Marketing is a Thermostat, Product is a Frying Pan

A crazy analogy like this can only come from the one and only Seth Godin.

Yesterday he blogged about this analogy and it immediately resonated with what I think all entrepreneurs go through in the beginning days of launching their venture.

Godin on why marketing is a thermostat:

Valuable marketing campaigns are the result of time and user experience, not media and more media. Tweeting more often doesn’t make your tweets have more resonance.

Godin on why product is a frying pan:

Extraordinary products, remarkable stories, intense connection via user interaction–these things actually do scale quickly.

In short, marketing doesn’t scale fast but product does.  Read Seth’s full post titled The thermostat and the frying pan here.

The myth of the 80 hour work week

The prevailing frame of thought in the startup community is that you have to work crazy hours if you work for a startup.  If you are the founder of a startup, you hours need to be even crazier.

There a very few contrarians to this 80+ hour work week thinking.

One of them is the co-founder of 37signals David Heinemeier Hansson.  I think every entrepreneur should regularly read the content created by both David and his co-founder Jason Fried.  They provide a contrarian perspective to almost every pervasive startup meme you could think of.

In the particular post I want to share today titled All or Something, David makes the case for the 10 or 20 hour startup work week.  He states:

The marginal value of the last hour put into a business idea is usually much less than the first. The world is full of ideas that can be executed with 10 to 20 hours per week, let alone 40. The number of projects that are truly impossible unless you put in 80 or 120 hours per week are vanishingly small by comparison.

If your main fear of going after a startup idea is the amount of time it will require, then I suggest you read more of this post.

In addition, you should read their book Rework and Getting Real to find motivation.

How would you survive on a deserted island?

This is a question every entrepreneur should ask him or her self.

Why?  

Well, simply stated in the words of the co-founder of Twitter Ev Williams, Starting a company is like landing on the shore of a deserted island.

That answer is actually the title of a blog post Ev posted way back in October 2008.  I read it this morning and it instantly connected with how I’m feeling right now.

Please go read Ev’s thought process on this metaphor here and let me know if you agree.

 

How to turn a bad idea into a good idea

Any entrepreneur worth their salt wakes up with a EUREKA moment at least once a month. However, when the dust settles and you do a few google searches, you realize that that eureka moment was a false positive.

Your idea sucks.

Hold your horses my friend.  The fact that your eureka idea sucks doesn’t mean you shouldn’t start working on it.  Many of the most valuable startups every created started with a sucky idea.

Jason Cohen, founder of WP Engine & Smart Bear Software, has a fantastic post on his blog from 2008 that explains this.  He states:

it doesn’t matter what your first idea is. First, it’s probably wrong. Second, the only way to find the right one is to try the wrong one and see what happens. You won’t find it by fiddling around with PowerPoint slides and Photoshop mock-ups.

So get out there and make some mistakes!

Jason shares some awesome stories about how PayPal and Flickr got started with crappy ideas.  Go read his entire blog post here.

Understanding the Series A Board of Directors

Most entrepreneurs will never raise Series A venture capital and have to worry about the type of board of directors composed of investors.  However, if you are creating a business that will need outside capital to go big, then this post is for you.

Getting a grip on the fundamentals of formulating and managing a board of directors is critical.

There’s a fantastic post on the Venture Hacks website that gives you an inside baseball perspective in a post titled Create a board that reflects the ownership of the company.

The bottom line comes from this quote from the article:

The board you create will be your new boss. But trying to please everyone on your board dooms you to managing board members and ignoring customers and employees. Great companies are rarely built by committee and a bad board will waste your time trying to run the company their way.

This hack will show you how to create a board of directors that you can trust even when you don’t agree with its decisions.

Creating a good board is definitely a luxury problem for an entrepreneur that most of us creating startups with big visions want to have one day.

It’s better to read all you can now, and understand the ins and outs well before you have to put your name on that dotted line.

So make sure you read the full post from Venture Hack here.

What’s Better: Pretending to know or honestly not knowing?

As an entrepreneur launching a new venture, how important is it that you know all the answers to the most common questions you’ll get from potential investors?

What’s your customer acquisition cost?

What’s going to be your pricing model?

What’s the lifetime value of a customer?

What’s your churn rate?

What are your risk?

These are all tough questions anyone thinking about investing in your business will ask. You better have all the answers right?

Wrong?

