean? By finding do you mean Googling 'Venture Capital' and spamming tens of inboxes with professionally crafted messages?
If you go to talks where there's a panel discussion including managers from a VC firm you might find out that many of them work rather on the basis of referrals. You might be approaching things badly if you think you're the only one sending a pitch deck to a generic email address you found online. Another way is to make yourself recognizable which considers that you were one of the lucky ones that managed to make a fuss about themselves before larger funding. Generally, you are in a too early stage if you have just built something and have not proven its usefulness or attractiveness. One of my old startups had created an interesting interactive product that got picked up by one rather influential online design news portal. From there it got picked up by other sites and some print media. This is similar logic to when you want to go on a date with someone you fancy. Just following that person wherever they go only makes you a creepy stalker. Making them recognize you by showing the best of yourself wherever you go is a better approach. Then when the time comes, when you talk to a friend of that person you're in love, when you catch a smile heading your way you get closer and say 'Hi'. Getting in touch with investors is like trying to date a high-school princess. By just simply approaching her without warning you put yourself in the same club as the other two hundred nervous, but excited teenagers.
You won't just "find a VC" by waving a business plan at someone.
What I've usually seen is the expectation of founders that they'd get funded a few weeks after they really begin pitching, but it seldom turns out to be that way and you might as well exchange the original "weeks" for "months".
It's about the right strategy and timeline for your specific case. One person will tell you that you have to first do high-level interest collection, another will outright go into months of development - spending own funds on a non-validated idea. In the same way, one person will bootstrap their whole development process, be successful and get investment when they're in a good position to negotiate while another can't enter a market at all without a multi-million dollar investment, but might still be successful in raising it. There's a whole spectrum of strategies. There are also people who will not bulge and even approach an investor until they feel like their product is shiny and cleaned up - they spend months or years improving a theory without iteratively developing it based on market feedback - I usually have seen these fail, but you might argue with the difference between causation and correlation and again - every case is different.
#I have a friend
Jack is rich.
So spamming your business plan to VCs didn't help. But there's also Jack. We all have at least one rich friend. Jack might have made his money as a banker or he inherited it. He owns a penthouse at Canary Wharf and a Lambo. You're good friends and you sometimes get together for a pub evening.
You're thinking that you need to figure out how to introduce this opportunity. You call Jack if he has time - you meet up and Jack is pretty excited to go out to a pub with you - as Jack is to you the "rich friend" you are for him the "simple friend" - you're his connection with reality - with you he gets his feet back on the ground - he lives like in the old days again for a few hours - you sometimes smoke a joint together drinking beer and discussing everything from girls to football. Simple evenings. But this one will be different. You will give Jack this opportunity to invest in your startup. He's got enough cash - it's nothing for him.
You do your pitch. Jack's smiling. And you throw in "so what do you say? Wanna invest?". Jack says "sure" with a smile on his face taking a gulp off his pint. You get super excited - "cheers". This is it! You now have an investor! You should have asked him in the first place saving yourself sleepless evenings and nights trying to get in touch with VCs.
"They all hang out with me just for the money" is what Jack is thinking as he walks back home.
You tell your co-founders that you're super excited and that you're certain that the money will be in the bank in a few week’s time. You say things like "Jack confirmed" and "he's excited to be a part of this".
The next weeks drag on as Jack can't find time to go out for a beer with you. You send him text messages, you call him - he's busy that evening, but "let's try next week". "Do you want to talk to the rest of the team?" "So at the beginning, I was thinking around a hundred thousand would help us get off the ground" You slowly poison your relationship. It's like that one family member that is trying to get you into an MLM scheme, sell you an Amway product or get you signed up for Lyoness. I remember growing up how my mom bought some huge bottles of some Aloe vera juice that tastes like feet. It was one of those schemes where you buy stuff in the promise of selling it further down the line for twice the price. I had to endure gulping down the feet-tasting liquid every morning as in her mind she couldn't have let the stuff go bad.
We sometimes seek simple relationships. Friends who don't want to borrow any money, who don't try to get into your pants, who aren't trying to sell you anything, run a business with you or try to have you teach them how to "invest" or "write software". "It's fascinating how you can make this work. I'd like to learn how to create software too. Will you teach me?" is usually not what it sounds like. I had a friend come to my office recently - he came all pumped up - he wanted to know if I can get him a project. I told him that I don't have anything that would fit his skillset. I am open working with students and juniors who already set foot in a certain technology or area, but not with someone who has zero track record. He was almost offended and asked me if I thought he wasn't up to the job - if I thought that he wasn't smart enough. That wasn't it. Then we progressed to level two as I got more and more uncomfortable having him in my office. "So how do you find all these jobs?" I told my friend that I get contacted by some people and I contact others - that I put on a suit and buy a plane ticket. He said "wow, you must be smart" kind of sarcastically. He was expecting some kind of golden ticket explanation - a manual. But there is no manual to "smart". Look at this graph - would you buy or sell this stock? "I don't know - how can I find out?" You don't want to go down that rabbit-hole.
We have to know where we stand in relationships. What is our leverage when we walk into a room? What can we put on the table that will amaze others? Where and when to push and when to wait. Which contacts are we willing to sacrifice. Which favors would be too disproportionate and where are we able to help or seek help and in which cases is it futile.
There are cases in which you'll just poise your relationships. It's often better to not ask for money, just talk about your case, tell people where you stand and just wait. You'll see - often the less you push the more comfortable the other person feels. Put a seed of an idea into their heads rather than revealing it butt-naked screaming it out loud being pushy. The old strategy of "playing non-interest" to get attractive applies in many spheres.
Last year I was discussing art and startups with a former Saatchi and Saatchi manager and his take on things when reduced is that the art market is about "who is the better owner of an art piece". This can also be applied to startups and investments. On one hand, there's you - you had an idea, but you might not be the best owner of that idea and in the long run, you'd just run your business to the ground. On the other hand, there's a person with capital to spend - they want to find the best use of it, but of course, they need to assess what to invest in and by looking at your company they might think that you're not the ideal person to perform the growth. You could look similarly on take-overs and exits - you did your job by proving that an idea can exist and now it's up to the big guys to either make it grow or have dust fall on it. There's often the other side of the coin where a large corporation might think that they'd be better owners of an asset, but they just let it fade out of existence (Yahoo's purchase of Tumblr) - similar cases happen on much smaller and much greater scales alike.
#We're a billion-dollar company
No you're not. (Unless you actually are in which case - why are you reading this?)
During 2019 I have seen a few trends as was the case with different ones during other years. There were a few companies just in my vicinity trying to work with image recognition - specifically applying it to detect cancer. It felt kind of similar to when at the tail end of 2017 and beginning of 2018 everyone was launching a #blockchain startup. Let's apply #blockchain on our sandwiches and smoothies - in fact, let's solve any problem in the whole world with it forever.
#We just need to release it
Creating an app and then having it on the app store is a totally achievable goal. It's only something your family and closest friends would be amazed off, but in product development circles this is less of an obstacle than you might think. There are millions of apps and millions of websites out there. This is, of course, an overgeneralization, but generally, most companies don't need to struggle these days with how they'd draw a button or text on the screen as was the case pre-iPhone.
