You have worked very hard to get your product ready for testing. After testing, you gain your first few users and know you are on to something, but where do you go from there?
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Startups You Might
You have worked very hard to get your product
ready for testing. After testing, you gain your
first few users and know you are on to
something, but where do you go from there?
Startups You Might
See why some startups succeed and some don't. These
points should help you understand how to approach
your new venture without falling flat!
Investors love to make excuses on
why they don’t want to invest
This is a little story from a now success entrepreneur and
"Investors all had different reasons why they don’t want to
invest. After getting over 20 “No’s” from investors, I realized
something was off. Each one would sugarcoat the “No” and
tell it to you in a way that would make them come off nice.
Don’t blame them as no investor wants a bad reputation. But
one thing I learned as an entrepreneur is that when an
investor tells you “No”, you should ask what you could have
done differently to improve your pitch. By asking this, you
will get feedback you can use to improve your overall pitch
and increase your odds of raising money.
you’ll get a high salary
To illustrate, here is a short story by an entrepreneur; “Our
seed round for KISSmetrics was a million bucks, and our
series A was three million. When we raised our seed round,
my co-founder and I were ecstatic as it was the first time we
raised outside capital. We were over the moon that we could
take a salary. We were even hoping that we could take a nice
Our lead investor True Ventures was very flexible and didn’t
restrict us on how much of a salary we could take. They
explained, however, that if we took high salaries, it would
increase the overall burn. This means the company would
have to raise more money faster, which would cause more
dilution for my co-founder and me.
Due to this, we decided to take only a $5,000 a month salary…
even after we raised our three million dollar round. The
reason I say we took a $5,000 monthly salary instead of
$60,000 a year is that we couldn’t always pay ourselves each
month as we had to conserve cash when things didn’t work
out the way we wanted.
In the long run, everything worked out, but we wouldn’t have
been around if we didn’t penny pinch…not just with our
salaries, but with everything.”
If you are going to raise capital, don’t be dumb by paying
yourself a lot of money. That will just cause you to have to
raise more money, which means you will own less of your own
Especially in the Bay area, employees and advisers are
notoriously known for asking for a quarter of a percent to a
half a percent in equity. By all means, good employees
deserve a lot of shares as they are getting paid less to work for
you than they would have had they worked for Google or
Treat your options as if they are gold. Hold onto them so you
can give them to your key employees. If an adviser wants a lot
of shares, make sure he/she gives you a written contract on
what he/she is going to provide you with for those shares.
Also keep in mind that if an adviser has a big personal brand,
the adviser probably won’t have much time to help you. So,
get a written contract on what that person is going to provide
you with for the shares.
(This is only necessary if the adviser is requesting a lot of
90% of startup networking events are
a waste of time
What you learn at most startup networking events is the
same stuff you can learn online. The only difference is
startup events typically cost money. There are a few
networking events that are worth attending, but most aren’t.
Look at attendee lists before you register for conferences or
networking events. Make sure there are either potential
clients or people who are a lot smarter than you are at these
events. If you are the one teaching the room on how to run a
You can only learn if people who are smarter than you are at
If you want to attend good networking events, look for the
ones that are intimate and invite only. It’s hard to get into
those events, but when you do, it will be worth it. Those are
the type of events that will allow you to create new
friendships and business partnerships.
Live in San Francisco, but don’t build
This may seem wise at first because you are getting feedback
from really smart people, but you need to take a step back and
realize they are probably not your ideal customers. Startup
people don’t like paying for stuff, and they make up a very
small portion of the world’s population.
When building a product or service, you need to consider all
of the people who live outside the Bay area… like someone
who may live in Lincoln, Nebraska. Remember, the majority of
the world doesn’t live in the tech epicenter.