Josh Kopelman, VC at First Round Capital makes a great point about not knowing all the answers in a post titled “I don’t Know” he wrote on his Red Eye blog.

If you have been reading this blog for awhile, you know by now I like to go back in the history of the blogosphere to find the best entrepreneurial advice. This post from Kopelman is no different as it comes from back in 2008.

Kopelman’s insight is simple. He states:

No one expects a pre-launch company to have all the answers. (In fact, we get scared if you think you have them).

This is absolutely a great post to read as Kopelman also gives two scenarios of two different entrepreneurs responding to his questions in an investment meeting. One he finds credible, the other he does not.

Read the full post on his blog right here.

Don’t define your business model too soon

Aren’t we in the business model generation?  Whenever an entrepreneur brings up their new venture, there’s always some smartass in the room who wants to question your business model.

Next time this happens, tell that spreadsheet jockey to hold his horses.  The business model is not the first thing on your things to do list when you start your new venture.

Fred Wilson does a great job breaking this down in a post he wrote in his blog titled: Product > Strategy > Business Model

Based on the title, you can see Wilson suggest that business model discussions should come only after the product and strategy are completed.  He states:

We have also had many portfolio companies build revenue models that did not line up well with the strategic direction. And in some cases, the companies really did not have a well articulated strategic direction at all. That led to a lot of wasted energy building a team and a customer base that ultimately was not of value to the business. We have seen teams walk away from parts of their business because of such mistakes.

If you don’t have a strategy yet, but have already decided on who and what you are going to charge for you product, then I suggest you go read both Fred Wilson’s post on this topic, as well as go read a follow up post from Mark Suster riffing on what Wilson shared in his post.

The age myth: Are younger entrepreneurs better?

There is a common perception that once an entrepreneur turns 30, he or she is over the hill.  Even worse, the prevailing thought is if you haven’t hit an entrepreneurial home run by age 30, your chances of ever hitting a homerun are next to nill.

It turns out that these beliefs are just plain false.  

Adeo Ressi, the founder of The Founder Institute, has done personality and aptitude tests on over 3,000 potential entrepreneurs worldwide to draw conclusions on the question: Are younger entrepreneurs better?

Ressi states the following regarding the age myth:

The research shows that an older age is actually a better predictor of entrepreneurial success

Ressi then goes on to conclude the following:

Age is only one factor among many to predict the success of entrepreneurs, and anybody at any age can break any molds put forward by “experts.” However, it’s clear that the stories of a few “college-dropout turned millionaire” (or billionaire) startup founders have clouded both the mass media and the tech industry from reality. We have romanticized the idea of a young founder because, well, it’s a great story, but these stories are not the norm. In the end, classic biases of gender, race, and age need to be discarded for a real science of success.

To get the background on Ressi’s methodology for these conclusions you should read this blog post he wrote on TechCrunch.

Entrepreneurship is a Strategy Game

Think chess, monopoly, spades, poker.  Entrepreneurship is a strategy game no different than any other strategy game.

Every strategy game has 4 components: rules, tricks, best practices, and NO NOs.

Do you know these 4 components of entrepreneurship?

A great starting point comes in a blog post written by my man Charlie O’Donnell on his  blog This is Going to be Big.

One of the 10 strategies Charlie shares is:

4) Don’t look at the leaderboard: Other people will be dramatically more successful than you–to the extent whether they’ve discovered a cheat or are playing a different game altogether.  Don’t worry too much and focus on your own game.

Go check out his post titled What Playing Dots Can Teach You About Startups to get all his brilliant insights.

When you should look for angel investors

I talk to entrepreneurs almost everyday.  Most live in Atlanta, some live in other places outside the Valley.

As an entrepreneur living outside the Valley, it’s important that you have the right mindset if you want to get angel investors in your venture.

First, you have to be real with yourself on whether or not should you should be looking for angel investors in the first place.

I found a great post written by David Cohen from back in 2006 that covers this topic.  The bottom line from the horse’s mouth is that:

If you’re going to go and ask any kind of professional (non-emotional) investor (angel or VC) to open up his checkbook, you had better be talking about building at least a $20M business. Fact.

Remember, that number is from 2006.  So in today’s terms you might want to up it a bit, (for the sake of argument) to a $50M business.

If your business is not going to hit that number in let’s say 2 to 5 years after you get your angel investment, then you are a great candidate for the bootstrappers club.

There are some other rants and nuances that provide more context on David’s blog.  Please go check it out here.