You might think to yourself that the whole point of finding an investor is that they will help you make your product more visible. You have surely done your part. The product is perfect. But you can't find anyone to be interested in you since you have not muddied the waters enough, no-one is talking about you - you are constantly under the radar.
And that is ladies and gentlemen the real nut to crack. You want to spend the least amount of money on building the first version of your idea and you want the right people to talk about you, to make enough of a buzz to become "investable". You don't come to investors with problems but with opportunities all on the shoulders of a proof that your idea works.
I actually never understood how some people say that they'll "release the app and it will be easy to find a VC". People who present you with an expectation like this are delusional. It's the same category of people who open restaurants of boutiques with no prior experience and expect to become rich. Reality is that things happen in phases. Every case is different, but the successful companies I know were mostly able to raise even small amounts of cash at the very beginning. We might be talking thousands or tens of thousands. They began humble and moved step by step - work was done in tiny bits, successes were measured on small scales, lessons were learned. They didn't expect to be handed a million pounds, euros or dollars right away.
#We just need to put up ads duh
The strategy to promote a product needs to live alongside product development. It can't just be an afterthought - something you hack together in an evening using Google Adwords. You can have the best technology in the world, but if you can't explain yourself in the right way then you will always be beaten by even a technically inferior product that has better visuals and access. You might think that this doesn't include areas where the actual technical achievement is the success metric and where the combination of a nice UI and a catchy name aren't elements of the mix, but even then you have to be able to explain your invention. There are fields where being in the right circles is a huge firewall. There are many areas in which you can't just turn up with a new idea, but you have to had studied in the right schools, written the right papers in the right way and convinced the right people. We in the so-called Startup, #app and SaaS circles tend to think that we are immune to firewalls, but they do exist.
#I am the chosen one
Whether you are thinking of using the magical power or social media or tap into the ad machine you should first analyze what your position is. What is your access? Who do you know - do you know the right people. Will the right people help you from early on.
This all goes contrary to the idealistic thought that things are allowed to grow naturally just by the virtue of their uniqueness. The success stories we often look up to be it Facebook or Apple had key moments during their inception be it in the form of specific knowledge, technical or not, strategic access and investors early on.
It is generally a better idea to create a startup in a field you have previously worked in. This applies to individuals as it applies to the whole team. In the case of the role models of recent years, I would point out that Steve Jobs had his Steve Wozniak. This is also usually one of the 101 best practices mentioned wherever you go as a founder - build a team where people fit in with each other like puzzle pieces. Each one an expert in a critical part of the equation. You don't need to know how to build a computer if you know how to sell it, but you still need to have someone alongside you who is a pro in building computers whom you can rely on. When it comes to software I have actually seen startups entering the SaaS space outsource the whole development of their product without having someone internally with any software knowledge, leaving the "CTO" role empty (or not even having advisors in the space), which I find unwise. And no, your main contact in an offshore software outsourcing company is not your CTO. You do not want to be handed over and try to sell a black box in shiny wrapping paper.
Interestingly I experienced several cases of a specific situation. Bear with me to explain.
Multiple non-technical founders approached me with an almost finished or completely finished app & server "product" in the last years. In one case the founder stated - "I have outsourced the development to India and the lead of the project is the current CTO. I have paid thirty thousand pounds, but the cost of development was three hundred thousand, so we agreed that I give them ten percent of the company.". Ok, so first of all - the cost of development wasn't three hundred thousand. The only reason why the offshore outsourcing business was able to convince the founder of this was because the founder didn't double-check with anyone technical who'd be independent. But the major problem with this is that the founder has essentially made the business less attractive for investment for multiple reasons. The main one is that they've proven to be stupid and let themself be scammed, but let me break it down further. Who would invest in a company that gave away ten percent of its shares away in exchange for something that was realistically valued at the same price the company gave to that entity anyway? Why would you ever give away shares to an offshore contractor? What's the equity given away worth now anyway? The startup has essentially been made toxic. This being said it actually doesn't matter because the product didn't go anywhere. After spending a year planning & working during evenings and weekends on the product the founder was put off by it not taking off immediately and she killed the whole thing just a month or two after launch. So, in reality, it wasn't a well thought through idea anyway.
I stumbled upon the almost exact same thing to happen again a year later. A founder who was convinced by an offshore coding shop that the development costs were much higher gave away a huge chunk of the business - this time thirty percent even though he spent fifteen thousand anyway. Looking at the app it again seemed that the effort put in actually matched the payment. So why did he give away a third of his business? After consulting the whole situation with me he sent me a message a week or two later that he's bailing on the whole thing.
So that's potentially a yearly bonus in the first case and yearly savings in the second just evaporating with nothing to show. You might argue "experience", but give me a break - experience in these cases? Let's not even go there.
In 2016 I found myself in the position of managing the development at a SaaS startup that had a web portal. In the years prior the owner of the company was running the development on fumes, moving steady. His only developer based in Kyrgyzstan. Leonid cost only a few euros per hour. I can't really hold it against the CEO wanting to cut costs, but over the next months, I really struggled. The developer didn't use any version control (no GitHub, no BitBucket, no nothing) so essentially there was no log being held of the changes being performed. As much as I tried to explain to him that this is essential he wouldn't install, learn or even ask questions. In fact, the communication I had with him was awkward. His English was almost non-existent and he took an awful time to reply ranging anywhere from six hours to a few days. The project was in dire need to have some features implemented and some software components updated. If you find yourself in an environment where no-one ranging from the owner of the business down to the developers understands agile, version control, backups or basics of security than your proposals for doing things properly might be met with some raised eyebrows. For you it might feel like being in a twilight zone - you don't understand how your recommendations aren't obvious, but for them, they might seem like unnecessary complications. Yes - complications. If you're unlucky they will think that you're just trying to implement large company processes into their nice little startup regardless of the fact that what you're pushing for is 101 Software Development. I might be a masochist at moments, or maybe I just thought of this as a challenge. Very early on I recommended finding an alternative developer - someone with whom I could lead a meaningful conversation. I was met with opposition - the developer was cheap, so on paper, it looked as if it was a good deal. My long year contact who worked in the same field charged twenty times the hourly rate. He was based in the Netherlands. My argument was that Jeroen could communicate in fluid English and that instead of struggling for weeks or months he could have the work done in a matter of days. I was again met with opposition. With Jeroen's rates, it would mean that we'd be paying hundreds per day as opposed to hundreds of euros per month. I feared that if we'd stayed on course we not only would take months to see the needed tasks completed, but I no longer believed that they would ever be completed. I began searching for developers who would be an alternative to these two opposites - someone who's cost would be somewhere between the incapable "developer" and the expert, but even that was too much. It wasn't a matter of funds as we have recently gotten our first round of funding. After months of struggles, I walked away from the project. I wasn't able to guarantee any delivery as I didn't have a reasonable budget nor did the current developer deliver. We had multiple discussions with the CEO ever since. He adamantly sticking to a developer who charged 3 euros per hour, failing to meet any deadline while having a six-figure investment in the bank. Of course, you shouldn't just spend all of that on the most expensive developers in the World, but be reasonable.
