30 Tips For Aspiring Entrepreneurs

Do you want to start a company? Scared you will fail or be embarrassed in front of family and friends? I’ve been in your shoes. I spent years trying to dip my feet into starting a company before jumping in. Here are a few things I’ve learned along the way:

1. You are a bad judge of your own ideas – When picking a startup idea, seek the advice of Smart No-People in your life (as opposed to Everyday Yes-People). You can’t pull the wool over their eyes as easily, so you have to convince them with real traction. Here’s the important part: Ask them directly whether they they think your idea is worth starting a company for or not. People don’t want to tell you it’s a bad idea unless you explicitly ask them to honestly give you their feedback.

2. Startups are a long game – The only way to beat the 9 in 10 odds of failure in startups is by preparing yourself to* do the best 10 startups you can*. Successful startup liquidations take 7 years on average, so try to get your first 9 companies to fail in the first 3-5 years so you can move on to the next one if things aren’t looking good. That means that you could be waiting 30 years to get your big exit. That is a full career in startups. Steel yourself: this is a marathon, not a race.

3. A quarter of a watermelon is better than half a grape – When dealing with investors and employees, be generous with your equity. It is much more important to put together the best team you can than to keep as much of the pie as you can. And don’t forget that investors are part of your team. If you have an offer from a top-tier investor, you should usually take it without haggling much on equity.

4. You don’t need investment to start a company – Most investors will never invest real money until you have more than just a nice story. Go build your app. Get users. Get revenue. Do it on your own time and your own computer. The average amount you need to spend to get some basic traction these days should only be $2000-5000. Don’t know how to write code? Find a co-founder who does and convince him to partner up with you? Can’t find one? Try a different startup idea.

5. Your job is mostly storytelling – A startup founder is a storyteller. You tell stories to investors, to employees, and to customers. Most of the time, the stories are boring because most people are bad storytellers. You focus on telling people stories about your new features (features = brochure = boring) instead of focusing on the problems your product solves (problems = drama = exciting). Don’t tell stories about yourself and your product, tell stories about your customer’s hair-on-fire problems. Make it juicy and exciting.

6. Building a great team is even more important than a great product – It is harder too. More frustrating. More painstaking. Takes longer. But startups are about the people. You will want to cheat and hire contractors to get it done quickly. Try not to, an engaged A-player employee is worth 100x more than a temporary contractor. Team trumps product because team can out-live a series of bad products.

7. Don’t mix your day job with your startup – If you are doing a startup while still employed, you have to be extremely careful. First, don’t compete with your day job–that is unethical. Second, do all your work on your own personal time and on your own hardware. No checking in during lunch break. Nights and weekends only. Third, check with a lawyer to get advice local to your state. It sucks to pay $300, but it sucks more not to own your IP. You may want to even tell your boss in writing what you are doing and that you are doing it on your own time and your own hardware for a paper trail, but check with your lawyer before making that decision.

8. Hire a great lawyer – Don’t skimp. Don’t even try. No legal zoom allowed. Don’t do it. No excuses. If you are doing this, do it right. Hiring bad lawyers or using generic fill-in-the-blanks legal forms is always penny wise, pound foolish. One wrong move can kill your company down the line or even worse, you could be held personally liable. Never worth it. Trust me.

9. Your personal network is your most valuable asset – Many founders start with no network. That’s ok. Remember you are going to do this 10 times, you have plenty of time to build a network. The single most important rule about building a network is to give more than you get. Always, always, always try to find ways to help people more than they help you. The dividends on this behavior are hard to see at first, but pay off exponentially as you go along.

10. Have the tough conversations early – Co-founders should discuss up front how decisions get mediated when they don’t all agree. Does the CEO have the final call? Majority shareholder vote? Don’t save these conversations for when you disagree about something, it is too late. Same goes for employee and contractor problems. Don’t let bad behavior go unresolved because you are afraid of conflict, it will just make the conflict worse when it all comes to a head.

11. Money is a fickle motivation for a founder – Many founders get into startups to get rich. That’s as good a place to start as any. But the idea isn’t comforting enough for most people to last long enough to finally get rich. So if you want the best chances of getting rich, find a deeper motivation. Start appreciating the craft of startups.

12. The feelings of fear and anxiety don’t go away – It never feels like the right time to quit your job. The fear of failure doesn’t go away even after raising millions in venture capital. Trust me, I know this personally. And you can’t argue with yourself or reason your way through the feelings of anxiety. You have to become friends with your fear and let it power and motivate you.

13. Study those that have gone before you – The path of entrepreneurship is well beaten. Go read The Hard Thing About Hard Things by Ben Horowitz. Go read Like a Virgin by Richard Branson. Go read The Narrow Road by Felix Denis. Surround yourself with 5-6 excellent advisors who have been there and done that before. Give them stock in your company, anything from 0.10-0.25%, and if they are an excellent fit, even up to 0.5% equity.

14. Skip the incubators and accelerators (except YC) – You don’t need them. Don’t waste your time. Do the real work of building a startup yourself. Incubators are bullshit.

15. Learn the difference between urgent problems and big problems – Focus all your time on urgent problems. You should hire people to solve the big problems. It is easy to get carried away in everyday details: Which payroll service do you go with? Who will do your taxes? How to keep your books? These are big problems, not urgent ones. Urgent details are: How do you build a product worth paying for? How do you reach an audience of customers? What problem are you really trying to solve? You can’t hire people to solve urgent problems, they are for founders to figure out.

