Noah Jessop, Senior Associate
In the course of starting two companies, I’ve received a lot of advice. Now I work at a VC firm that has backed companies like Uber, Cruise, BuzzFeed, and Thredup and I’m asked to give advice. There’s no “secret manual” to building a company. No “one easy trick.” No roadmap. No two companies are ever the same.
#1: Work on something new. The low cost of starting a company means too many people chasing the same old things. This will confuse your customers if it’s not really clear why you’re different—radically different. To be new for your customers may mean you build frontier tech (e.g., a system to drop drones out of the sky) or apply an existing concept to a new vertical (e.g., CRM for healthcare).
#2: You win or lose based on customer delight. All the pitching and cool tech cannot save this. Sometimes you have to get creative to make people want what you can offer in the early days. (Note: if you have a terrible customer experience but people use your service anyway, that may mean you have picked a good problem to work on.)
#3: No one cares about your little startup. Get over it…and relish that it makes you free to iterate and try things. As Brian Chesky from Airbnb says “if you launch and no one notices, launch again.” (And if not your company, the good people you meet along the way will care about you.)
#4: A library worth has been written on fundraising. Read Brad Feld’s tour de force on term sheets. Read Mark Suster’s take on dilution. Read Fred Wilson on “small ball.” If you’re in SaaS, David Skok and Jason Lemkin are must reads. Bryce Roberts counsels founders to think about building their business on a single round of funding. Look at the pitch decks of dozens of billion dollar companies. VCs and entrepreneurs have shared a tremendous amount of data and wisdom over the last decade. Use it. A few other notes:
- Don’t try and overthink fundraising or try playing games.
- Remember that humans love stories.
- Are you sure you need capital to get going? Plenty of “Invisible Unicorns” started with nothing, and as we say here, venture capital is a hell of a drug.
#5: Entrepreneurship has one magical trait: there are “no rules.”
I: If you can hack it, you’re in. No one cares about your SAT scores — Entrepreneurship isn’t a Google interview.) There are no rules outside of the laws where you operate and your moral compass — You can be lawful, good and still break all the rules.
#6: Teams + Communication. There’s a fine balance between communicating and spending all day talking instead of working. Transparency and clarity are good — but be tactical about how you spend your time achieving these goals. This is also true externally. Avoid conferences unless you can land sales. Turn down offers to speak on panels until you’re profitable.
#6A: Since you’ll struggle with 6) in some capacity: make sure your cofounders, team understand how impactful their contributions are — and that you notice and appreciate them.
#7: At any moment, there are ten things you should do. You cannot do them all. Embrace the chaos and choose which seven things to ignore.
Selling to businesses? You are the only person who can ‘fire’ needy customers who will lead you astray from building the right product for many people.
Consumer? You are the only person who can ruthlessly cut the roadmap to get your product out there. Or stop pushing something that isn’t working and go back to the drawing board.
Give your team the permission to ignore things that aren’t the most important focus for the company. Only you can do it.
#8: Pick a single metric for the company, but only after you’ve figured out something that seems to be working. Paul Graham/YC might suggest WoW growth (Startups = Growth) — or monthly growth in SaaS revenues. Pick something that makes sense and align your team around it.
#9: Ignore M&A talks that don’t come with dollar values. If you get requests for coffees from anyone at Corp Dev at a big tech company, I advise the following response, “Would love to engage with the right team there if you would like to buy our product or service.” Any further push — send them to your board. They have the fiduciary duty to listen if a genuine offer is on the table.
#10: It’s about the journey. Just like Odysseus, the sirens will call to you with your deepest desires. Riches? Temporary feelings of fame? Escape from the pain? (Or true knowledge, like Odysseus?) But you must not deviate from your journey. Tie yourself to the proverbial mast and focus on the path ahead. If you can’t get behind this, why wouldn’t you instead get a job that will take care of purpose for you?
#11: Recruiting is going to take more time and effort than you can imagine.
- Ideally, make a company that you would join as employee #10, #20…even #100.
- It’s an incredibly tender, humbling moment for the candidate — remember, they are debating spending the better part of their working lives sitting in a room thinking about your problems.
- You are asking the most talented people you can find to go home and tell their spouse that they are joining a risky startup. Give them the “why” to take the plunge. And be decent — even if things don’t work out the way everyone hopes — they won’t regret having done so.
The best time to start recruiting is five years before you plan to start your company — whether that’s by making friends in your dorm room or building relationships with star co-workers. You’re probably not going to be in the position to recruit a C-level exec from Google when you close a $1.5M seed round, but you should be able to convince the very best people you’ve worked with.
#12: Your best additions to the team will be slightly unqualified, but with massive innate ability. As Ben Horowitz writes in The Hard Thing About Hard Things, why would a perfect candidate with the “right” background join your early little company? (Or company with a low stock price. Or whatever struggles you have today.)
#13: Your worst additions to the team will set the new average. You compromise your standard in once innocent hire (“we really need to fill this role”), and before you know it, you’ve done permanent damage to your company and culture, letting the standard slip further and further. As Steve Jobs allegedly said: “This trickle-down effect causes bozo explosions in companies.” (Not one to mince words, that guy.)
#14: Dominate your wedge. By definition, this means starting with a bit of a small universe. Remember: capturing 1% of the $300B energy market may sound great, but is completely devoid of how. Make something a small number of people love.
#15: Learn to create urgency for NOW. With customers, employees, investors, etc. — everyone else can afford to sit and wait long enough for you to die. (And the best of all these observers must believe you will find another way without them — else why would they do business with you at all?)
#16: Follow-up on everything and with everyone. You’d be amazed how few people do.
#17: Find a peer group of other founders / CEOs — they are the few who can understand what you are going through. You’ll also learn more about how the ecosystem works talking with your peers than by spending another hour on Hacker News
#18: Building something of incredible value is really hard — and takes awhile. Don’t force it. Buckle up and hunker down. Give yourself the permission to let other trends and possibilities (for your career or life) pass by. As we say here, sometimes things are “someone else’s opportunity.” Focus on your business, the journey you’ve chosen.
#19: For many things, you should abhor process — but for other things it is essential:
- Fundraising (intros, meetings, timeline)
- Pipelines (sales, candidates, etc.)
- Interviews / recruiting — doesn’t have to be formal, but find a way and stick to it. Consistency and care (for the candidate) are key here.
#20: Build as little as possible to answer questions / validate demand. Read The Lean Startup. Then read it again. Also, “do things that don’t scale” (You don’t need to hear it from me, but included for completeness.)
#21: Learn to handle “No’s” —Fight them or accept them, but be ready to put your smile back on and get to your next yes/no.
Some of the best entrepreneurs love each “No” — it’s a moment for learning and step closer to the next Yes. Seek them out! For example, after being funded, one of our portfolio founders, promptly asked for his investors Linkedin credentials. He used these logins to see deeper into prospect companies to try to find a way in. A brazen ask? Yes, for many, but there was no real risk other than hearing the word “no.” The good salesperson asks for the order.
Taking my advice from #21 above — if you learned something today (or enjoyed reading this far) go ahead and “Clap” below. And follow me @njess for future writings.