A few times I have also met founders with a sales background who were quite delusional on what it takes to make software. One I talked with recently told me that she began learning Swift and that she's making progress. That's the same person that told me that the product is in safe hands because her boyfriend is helping out with marketing. Don't get me started why I don't think it's a good idea to get your family involved in your business matters. At another time as a product owner at one company, I needed to listen to comments by our CEO yelling that he'd "develop this or that on a weekend" whereas he never did any software development himself in his entire life. I guess I just simply got allergic to people misunderstanding that there's a reason why there's the word 'engineering' in 'software engineering'.
I'm glad that these days we have platforms like Wix or Squarespace or I'd fear the Internet would look a lot worse with a hoard of "let's learn it over the weekend" web developers. There are the things people tell you like "my cousin knows how to create websites" or "my neighbor is a designer". When I first began freelancing back in around 2007 I heard these things often and I needed to change how I work fast. There are types of people whom you can't really argue with using logic. They'll always find ways how to mess things up with their misconceptions.
Sorry if you're that one person who's living next to your aunt and you're a great programmer and helped her out to create a multi-million dollar business.
From what you've read so far you might have gathered that I'm rather the "Nanny McPhee" type person:
"When you need me, but do not want me, then I must stay. When you want me, but no longer need me, then I have to go."
I've heard & read some statistics that ninety percent of startups don't make it. In my experience for every ten people with an idea, there is one solid effort to actually create something. Out of every ten efforts, the majority ends early due to amateurism. The ten percent success rate concerns only the ones that make it past these stages, so the percentage of failed projects in contrast to failed companies might be closer to 99.9%. For every startup that's "made it" at least past the three-year mark there did exist hundreds of projects ranging from documented ideas through Kickstarter campaigns, offshore software developments going no-where each spending thousands, tens or even hundreds of thousands in the process.
#Yes! You're 100% right!
Agreeing to bad.
I am a culprit in agreeing with toxic plans to get a contract. I did that too often. You might know those situations in which you know that by pointing out flaws you'll outright lose the favor of the inexperienced founder. There are moments when you rather take the money and agree to whatever nonsense is thrown your way because you know that if you won't do it, someone else will. If you won't accept the gig than there's ten freelancers and agencies with a smile on their faces willing to deliver whatever they get asked pixel by pixel, no questions asked, no good advice, consultation, no nothing. In some cases, I was willing to argue and in some not - I believe it's up to the emotional maturity of the people you meet.
I have outright a few examples in which my comments or advice was met with stark opposition. In 2018 working with a hedge fund manager who launched an app I wanted to ask her the usual question any investor, in fact, anyone would ask her - "how is your app different?" and her answer was "I'd tell them they just need to use it and they'll see.". That was our last discussion. A few minutes later I allowed myself to leave seeing how I spoiled the attitude. Was I perplexed? No, I've seen this many times. She got mad at me. I was no longer the yes sayer - I turned to someone asking questions. If she'd answer like this at a meeting with any investor they'd kick her out flying. What did she expect?
At another point in time, I was remaking the design of a mobile app for the third time in months. I argued that the company might as well hire a professional designer and/or release or however test the current version to actually get some user feedback. It's meaningless to remake the looks of something over and over in the closet - just remaking it based on your assumptions. You make your initial research, but keep the design clean and minimal, you test the design out, you implement it, test out the functional prototype, if there are changes needed you implement them, you do your first release and iterate from there based on feedback again. Of course, this lacks context, but you just simply do not remake something over and over, keep it hidden, don't test it out with real people and just work behind closed doors based on your feelings.
"But my gut tells me..."
No, it doesn't.
Use your gut feeling when dating, not when designing apps.
Many founders are poised with the image of Steve Jobs yelling at his employees, pushing them to their limits and becoming super successful. This is an example of how correlation is not causation. You can't just extract the one easy thing to do "being an ass" and attribute to it the company's success. Apple was successful "in spite" not "because" some people behaved badly.
To be honest I like challenges. There were situations when I knew a part of an idea was not thought out or when I saw a flaw in the thinking of a founder, but I still sensed potential and wanted to see how things play out. Bit by bit I wanted there to be progress not just dismissing an idea outright. I have thought about how much sense this makes mainly during 2019. I have come to the good old conclusion that "life is short". If I can't have an open discussion with someone and the freedom to point out flaws and errors than I outright ditch the cooperation. If I can't ask questions, nor point out errors than there might as well be good money involved. A good friend of mine calls this "putting people in the penalty box" or just "multiplying your rates as compensation for the pain".
#Mentor me, mentor you
Then there's the easily swayed.
You need Some advice, but you shouldn't automatically go with Every single thing someone else tells you. Are you able to assess if that person's experience applies to your particular case? There are too many charmers acting as mentors and advisors these days, so you need to be careful. It's become easy to call yourself an advisor unless you don't have a pulse. Credentials are relative and "fake" doesn't need to be "deep". A success in one man's portfolio might be perceived as an utter failure by another.
If I pointed out that good founders are open to advise I must point out that they should also question and think about it.
There is something about having the option to isolate yourself at some moments, mingle in different communities at others and meet different people each day when you have the time. What helped me was the ability to be in London if I needed, pretty much in the center surrounded by WeWorks and a huge mass of people, but also being able to retreat to the Isle of dogs and watch swans swim here and there across Crossharbour whereas I also flew home often to our old country-side house - a former wine-makers villa in which you have to walk twenty meters though cold rooms to get to the bathroom.
I get annoyed by scams. Actually I get annoyed by people thinking I don't recognize a scam. Like almost everyone, I get annoyed by the telesales calls by the hoard of twenty-something-year-old boys in call centers of London. "How are you doing? We have a limited offer." Learned lines and self-thought strategies - an aggressive attitude, but a smile on your face - why should you be ashamed if your customers are willing to buy? Once the money's in the bank your job is done and promises don't mean anything. It's not a secret that you can give yourself any label you want if you're able to make others believe it.
In startup town, you can call yourself a founder by having a project name, a website, an elevator pitch and a few pages outlining your idea. You can also advertise yourself as an advisor tossing around credentials and successes with the correct kind of opinions and the correct kind of "best practice".
You should do enough market research, you should attend an accelerator, agile, cross-platform, mobile, write this in your pitch-deck, use React Native, always be fund-raising, sprints, entrepreneur meetups, do this on social networks, get a CFO, I know just the right person, get to market fast, grow your user base, you'll make money with ads, you'll make money by offering a subscription, you'll dominate this segment, Jira, Trello, GIT and why should you be bothered to know all of these anyway, get a CTO, ask your friends & family to invest, wear business-casual, have a few business cards printed, drink beer at WeWork on Fridays, party hard.
Media has managed to package entrepreneurship into a product. We sway towards stereotypes way too often and we let ourselves be charmed by trinkets of success too easily. I recommend searching for inspiration outside of the startup town just to detox your mind and come back with your opinions sorted. You might find that you'll be able to recognize scams and people who try to leech off of you more easily. The little bit of time spent outside of their influence helps.
To be successful you don't just need to follow "best practice" - that should just be a baseline as for example with running a restaurant - your hygiene has to be up to a standard. You won't be "killing it" just by the mere fact that you'll do the basics right, but you might prevent dying early. Not doing stupid mistakes buys you time - that's what it is.