But just because your customers may not live in San
Francisco, it doesn’t mean that you shouldn’t. You’ll find
more tech investors in the Bay area than anywhere else. They
tend to invest in people they know and believe in. You won’t
be able to get to know them as well unless you live close to
It’s never too early to start making
When you raise money for the first time, you have less of an
urgency to create a revenue stream for your startup. When
you take on a seed or series A round, you end up spending
more time building a product versus getting paying
On the other hand, if you were using your personal savings to
build your company, you would try to break even ASAP. But
even before you have product market fit or even a working
product, you can start selling.
We should have started the sales process before we even
finished creating our product because not only would it have
helped bring money to reduce our burn, but it would also
allow us to learn from paying customers faster.
Experienced employees aren’t better
than hungry ones
When your startup has a few million bucks in the bank, you
have a lot of flexibility when it comes to hiring. Because of
this, you will look for the smartest person out there to hire…
you know, the person with a ton of experience who has done
what you want to do…such as executives.
What I quickly learned is that although those high paid
people did well in their last job, it doesn’t mean they will do
well with your company. In many cases, they do much better
in big corporate environments. What they lack is the ability to
move fast and do so without relying on others.
Those corporate executives are used to farming out the work
instead of figuring out how to do things on their own. When a
startup is young, these are the people who I recommend you
who haven’t gotten that big break in their career yet. These
are the ones who will fight and do whatever it takes to
Later on, you can hire those corporate executives, but you
don’t need them at the beginning.
Your social circle defines you
When you were a kid, did you parents always tell you to hang
out with the smart kids?
I know mine did…they didn’t want me to hang out with kids
who were dumb or misbehaved as they feared it would rub off
The same goes with entrepreneurship. It wasn’t till later in
my career that I realized that your peers have a big impact on
how well you will do. If your friends are smart entrepreneurs
who are successful, the environment will push you to do
better, and you will develop faster as an entrepreneur. We
both knew this ahead of time, we would have moved out of
Orange County a long time ago.
You should move to a location where you can surround
yourself with people who will help you get to where you want
to be in life. At the same time, make sure you reciprocate and
help them out whenever you can.
The grass is always greener on the
If you are coming from the corporate world, you probably
read TechCrunch and see how young kids are raising millions
If you are in the startup world, you always hear about people
getting paid well into the six figures with perks, such as free
food, working at large companies. And best of all, they don’t
have a ton of stress because they only have to work from 9 to
The reality is, neither of the above two scenarios are accurate.
People in the startup world work their butts off; they don’t get
paid much; and it’s rare that they ever succeed.
People in the corporate world, don’t always get paid a lot, and
many of them work 70-hour weeks even though they are only
getting paid to work 40 hours a week.
Don’t become an entrepreneur because you want the
entrepreneurial lifestyle. And don’t work in the corporate
world because you want an easy job. Do what you love and
solve problems while you are doing it.
Don’t pick a career path just for the money. The startup world
isn’t a place where most people get rich. I wouldn’t count on
luck, If you want to solve a problem because you are
passionate about it, become an entrepreneur for that reason,
and not for the money.
Money is a side effect of solving a problem that enough
people are facing.
Stick to what you know
Warren Buffet is notoriously known for investing in
companies that he understands. He is good friends with
people like Bill Gates, but he wouldn’t dare to make an
If you want to increase your odds of succeeding, follow
Buffett’s advice by sticking to what you know.
Successful people don’t always know
The one thing that I kept screwing up is not questioning
advice I got from these mentors. If they said something, I
followed it because… who am I to question someone who has
sold their business for 100 million dollars?
Mentors are great at giving general business advice and
guiding you along, but getting specific industry advice isn’t
always a smart idea unless that person has a lot of knowledge
about your industry.
Just because someone is successful doesn’t mean he/she
knows what is best for your business. In the end, we pivoted
and found our own direction based on the needs of our
customers, which worked out well for us. Our mentors have
been great and helped us out a lot. We just had to learn how to
ask them the right questions.
You just need to have realistic expectations when taking the
plunge. It’s not realistic to think that you will raise a lot of
money, create an awesome company, and sell it to Facebook
for a billion bucks.
So, what do you think about starting a company? Is there
anything you wish you knew before taking the plunge?
Now that you billion
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