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11 Things About Startups You Might Not Know PowerPoint PPT Presentation


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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11 Things About Startups You Might Not Know

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11 things about startups you might not know

11 Things About

Startups You Might

Not Know

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?

made with


11 things about startups you might not know

11 Things About

Startups You Might

Not Know

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

mentor

"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.


11 things about startups you might not know

Raising a lot of money doesn’t mean

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

six-figure salary.

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

company.


11 things about startups you might not know

Options is the quickest way to dilute

yourself

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

Facebook.

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

shares.)

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


11 things about startups you might not know

company, something is off.

You can only learn if people who are smarter than you are at

the event.

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

for it

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

them.

It’s never too early to start making


11 things about startups you might not know

money

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

customers.

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


11 things about startups you might not know

stay away from. Instead, you want to hire hungry individuals

who haven’t gotten that big break in their career yet. These

are the ones who will fight and do whatever it takes to

succeed.

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

on me.

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

other side

If you are coming from the corporate world, you probably

read TechCrunch and see how young kids are raising millions


11 things about startups you might not know

of dollars and selling their company to Facebook for a billion

bucks.

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

5.

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


11 things about startups you might not know

investment in Microsoft because he doesn’t understand the

tech industry.

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

what’s best

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.

Conclusion

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?


11 things about startups you might not know

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