If you find a mentor or advisor or a guy that teaches you how to sit still and breathe well than make sure you're on the same page as to what you expect from each other. How and if you recognize character is only in your hands.
And then there are narcissists.
Social vampires who leach on each room they set foot in. He has a plan for you. He who's not accepting a deviation from his own plan and who'll be the best charmer you have ever met just to draw you close and suck out all your energy. In startup land they leech off of ideas and opportunities - they steal good ideas and take over businesses driving the other kind away. They let their presence be met both verbally and physically. They might use cheap tricks to make you nervous like doing a repetitive movement like continuously knocking on the table or against your chair. They get too close too often trying to push you into the corner. I always had a strategy for True narcissists - I made sure that they didn't know that I know. I had good training in terms of my aunt who was the first True narcissist I have met in my life. She made most of her money as a local smuggler and salesman of falsified brands. She knew someone everywhere be it at the police or every other organization that meant anything in town. She led you to believe that she had your best intentions in mind and when you opened up to her when you've shown your vulnerable side she made her move. When you resist a True narcissist at the moment when they're making their move you make them furious. You'll experience them screaming and yelling, throwing things, smashing their fist on the table, calling you names. They can't understand how you said "no" - how was it possible that they've let you come so close, they thought they had you in their influence, that they've sugar-coated the World for you just so that you oppose them. That's when you fall out of grace. Whenever I meet a True narcissist I know at the back of my mind that there's a timer running. I know that I won't be willing to do the usual ass-crawl beg to get a narcissist to favor back at one point or another so I prepare myself to exit that relationship at any given point and I keep it alive only if there's a clear benefit to me. It might be a dangerous game - only play it when you have something to acquire be it resources, strategic access or information. Don't let this kind of person get the keys to your startup kingdom. If you're unsure that you can manage to play a game with a narcissist than bail on the relationship right away.
If you've actually let a social vampire get the keys to your startup kingdom than you're just managing an explosion. You might find that a lot of people don't share your opinion on the narcissist and for them, he's just the most charming of people and they don't understand your gripe. You've been exited - shame on you.
#Programs! Accelerators, schools & incubators!
It's like kindergarten for adults.
Surely you'll be an expert in managing a business, fundraising, and product development once you complete a couple of weeks of classes. You're thinking that you must have already been a natural if they let you attend, right? What's all this fuss around industry veterans and years of experience - this stuff is easy! Your new Moleskine notepad is slowly filling up with notes.
Market research! Well, duh! I wouldn't have gotten this far if I hadn't done that. Agile! Gotcha. Mobile! I already knew that, let's move on. React Native seems cool - all the guys not doing 'that' must be blind. Cloud. Sure - I already heard about that. My "IT guy" will help me out with that.
So you made notes and now you'll confidently present your findings to the rest of your team - they definitely don't have a clue about any of this. You will be a driver of change and you will be in charge of the company's direction from now on - the program you attended made you complete.
I don't want to dismiss such programs, but to me, it seems that they should be more a way for CEOs to gather an overview of the other aspects of the business in which they might not have the expertise, but these programs are hardly providing in-depth information. These programs should point you to relevant areas and you should spend time on your own to educate yourself, so you'll know what your development or marketing team is talking about. Please don't expect to magically become an expert after attending these.
In the startup community.
After you attend a few startup presentations at let's say a space co-sponsored by Google as I did you'll start noticing some similarities in the companies presenting themselves. Maybe it's just a coincidence, but I only got to witness either companies that were at their very beginning or that have already made it. I made an oversimplifying comment and I maybe came to a faulty conclusion that - companies that are actually busy don't attend these meetups. There were no investors, or at least this even wasn't advertised as such. I witnessed a presentation by a lady that was launching a VR product that needed to ask one of the audience to help her out and I witnessed a rep from a Chinese company talking about how successful they are and that they're making millions. The reason they attended got lost on me. If your company has just received funding and you're super busy planning, developing, staying late at the office than I don't see how you'd attend this. This is the type of businesses that `were missing - those that are not complete cannon-fodder, nor are they over the line.
I drank my Peroni and ate my slice of pizza together with the rest of the pushy crowd and then I headed for the tube. There are days you want to stay for at least a bit of mingling and then there are those you don't. None of the presentations caught my interest.
Might I actually recommend that a ton of these events are often a fun and interesting way to end up having a worthwhile evening? Especially in London, you can stumble upon a #fintech event with waitresses handing over cocktail snacks and champagne on Wednesday and then attend some presentation at one of those startup hubs with free Peroni and pizza on Thursday. If you happen to stumble upon someone and start an interesting conversation than it might turn to something more. You will find a lot of repetition in what's being said and in some presented opinions, but that's just how it is.
Although this sounded rather dumb and leachy my point is - make the best out of an event - attend it with low expectations. If nothing else then at least you'll get to drink a free bottle of beer and maybe have a substitute for Netflix if not more. You might start an interesting conversation that leads somewhere or not - it's all up to you.
It's been a trend over the last few years to praise some things and dismiss others on these events. You might witness someone preach about the Chinese market and blockchain saying that those are safe bets and how you're dumb not to invest. Another time you're presented with an opinion on how private car ownership will disappear entirely or how property prices will never see a price correction and the stock market will keep on rising forever. There's a lot of preaching going on. You have to navigate your way through black and white opinions searching for the "shades of gray & occasional colors".
#Let's mingle some more!
Where there's cash.
You find yourself at a party organized by a friend of a friend or a co-worker of your mom or dad somewhere in West London. There's a Tesla and a Porsche in front of the mansion. The promise is that you'll get to mingle with potential investors, so you have the catering staff pour you a glass of Prosecco and you bit one or two appetizers while esteemed ladies in high heels and subtle tattoos and gentlemen with an always-on smile exchange niceties.
This is not what you expected.
What is it that you actually expected?
A meeting on a top floor of a fine office building somewhere in The City - a receptionist asking you if you wanted an espresso while you wait in the meeting room. Projectors, powerpoints (Your Powerpoints), talk about the future, equity, expectations.
Instead what you got was a snobby parade of silly faces stuffing themselves with prawns surrounded by a trophy interior in a pretentious house organized by an overly friendly host. Of course everyone is friendly, touchy and smiley and no-one really needs to be here, but they are and they are feeding on bits and pieces of attention from one another. Whatever is thrown your way in terms of opportunities are just scraps even compared to the cost of this whole event.
Your mind is elsewhere. Not with these people who'd probably smile themselves blind if they'd get a chance to exchange a word with anyone from the royal family that would serve as conversation fodder for the next ten years. In your thoughts, you’re at a meeting room with ex-startup founders turned VCs and young minds who's market analysis insights you adore - but not even Google can find traces of that where you are now.
But money comes in different forms and sizes - it's not just hoodies, meeting rooms in glass buildings and bicycles stashed in the corner of open office spaces. It's the banker who got their bonus, the hedge fund manager who saved up, a former cab driver who bought one more property at a shitty neighborhood twenty years ago and just sold riding the wave of skyrocketing real estate prices and wants to invest in something cool - he's excited about smartphones, Uber, electric cars and overall us "young people" who know how "to do stuff". It's also people like you who already ran their own fair share of startups and did their exits and now want to try out to sit on the opposite side of the table - they're thinking "I sat where you're sitting now ten years ago".
