When you have the honor of talking with a customer about their needs, don’t try to sell them on your product idea. Instead, ask an open ended question about how they get through their day. Then shut up. Follow the “ask ‘why’ five times” rule to really get to why they would consider buying another solution.
In all things, the best interviews are when the other party does most of the talking.
No competition, no market.
No market, no business.
NEVER assume, or even say, you don’t have any competition. Your customer can always decide to do nothing…
A company of one can be agile and react quickly. It’s exhilarating. If you grow, it does’t last. Employees need to be managed. Boards need to be managed. Management requires structure and discipline.
It’s said a startup needs three CEO’s – The million dollar man, the ten million dollar man, and the one that grows the company past ten million. Sometimes that’s the same person but usually, it’s not. Each step requires transition that can be painful, especially when the founder/CEO is not the one for the job.
Know yourself and know when it’s time to find the next leader.
There IS something to be said for focus. Starting a company is more than a full-time job and you can’t outsource it. The safety net can take the edge off.
Sooner or later your startup opportunity will demand your full attention.
Business models change because customers change. Technology changes. Culture changes.
You may have a great idea but you don’t have all the answers. Great ideas go unsold. You have to stay in touch with the market. Give them something to try out for feedback.
Always be ready for change. Century old companies can’t last on their history or their brand. Ask Kodak.
Early in the fundraising process, many entrepreneurs avail themselves of the traditional 3F’s (friends, family and fools) to raise that early capital. While this is a legitimate and valid process, it does not mean that it shouldn’t be treated as a formal legal arrangement.
Sometimes, entrepreneurs are highly successful in raising capital from a number of close acquaintances. This gets to be a problem when you start to raise equity based capital from angels or venture capitalists. Rather than dealing with a single owner, there are in fact many individual owners who may all have different assumptions and expectations. While some investors will give you enough time to clean up your cap table, it can be enough for other investors to pass altogether. The time to keep this all clean is the first time you take on capital from a friend or family member. You need to treat the transaction like any other legal contract spelling out terms and rights.
Sometimes, entrepreneurs have to give themselves permission to get rich. For many, getting rich is not the primary motivation… and that is as it should be. Drucker says the primary purpose of the business is to have a customer. Having a customer means you have solved a problem someone else is willing to pay for.
If you’re lucky enough to get rich, that’s because it is an effect, not a cause. It’s the result, not the reason.
But it’s ok for wealth to be number 2. It gives you opportunities you wouldn’t otherwise have; like philanthropy or starting your next company!
“The E-Myth” by Gerber talks about working ON the business while working IN the business. You need to spend some time off the clock where you are not bounded by the demands of the moment. Those times are when you are visited by moments of clarity.
Long walks, runs, hikes, bike rides, golf and other time consuming physical activities not only provide these moments but they offer considerable health benefits.
Hobbies like gardening, woodworking, fishing also provide time out of mind opportunities.
The important thing about this is there is never enough time for this. You have to plan it like another activity and make sure it get’s on the calendar.
Oh, and leave the cell phone at home!
Legal issues are tricky. Every term, every clause has ramifications and usually is made up of latin words you won’t understand.
All attorneys are not created equal. You wife’s brother who is a trial lawyer, may not be the best one to negotiate your license agreement. Negotiating a term sheet with a VC is very much a specialty.
It’s expensive, it can be frustrating and it’s rarely fun but find yourself a good business attorney who knows the issues of small business.
You may just avoid seven years of bad luck.
It’s good to understand the end game early. Nothing is carved in stone, but especially with multiple founders, the earlier you talk about exit, the better. A term sheet negotiations is the wrong time to discover one founder want to take on equity and the other does not.
For that matter, you should have that conversation with yourself. An advisor can facilitate the conversation and the thought process for you. Ask the tough questions. Plan scenarios and understand the details related to each possibility. You can’t plan when opportunities will land in your lap. Don’t be surprised. Be proactive.