THE DREAM IN ACTION

Paul Graham, the founder of Y-Combinator, regularly writes great articles for the startup community. His latest, ‘Startups in 13 Sentances‘, was his 13 most important tips for startup founder. As the advisor to many successful startups, I take his advice very seriously. I thought it was valuable enough to reflect on so I want to share my digestion of his thoughts here. Most thoughts I completely agree with and I share why, but some I’d like to challenge.

The top is his main point, then an excerpt, then my response.

1. Pick good cofounders.

Cofounders are for a startup what location is for real estate. You can change anything about a house except where it is. In a startup you can change your idea easily, but changing your cofounders is hard.

Response: Remember, you are one of the cofounders. Make sure you’re a good cofounder before you try and recruit someone else. At least make sure that you bring half of the founding equation to the table. Don’t try to find a technical co-founder unless you believe that you have the skills necessary to run the business side. Don’t ask your cofounder to make a commitment to the project if you can’t commit yourself. Always continue to work on your personal development so that you don’t look at yourself one day and realize that the knowledge you had is irrelevant or outdated. Don’t become stale!

2. Launch fast.

You haven’t really started working on it till you’ve launched.

Response: People always talk about this great idea they have. Oh, what it could be if only, X, Y, or Z were to happen. Nobody has great ideas, people have good ideas that haven’t been proven or tested. I believe that you can’t have a truly great idea if it’s stuck in your head. Ideas only become great when they are proven and put into action. You don’t know how people will react until your product or service is out there competing and you have customers.

3. Let your idea evolve.

Most of the ideas appear in the implementing.

Response: I wasn’t sure how this blog post was going to turn out until I started writing, and you sure as hell won’t know how your company is going to progress until you get going on it. Start fast (point 2) and see where the beast takes you. Twitter started as Odeo, a podcasting company, but Ev and Biz stayed open to other ideas and Twitter took off.

4. Understand your users.

the hard part is not answering questions but asking them

Response: This is why its so much easier if you are one of your users. This won’t reduce the importance of listening to users but it will help your ability to relate to them. If you are your target customer you will be able to know them well enough to solve their problems before they have them. If you can anticipate your customers issues you can get a head start to the solution. This is much much easier said than done.

5. Better to make a few users love you than a lot ambivalent.

Ideally you want to make large numbers of users love you, but you can’t expect to hit that right away.

Response:  I first started thinking about this kind of niche targeting as a way to launch then grow when I read ‘The 4 Hour Work Week‘. Tim Ferriss talks about cutting down your target customers so that you can reach a small amount of people and really help them rather than reaching a ton of people but not help any of them. The name of the game is niche! Build a solid foundation and measure it, then grow based on your measured findings.

6. Offer surprisingly good customer service.

Customers are used to being maltreated.

Response: This became super obvious to me recently. Here’s what happened… I was on Zappos and screwing around with their ordering process. I accidentally (not their fault, mine) purchased something that was shipped to my Mom. I couldn’t call to cancel the order before it was shipped so I had them send my Mom a return label via email. Then I decided not to call my mom and tell her about my mistake, I wanted to see if she could figure it out on her own. Was the Zappos return process as easy as they claimed? The item arrived, the email with the return label arrived, she put 2 and 2 together and slapped the return label on the box without opening it (thank goodness) and shipped it back. Because of how easy the process was for her, I think I turned her into a Zappos customer. Their return process was so simple that it likely acquired them a customer, now that’s customer service!

7. You make what you measure.

Merely measuring something has an uncanny tendency to improve it.

Response: At GE there is a famous phrase that is ingrained into our heads. “You can’t manage what you can’t measure”. This has proven to be true over and over. With the six sigma culture of old, the importance of measuring things that you want to improve is huge. The hard part many times is trying to figure out how to measure. Sometimes you have to be creative but finding out how to measure a process

8. Spend little.

A culture of cheapness keeps companies young

Response: Read my post on Xobni’s burn rate

9. Get ramen profitable.

“Ramen profitable” means a startup makes just enough to pay the founders’ living expenses.

Response: My personal challenge with this is how can you do this if you’re not single? I have not words of wisdom here, I need advice on this myself. Xobni a Y-Combo company is doing it perfectly.

10. Avoid distractions.

The worst type are those that pay money: day jobs, consulting, profitable side-projects.

Response: I agree that making money now can definitely distract you from building something that could be huge later. It’s easy to forget the goal when the short term rewards get good. The only thing that I’m unsure on about Paul point #10 is the fact that Twitter was a side project, a distraction if you will, from their original company Odeo that did podcasting software. Pretty much anyone knows that Odeo’s original goal would not have taken off like Twitter did so how can he say that the side projects are always bad. Ev, the co-founder of Twitter has often given opposite advice of don’t ignore side projects and other ideas. I’d be interested to see what Paul would say about the apparent clash between point #3 and this one. Should I evolve or focus?

11. Don’t get demoralized.

The underlying cause is usually lack of focus.

Response: Laser focus can definitely happen even after a failure, if not more so. Currently, SocialDreamium is sitting still unsure of what we’re going to do and it is starting to feel like a failure. We tried to compete in a space that was faster than us and we are learning to refocus. I’m learning to use my set backs as motivation no demoralization…it ain’t easy but if done correctly, I truly believe I’ll be better off in the long run with valuable lessons learned.

12. Don’t give up.

You can get surprisingly far by just not giving up.

Response: My father has been quoted on multiple occasions for saying, “he found success by staying with the same wife, the same job, and the same house for over 25 years”. He’s right, there is true value by just not giving up. Stick with something and prove that you can be a sustainable player in the game and you’ll prove your worth and eventually rise to the top. A significant portion of my fathers business as a salesmen is strickly due to the fact that he’s been doing for 25+ years. You may not want to stick with your failing startup for 25+ years but don’t give up right away either.

13. Deals fall through.

One of the most useful skills we learned from Viaweb was not getting our hopes up.

Response: The lesson here is hope for the best and plan for the worst. In SocialDreamium we hoped for the best but failed to plan for increased competition and challenges in the market. To expand on Paul’s thought, things fall through in business, it just happens. Whether the perfect hire decides to take a different job or a strategic deal falls though, things will always change. Plan for the unexpected and you’ll survive much longer.

###

Paul Grahams closing thought…

Understanding your users is part of half the principles in this list. That’s the reason to launch early, to understand your users. Evolving your idea is the embodiment of understanding your users. Understanding your users well will tend to push you toward making something that makes a few people deeply happy. The most important reason for having surprisingly good customer service is that it helps you understand your users. And understanding your users will even ensure your morale, because when everything else is collapsing around you, having just ten users who love you will keep you going.