#Shares are just a way to get stuff done for free
A hundred magical coins
This is a go-to of many founders in the early stages. To get their product developed they find someone to work for free or at least not for money, but for a percentage of the company. I'm not bashing this approach if there's a harmony between positions like the CEO, CTO or CFO, but I have seen too often this strategy of getting people on board being abused.
Over the last years, I was actually approached a few times by companies to get on board for shares of the business to do some work, but in this case, these weren't new companies. In fact, they have already spent substantial funds. The thing is that they had already spent whatever they could spend - be it personal funds or investments and now they are only trying to solve the fact that they can't pay anyone. Whenever I got such an offer I asked myself - why on Earth should I want shares in a company that failed to either attract further investments or turn a profit after spending tens or hundreds of thousands of years. Each time I was presented with the founder’s opinion that I should be grateful for this opportunity. I like clean-cut simple situations. I have in principle nothing against joining a startup in its formative stages, but not when I'm only being pitched a sugar-coated story after obviously something went wrong and I'd be going in only to be a free resource - the last choice before the lights go out.
In 2007 I attended something that you could describe as the EU's and my small home towns 'incubator' which aimed to spur growth. You had to attend some classes, write a business class and if you had a pulse you received a couple of thousand euros. Your financial projections or viability of the plan was barely checked. It was one of the situations in which some people who should have received ten times the amount didn't and those who shouldn't have received anything did. We all found ourselves in this gray bureaucratic "let's just give each one a small amount because that way we'll fight corruption" - the machine feared that if there will be a human element involved that they'd give out disproportionate investments to close contacts as is often the case in Central & East Europe. Nevertheless, the small funding helped.
One of the people whom I met during the program dropped by at my house afterward. After the usual friendly chat, I was asked if I was ok with him dropping off his sister's computer, because if you work in IT "regardless if you are a software expert, tester, security expert or a founder of a SaaS startup you're expected to know how to fix computers and you have a lot of free time on your hands". I did it once for free, just for the fun factor - it involved reinstalling their Windows on a cheap box they bought at Tesco. Don't get me started on why you shouldn't buy a computer there. But it didn't stop there - they messed up the system again and after a bit of chat I did it one more time. For the third time I was on the phone with my new "friend" and I outright told him that I can't be spending my time on this for free and that he should either give me some money for it or find a computer repair-store. I heard his sister in the background say that "in that case, let's find someone else". Why I mention this is because this was an example of someone's expectations that I'd do something for free. It was a bit synonymous to what I'd experience in startup capitals like London, San Francisco, Vienna or Berlin. Often I experienced cases in which the expectation was that I'd do work not only for free but for no shares involved. After drinking their (kool-aid) founders might think that people would join their case just because it's noble - and there are a few noble causes and cool ideas which you're able to find in their inception stages, but there isn't as many of them out there as you're asked to believe.
Of course, this doesn't mean that companies need to go with the most expensive freelance offer to get things done, nor am I dismissing the option to have stuff done by friends and family. Accepting shares in a startup in exchange for your time has to be a proportionate and well-thought decision. You can't be the only person pushing their weight, there needs to be a plan to success and you need to feel overall comfortable in your position. I usually raise eyebrows when people offer or accept co-founder roles and/or shares too quickly. Too often are percentages just thrown around as if it were a poker match. You should be uncomfortable accepting shares before you do at least a bit of work and you validate that working together works and that you can deliver as a team. The first time I heard someone say 'should we split 50/50' I was immature. Back then I was prototyping an interactive touch-based system and this came from a friend who promised to handle the production of the prototypes. We began with him being just a supplier and I ended the cooperation when he made me an offer to only continue if he'd get the majority. He got a bit screamy when I declined. The last time I heard someone just throw a sentence out there like 'so should we go 50/50 on this' I just outright canceled the conversation right there. Of course, I didn't explain the details, but believe me - it was very amateurish considering the context.
There's a right time and place for everything.
On the other end of the spectrum is a situation where you've been promised shares, but already did way more work beyond the initial prototyping. You might have already built an MVP, but there's nothing yet signed defining your involvement in the business. This is a failure on your end because you haven't insisted on having a contract that would define your compensation based on successes. You might have signed a contract that would state that you'd receive shares in the business upon successful completion of the MVP and that you'd provide source-files once you get them.
But the last example was rather developer-centric.
As a non-technical founder, you might find yourself in a situation where you're being held hostage because the reward for delivering the product was misunderstood or your co-founder changed their mind. I find situations bizarre in which a co-founder demands a larger chunk of the business without prior consultation as I have witnessed. Why would you want to do business with someone who keeps asking for more until they take over?
It's mind-boggling that some people expect others to just simply give-in. You have to be in a very good position to play that game and the reward needs to be immediate. These are all toxic situations you don't want to find yourself in.
One of the startups I met in 2018 was in the smart power bank space and they had their system developed & prototyped in China. The problem arose when the company wanted the actual source-code. They were told that it would cost them twenty thousand on top. Similar behavior happens all over the place - if things aren't put in stone (or on paper) and if you don't get access to all needed documents and files throughout the whole process as you go you might encounter this problem. As a non-technical founder, you have to understand what all the components of a deliverable are, you must secure you have access to them and you should raise red flags if your contact handling over files that are essential for you to continue product development & carrying out your business activities.
#From drone to founder!
From drone to freelancer?
It's not at all linear.
Being a contractor gives you access to all sorts of various environments. You experience both companies that are inspirational and which you'd like to emulate and such which you'd use as an example of what not to do. Specifically in London, you can make anywhere between 200 to more than 500 GBP if you're doing software development and potentially a similar amount just per hour if you're doing business consulting, restructuring where-as you're in lawyer territory then.
I met several types of people over the last years.
Becoming a founder full time might be a harder sell for yourself if you came from a field that almost guaranteed you high income. Your bonus might have been 50 or 100 thousand or even more and you have a certain lifestyle. On one hand, you want to stick to that lifestyle for as long as possible and on the other hand, you want to venture out. I knew a young lady who worked in hedge fund management during the day and on the side, she invested into offshore outsourcing of the creation of her app idea. She too had a lifestyle and she invested quite some resources into the app and I can imagine that she might still have some money on the side.
On one hand, you have people who go all in. They save up, quit their jobs even before they kick start any project or wait until it's about to go live and then they bail their day-jobs. They calculated for how long their finances last and that's the time in which they need to make their new venture work. In most cases, I witnessed the expectation was that it's possible to get something off the ground in a few months or even weeks. Although this all depends on the context and the specific situation it mostly didn't work as planned. Going all in enables you to have time for your new venture, you'll be able to attend meetings, plan out the product's details, find co-founders - all the necessary things assuming you already did your market research & all the other basics.
On the other hand, you have people who try to run their startup on the side juggling their day job, finding time-windows when they can go to meetings, working late at night and during the weekends. This is possible, but you have to have a strict schedule and I don't know how well this can work with kids & family.