16. Don’t fall in love with your idea too early – Too many startup founders fall in love with their product long before the product should survive. They put it on life support, unnaturally keeping a bad product alive. But the founder has trouble seeing this truth because he is in love with his product. Don’t let this happen to you. Don’t get stuck on a product. Read the Instagram Story… if they had fallen in love with their first product, they would never have sold to Facebook. Fall in love with real traction, not with your product.

17. Not every company is investable – Why do you want to raise money? If your answer is: “to pay myself a salary and grow awareness of your company” then you probably shouldn’t even be trying to raise money. Raising money is best done after product-market fit, after your company is taking off. I know it feels like a chicken-and-egg problem, but you have to figure out how to get awareness of your company before you raise money. Money won’t solve your problems. Traditional marketing techniques don’t work for early stage startups. You need to create a great product first that doesn’t need marketing to grow.

18. Do the math early if you ever want to raise Venture Capital – VCs only invest in companies that could potentially go public within 7-10 years. That means growing to $100M/year in revenue. In other words, you need to be signing up 326 new customers a day who each pay $10/month every day for 7 years straight. That is incredibly unlikely and exceedingly rare. Venture backed companies deliver higher value and can tell a much more compelling story than “we will get a bunch of people to pay $10/month.” Figure out your viable path to $100M/year in revenue.

19. Buckle up, this could take a while – The difference between success and failure is usually tiny – almost indistinguishable. In golf, the difference between a hole-in-one and a flub can be less than a millimeter in distance. In startups as in golf, it often takes years of practice, repetition and mentoring to get it just right. Overnight successes are flukes and outliers. By the way, the average whole-in-one startup takes 7 years for a liquidity event (acquisition or IPO).

20. Your idea is worthless, execution is everything – Don’t be secretive about your idea. Your company is MUCH more likely to fail because of lack of awareness than it is from someone stealing your idea. You should be shouting your idea from the rooftops. You have to do everything you can to ignore your concerns of someone stealing your idea.

21. Beware of commitments – A lot of people will ask for quick commitments (VCs, customers, investors), and it is ok to say: “thank you but let me think about that for a night” or more simply “no.” You can get yourself in a lot of trouble quickly if you are not willing to say no.

22. Your reputation will last longer than your startup – Many founders often blow people off and treat them badly. They do this to their own employees and lower level employees at other companies. They don’t realize that the people they mistreat today could be VPs, VCs or M&A decision makers tomorrow. You have to bring your A game to every conversation you have.

23. Cash-flow is king – You must always always always watch your cash-flow like a hawk. How much do you have left? How long will it last you? Did you save enough for taxes? You should have these numbers memorized and keep looking at them frequently. Forgetting to watch cash-flow is like forgetting to breathe… a very fast way to die.

24. Nobody cares about your startup as much as you do – Nobody will promote it if you don’t. Where is your blog? Why are you still making excuses for not posting? How are people supposed to know about you? How do people find you? Nobody figures this stuff out for you if you don’t. And nobody can write blog posts as passionately as you will. Get off your ass. Get out there. Write. Convince the world that you can solve a problem.

25. Beware of following your passions – It is always good to scratch your own itch, but it is always better to get passionate about the success of a product than it is to be passionate about an unsuccessful product. Listen closely to Dilbert’s founder, Scott Adam’s advice on following passion.

26. Surround yourself with advisors – People who have been founders recently enough that it counts. Guys that haven’t been active founders since the 90’s often won’t have advice that is fresh enough to be relevant. Listen to their advice carefully, solicit it frequently… but in the end make up your own mind. It is good to have a mix of advisors: some who question your every move and some who motivate you.

27. Focus more on the hair-on-fire problem than your product – What hair-on-fire problem is your customer facing (must be articulated in one simple sentence)? How can you help them? The key to your success is your customer’s success. If their problem is not a hair-on-fire problem, then they are not going to be looking for a fire extinguisher. Make sure you are building a fire extinguisher. And be certain your potential customer’s hair is on fire first.

28. Nobody believes in you until you quit your job – I know it sounds harsh, but it is true. It sucks, but nobody takes you seriously until you are doing your startup full time. Especially investors. You can have a great pitch, but even angel investors will ask: are you doing this full time? If you say no, they won’t invest. This doesn’t always mean you need to quit your day job on day one. But when you think it is time to raise money, be prepared to quit.

29. Take care of yourself – Until your startup really takes off, you are your startup. If you are tired, overworked, unhealthy, under-slept, and disheveled… your startup is too. You can’t take proper care of customers unless you are taking care of yourself first. If you don’t take proper care of customers, they will leave and pay someone else who will take proper care of them.

30. Give weekly quantifiable updates to all stakeholder – Investors, employees, advisors and significant others should all receive a weekly email from you with key performance measures (KPMs) like users, signups, revenue etc. It does not have to be a long email–in fact, shorter is better. But it should cover what went well that week, what went poorly, and how you need help. Keep copies of these in Evernote for yourself like a startup journal, they are massively fun to look back on.

Your turn…

Did I miss any good ones? What are the best tips you have heard?

What’s next?

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