I tend to think that a freelancer or overall someone with a flexible schedule is better positioned to enter startup land. On the other hand, there are a few types of freelancers too - freelancers who actually aren't "real" freelancers and they effectively work at a company on-site full-time and yes I believe that you should have more than one client where you work 9-5 to call yourself a real freelancer. The real freelancers might juggle their projects well or less well and for example, in my case, I don't always am able to do all the work (I must learn how to say no more often). If you juggle your projects well than you might have free time, if not then you end up working Monday till Sunday anyways.
If you have a flexible schedule and several clients than you wouldn't take such a painful hit as if you have a full-time job. You might cancel on one or two of your clients which would give you some additional time in the week, but you're potentially not bailing on all of your clients at once.
If you come from the banking or property industry and you have a five or six-figure amount stashed than it is easier to think that you can throw money at a problem.
I have friends who joked that if their goal was money they might have stayed in banking.
We might have all watched at least one episode of Kitchen Nightmares. People who had money thought that they can just rent a place, find some cooks and call it a restaurant. False. If you have zero product development experience (product development, not software development, not stating that you need to have coded anything) - if you have no experience in the life cycle of how to bring a digital product onto the market and make it grow then chances are that you'll fail. If you have very deep knowledge of a specific field and you're tackling a problem you've been balls deep in over the last years that's a different story.
There are people whom I met who think that the fact that they've "used apps" gives them enough experience in designing them. In fact, way too many people call themselves designers these days - but the market as with everything else disinfects itself from bad design by not allowing it to flourish.
The hard reality is that in some cases I'd rather recommend people to become investors than form their own startups. I won't go into discussing what to do and not to do when deciding on the startup you invest in - that's for someone else to document.
Look around yourself and think of the good moments you experienced over the last week or a month that were only made possible due to your high pay. Are you willing to sacrifice those for a long time? The Fridays, the new car, the apartment at Canary Wharf, the new laptop. And if you're not single - are you sure that your partner would go along with you losing your perceived status? Would she or he be fine with that?
If you're single, don't own property and/or just simply aren't a huge spender and you have the possibility to move back to your parents than your dilemmas might be simpler. You either "make it" - in which case you'll have your own company "yay!" or you won't and you'll get back to working somewhere for 50k again, renting a room and waking up every morning at the same time again.
#I am ready sensei!
Mark, Steve and Bill!
The frontal lobe isn't fully developed until about 25.
You hear, read, watch movies about entrepreneurs who founded their companies in their early twenties. When you're twenty it's easy to think that your life literally ends when you're forty. By thirty you believe you should have already figured everything out, have a nice house, be independent, a few years into running your own company. When you hit thirty-five you retire, maybe become an investor yourself, advise a new generation of founders. The book, the interviews, TED talks.
(Have you ever heard of Zhang Yiming? Feel free to Google Byte Dance, the mother company of TikTok.)
We choose whom we idealize and it's easy to understand why we would find the idea of a twenty-year-old or so who creates a company that becomes a multi-billion dollar giant attractive. In reality, the chances of founders succeeding in their early twenties are much lower than in your thirties, forties or fifties (you might not even think being in your fifties is a thing when your twenty).
If you'd meet me in my early twenties and you'd get on my nerves or criticize me than I'd tell you to eat my shorts. I lacked real-world experience.
I have seen instances where young people state in their CVs that they have expert knowledge, are seniors in this or that. One internship and a year or two of full-time. A summer or two of pursuing a hobby and you have expert knowledge of a field. I wonder why it takes so long to become a doctor or an architect opposed to sales, marketing or software development where it feels like every second person thinks all it takes is a good attitude, a Macbook and potentially a fine suit or a hipster hoodie.
In 2012 in Berlin, I experienced some funny moments when I got introduced to someone being told by the host with a straight face that the person was the next Steve Jobs. In the other office there resided a company that was to be larger than Amazon in three years. The only person really "killing it" in the next years was a young than 16-year-old intern from Brazil whom I recently found in an issue of Time Managing.
My take away from my experience of seeing people fail and get successful at any point in their life is this:
If you "have it" - if it's "part of your genes" and you're lucky then you have better chances to become a prodigy entrepreneur. It reminds me of that little Japanese girl playing drums - I can't get enough of her doing Rage Against The Machine. For the rest of us who weren't born with the right mojo, skills and weren't lucky it's a long path to success with a slap in the face on every corner. We, the not so talented ones learn the hard way. And there are much much fewer prodigies than there are people who are willing to take on the painstaking path of learning the hard way how to become fine entrepreneurs. That's why the stats that you are more likely to succeed later in life and that's why our role models tend to be the twenty-year-olds founding their companies from college dorms. The alternative story is the thirty or forty-something industry expert who saved up some cash to finally start a company while his tolerant wife or husband takes care of the kids.
I have also seen instances of smugness with which the older generation of entrepreneurs who have seen their prime in the eighties or nineties view the twenty or thirty-year-olds regardless.
It would be naive to try to even imagine a world where each generation would understand their strengths and weaknesses without trying to push one another into the corner. All we can do is try to concentrate on people in our own little sandbox. Don't let yourself be looked down upon (down onto?) nor try to cut someone's wings off. Just be nice to each other.
#I did it once, I'll do it again!
The World isn't a static place. It's constantly changing. What was true ten years ago don't need to be true today and things you thought were long gone just hid underneath the surface. Re-adapt.
You have already raised money once.
You already successfully exited one company.
Why not replicate this success again by using the same techniques as last time?
You might hear this or similar by self-proclaimed mentors or CEOs in their second companies or those trying to raise the next round. Often reality strikes and reminds us that not only is the World different, but we've changed with it. It might well be that in 'situations in which we'd usually be reckless we're cautious now and moments where we've been cautious we're surprisingly reckless. The older I get the more I'm convinced that nostalgia is a disease. As people, we should hope for one thing - to be in a state of mind to realize which patterns of behavior improved us and which let us astray.
#I have an investor! We just need the MVP
We JUST need to build the actual thing that would form the underlying basis of our company and then someone I know will definitely for sure give us money because they expressed so much interest in our idea.
That sounds really exciting in theory, but I have a problem in believing that both sides in the discussion understood what has been said in the same way. I have a hard time if this is used as a motivation tactic. You might think that it's a sin only in the case if the person motivating self believes it even though they might be wrong. Think about it this way - it's probably not good to commit to an idea that relies on a benevolent decision of a single person to invest or not. If your idea has grounds then you won't just have the one funding option. In any case, I believe that it's irresponsible to base your strategy of acquiring co-founders and motivating them based on this one promise. If you're on the receiving side and being motivated this way than you should consider if you would stay at the startup even if the whole promise of a certain investment after creating a product wasn't real. If the answer is 'no' then I recommend reconsidering your involvement.
A lot of ideas might look interesting on paper.
I recommend all founders of a start-up to be honest with each other as to why they want to be part of the project. You might be a CEO of a company and or work with a co-founder CEO or have a boss who is constantly highlighting how the company will change the World and that they are in it for the long run, while their only objective and goal is to do an exit as fast as possible maybe even because they don't believe the business would be able to sustain itself beyond this or next year. I'm not complaining about planning your exit - we all like money, but I was in a situation myself, close to the core of the business at which point I would appreciate clarity on our current situation and the objectives. I have heard opinions that it's not good to scare your people, but now I believe that it's good to be transparent with them rather than sugarcoat things. If you only have money in the bank to last the next few weeks and you're primary goal is to find investment as fast as possible then you want your sales, marketing & development teams to adapt to that situation. In some organizations, I've seen that business development has been in constant fighting with the CTO and maybe the whole development team. The #bizdev part of the business might see an option, an opportunity how to attract money into the business and they might want just a simple prototype of a feature for showcasing purposes. You have to adapt to the current state of things. If not delivering a feature fast in the next weeks will cost you your company's future or at least limit you from being in a strategic position than you might need to adapt your work processes. Hardline project managers or CTOs or developers who would go on strike unless they run standard work processes will stand in your way. They will curse you behind your back, laugh at you, tell jokes about you, tell you that you know nothing about software development "that's not how it works". Honestly - they're right - you might not be asking them to do things how they should be done, you might be asking them to cut corners and avoid some parts of the work-process - your best bet is to be transparent about this. Be open about the stakes and the reasons for this special case. If you're still hit with resistance than you might resort to working with a separate cell within your company if possible or getting an external freelancer to work with you on this one project, but that might again be considered toxic by your co-workers. There are ways to dealing with special case scenarios and neither would you be conducting business by the books - whatever "by the books" means be it your usual sprints and division of work. You don't want to be the driver of a toxic work environment.
That being said about transparency and being reactionary I also experienced a company staying in a kind of state of flux even after receiving enough funding and becoming part of a recognized multi-billion mother corporation. It became clear to me that some people are unable to function without the abbreviation of a looming crisis or without chasing after an opportunity that can't be missed to the extent that everyone needs to drop what they're working on immediately.
I have seen both the side of the business decisions and software development - being a developer and a product owner (having to also work with a toxic CTO) as well as being a co-founder myself in various organizations in the past. Now I am a co-founder and CTO and I want to avoid making the mistakes I witnessed over the last years. What works for me at this point is to run the core of the software development similar to how you would conduct prototyping. For our core team the features we develop to act as self-contained modules and I intend to limit the amount of bureaucracy for the small internal team as much as possible. I want to avoid the need to switch between pure & structured work processes and reactionary as the core development team should stay aligned with the goals of the business. I plan to keep the core as small as possible. The features we develop outside of the core product are a different thing. That's the layer of the business that would see the growth in personnel. I want to limit potential mutinies and resistance to the outer layers of our business. This is an approach I'm taking right now and it might not work for you - it all depends on the circumstances.
When it comes to applying the right processes at the right place and the right time there is no "best practice" to rule them all. You might think Agile is king until you start working in a more traditional industry dealing in for example defense, medical or banking. In the case of many of the more traditional and larger corporations how fast progress is actually achieved is by outsourcing bits and pieces of the work potentially avoiding a whole pyramid of bureaucracy, politics and braindead decision-making. Often outsourcing companies have one main client who comprises 99% of their revenue. Even after years or in some cases decades the large multinational doesn't buy out the small contractor or establishes a team internally. You might ask yourself why have the same complex processes in your large corporation if at any given point when you need to move fast you outsource work to avoid them? It's because the potential risk of the external contractor failing is smaller than the risk you would undertake internally trying to change your processes. Your multinational might be working well bringing in billions, so why go into a risk?
Please forgive me for talking in scales like small or big when that's relative. Hereby a large corporation I meant, for example, a company like Microsoft, Volkswagen, Adobe or Airbus and by a small contractor I meant a company anywhere between a few to a few hundred personnel who get paid by the hour.
So what if you just realized a major flaw in the core of the business proposal which you have been basing all those assumptions on over the last year or two? What if not even your first angel investor saw the flaw, nor do your co-founders and/or employees? Or maybe you have known the issues from the start, but you knew that you could still convince investors and people working with you of the novelty of the idea? It's not an uncommon strategy. What if you have been burning cash for the last year or two at a staggering rate and profit is nowhere in sight? You might have already tried raising more capital from your existing investors, but you have been met with disdain. You've tried all the various sales tactics long enough for their taste and you've driven half of your development team into a state of burnout agony. You know it yourself - there's a fundamental flaw in your business model. You might have known it from the very beginning. It's a flaw that can't be tackled by a company of the size you're running. You knew you'd be losing money on each sale. It's been obvious from day one. But you were able to still convince your initial investors and sell them the idea of growing margins, optimizations and expansions into other markets. It didn't happen or at least not fast enough. You have to move fast.
You know deep down that you're a bit on the sketchy side when it comes to running a business. But who's to blame if you were still able to make money in the process? At least up until now.
You have to either find new investors or sell the whole damn thing fast. That was the plan from the very beginning, wasn't it?
Week after week you attempt meetings with investors, but you don't move forward. They look at your sales figures. You actually have sales figures now, unlike when you attracted the first batch of investors. Your current sales figures are both your blessing and a curse. They sort of validate that there are people willing to buy your idea, but what is it worth if you're losing money? It's much harder to sell a spreadsheet with minus figures than to sell an idea. Even if you start selling the idea it comes to your performance, since you've already ran your business a few years.
You're no longer selling an idea, but a business.
The only one who takes your situation seriously might be one of your strategic customers. Maybe you have a large corporate customer who began using your solution at the heart of their operations. They don't want you to fail. They can't afford you to fail. Or at least they can't afford your product to become just a black box with no-one to maintain it. First you come to them with an offer. A friendly offer to invest. It's all smiles and brainstorming at the beginning until they look at the state of your company. They realize what this is about. If they don't invest then you'll be out of business in a few week’s time and whatever they purchased from you until now might as well be written off, since there will be no support, no developers, no nothing. They don't like being taken, hostage. They realize the pressure you're under and they realize that it's larger than the pressure you're situation is putting them under. So the negotiations begin. They drag them on to push you. Then you finally get a proposal. It is actually much less than what you hoped for. How dare they offer pennies to you! You're billionaire material! Can't they tell? "Is this a joke?" you tell them. Their response is that if you won't comply they'll wait for you to crash and burn and they'll just acquire all your assets in liquidation. "Calm down," you tell to yourself. At least I'll buy myself some time. I'll make sure that I'll remain at the company whatever happens.
#Keep your suit clean
In 2019 we have seen the burst of a couple of bubbles. One example was WeWork's valuation, but there were others such as Uber or Slack. WeWork didn't even make it to the stock market as there was opposition to (to my best knowledge) how the company was run and how it's valuation was determined. The stock market today actually reminds me of how companies were run during communism (I was born in Czechoslovakia). If a factory was not producing quality goods or even if the market demanded something else the machine kept going to fulfill the four-year plan. The cost of unsuccessful running a vast part of the economy was offloaded onto the population, which got poorer. That was one of the major flaws of the East European planned economies - the success of their leaders (or For their leaders) didn't mean success in market terms as we understand them today, but success in sticking to a production plan even though the production plan might have been flawed. Success for them meant producing the planned amount of goods however that number was different to what the market demanded be it there was either a much higher or lower need for "something". In a similar way, the stock market has been accepting companies with flawed business models and packaging their losses by the use of their public image and "coolness" into inflated stock prices. That strategy did seem to work just until recently. Small living-room investors who are often just considered sources of profit for the more versed in the financial world might have begun to reach a certain fatigue too, or maybe it's the whole SaaS industry coming to a consensus that there was already enough fictional numbers. We will see how much longer the extraction of wealth from amateur investors will continue and for how long companies losing billions will be able to sustain their current operations. Actually - it's not a black and white World and there are always survivors from a "hype era" that make it all the way into the next cycle such as Amazon or Google who already survived a couple of market ups and downs. It feels like we are wiser in one way, but still cesseptive to hype as not every website that doesn't immediately crash is receiving millions of dollars of investment, but we're instead pumping more and more money into trusted brands. So we live in a world where we became more pragmatic - not letting just about Any overhyped SaaS platform do an IPO, but that just meant refocusing and we pump more and more cash into established brands giving the rise to Trillion Dollar Brands.
And then there's Open Source Software 'OSS'.
A patent that is validated on the market and you have proven that it can bring in revenue might be the one valuable thing even if all else fails and you're for example losing money on each sale. In that case, a patent might make a valid case as part of a pitch to sell the business.
There might be companies who view your inability to turn a profit as your faulty tactic in sales and/or various other factors, but they could see value in your technology especially if it's patented and you were able to produce at least some leads or sell at least some licenses. The question to ask is if what you patented was essential to your partial success. If it wasn't and you might as well take that part of your technical stack and replace it with something else than it might be argued that your patent didn't prove to have value.
Would you be unable to sell your product unless you implemented your solution in the way that's covered by your patent? You might actually not know at this point - the product is already developed. The ones who will know the answer to this is your competition. If they were able to come up with an alternative solution in the meantime than your patent could be perceived as less valuable. If they weren't then you could again argue that your patent was essential to your success.
USP - not UPS or USB. Sometimes we mistaken assets for liabilities. Actually every asset has also a liability aspect to it in that it has to be managed - the idea is that the overhead of handling an asset doesn't overshadow its value. High-tech assets become commodities over time. Over the last years, we have seen the commoditization of technologies which in itself were enough to be provided as standalone services in the past such as data storage (you wouldn't be able to compete with the likes of AWS or Azure these days with generic storage and compute service), maps & generally the ability to be able to discover services (it's relatively easy to display a map and locations on a map), social network type features (being able to provide a user sign-up system, the ability to search for other users and interact with them isn't a technical challenge) or even face recognition (OpenCV). Those are just a few technologies that won't in itself provide you an edge - they should be merely an enabler of your larger vision. The identity of your product isn't a single piece of technology you integrated (unless off-course it actually is and you are solving a high tech problem and not just creating a generic SaaS service).
#Work hard, play hard!
The first office I freelanced at had a pole in the back of the office. You can find such poles in strip clubs. The reasoning for people not in the know was that it's there for stability reasons. The contracting company was run by two Austrians Thomas & Helmut who came to a city not far away from my home town to develop digital signage Linux boxes rather on the cheap side. They were drawn there by the vision of saving costs. Whenever Helmut came to the office they had a specific type of weekend with Thomas. They ordered a bunch of girls over to stay with them at the office. The cost of these visits was somehow masked under 'secretary' or 'administration' to my best knowledge. One day during winter of 2007 right after Helmut bought his new car and spent the usual Friday evening with professional girls he broke his leg slipping on ice as he was exiting his new Mazda. I came to the office on Saturday as I wanted to finish up some work. I met Thomas frantically hiding the hair-drier while his bald head shined under the sterile write office light. Some moments later Helmut's family arrived from Austria - his wife, kids and mom, they all came to the same office where he and Thomas have spent the last night outsourcing administrative services to local girls. Helmut was in pain. The company's goal was to offer digital signage systems to Tescos were the two guys had some contacts (it turned out they just knew some manager somewhere on a local level). Nevertheless, they kept their operation going until their "funds" dried out. The money came from a friend who had them run his e-commerce website for about ten thousand euros per month. It wasn't really a company making real money. The little they made they spent on me, a real secretary and on playing too hard. The office ceased to exist maybe a year or so later. You can tell by all these happenings that the company was actually a joke. It might not even be considered a startup, just two guys getting mad at the prospect of making a ton of money and blowing it all at the very beginning.
There has been a lot of talk recently on how WeWork was managed during the reign of Adam Neumann. The opulent parties, the booze. There is one story about how he announced layoffs at a company event and just a moment later everything burst into party mode with tequila costing thousands - something down those lines. It's become cool to at least give the illusion of a "playful atmosphere" and "everything goes" until you reach your target. When in San Francisco during my 2014 trip I witnessed the usual at one startup - the sweets & nuts dispensers, free beer, hoodies, and t-shirts. I have met a ton of interesting people and everyone either planned or was in the middle of establishing their startup - developing an app, website or running a Kickstarter or IndieGoGo campaign. Everyone had a story to tell how they found an opening on the market that no-one has yet discovered be it a discovery of veterinarians or cupcakes with custom prints on top of them. I witnessed a couple of already established companies in which people walked around the offices with a dead zombie stare or a sarcastic grin on their faces that reads "I already gave up, but I'm getting paid". One day you're holding a cup under free nuts & raisins dispenser, walking around in your company-issued hoodie drinking a bottle of beer you took from the company's "free-beer fridge" and the next you're being laid off because your whole department is being canceled - something I witnessed happen looking at a situation externally. I became annoyed whenever my senses told me that the (mojo/attitude) on(at) a company's premisses didn't match the free toys and snacks. Too often you hear the argument "here we have table tennis" and "here we have the kitchen area" just to substitute some other toxic decision making or internal problems.
I'm not saying that benefits are bad, but in some places, they obviously stand out if other parts of the business feel rotten.
Every company is different and each company's DNA demands something else in terms of workplace and processes. Benefits and designed environments should match the company's culture. I don't believe that you can just copy-paste a generic Silicon Valley Google campus premises environment into just any startup.
I have witnessed a lot of young founders take inspiration rather in the "play" and not the "work" part of the equation.
The thing about "the end" is that you resist it. The aim of this text was to point out the mistakes and mention unsuccessful endeavors, so with an "end" I don't mean a successful exit, but a painful phase out - a crawling depletion of funds, scaling down on office space, lay-offs, and debt. It's smart to quit at the right time. Too often we hold on to things too tight whereas a time-off and a new perspective would help. Start all over, but don't just copy every step you made last time - look where it got you.
As for me - I guess I'll continue doing a tiny bit of trading, consulting startups, doing a bit of project management, product ownership, and software prototyping, I'll keep the lights on in my little office, might do a painting or two & hopefully my mini-vacation in Lisbon will be worth it and I would love to resume writing fiction. Failing Unicorn is something I had to get out of my system. I have been involved externally and internally with software projects, startups and all sorts of endeavors since about 2002. Yeah - It's been almost two decades. I have seen great wealth-generating machines take off, but at the same time, great talent makes stupid mistakes and destroy assets. At the end of the day, I don't really have an answer to how to "do things right". My one recommendation is that we all take a step back, calm down and look at the state of our professional and personal endeavors with an open mind without prejudice. Step out of the bubble and face reality.
by Milan Kazarka firstname.lastname@example.org
art by Henrique “Kite” Xavier facebook.com/thekiteart