Practical Lessons Learnt As An Entrepreneur

It has been more than two years I quit my job and started my startup journey. One year back I had written this post – Lessons Learnt As An Entrepreneur For One Year. Since then I have learnt many more lessons and I thought it would be good to revisit and write down all the lessons. So here they go –

  1. Business Value Proposition: Your business value proposition messaging has to be right – and it takes hell lot of time and experiments to get it right. Hint: “The customer rarely buys what the company thinks it sells him” – Peter Drucker
  2. Learning from mistakes: There are some things you cannot learn from other’s mistakes, you will have to make your own.
  3. General advice: General advice are best to be avoided. Whats works for one startups may not work for the other. So general stuff like “Raise money early” or “build a viral product” does not hold true in all cases.
  4. Get an independent board director: Even if you are not funded, you should bring the discipline to report to the board. Bringing someone else on board (apart from the founders) brings this discipline.
  5. Create a focus group of external people: These are some people whom you keep updated about your company. They review the progress and bring in external perspective to the company.
  6. Business Metrics: Work on defining the key business metrics and have a business dashboard for tracking them.  Each business function should have a set of metrics – customer (growth, satisfaction, churn, virality), revenue, product, costs etc
  7. Show up: An opportunity knocking is useful only if you are at the door. Always be looking for opportunities – to partner, to sell, to hire, to whatever.
  8. And follow-up: Overheard on twitter: showing up is job done 50% and following up is remaining 50%.
  9. Always be closing: Pick up the phone. Get out of the building. Get help. Make that sale happen. Keep closing. Get inspiration.
  10. Sharing your ideas: Talk to people around. Dont hesitate to share your idea with others. Nobody gives $*%# about YOUR idea, everyone has one.
  11. Leverage: Physics 101 –  leverage your resources – contacts, infrastructure, talent, anything.
  12. Do not assume anything: Assumptions go wrong most of the time. Hypothesise and test the riskiest ones first.
  13. Experiments vs Research reports: Experimenting on smaller (or inaccurate) sample size is better than macro numbers published in research reports.
  14. Be crazy about customer analytics: Because the original idea that you think is worthless and only by understanding your customers, you will be able to pivot to the right idea.
  15. Budget time to pay technical debt: With fast experimentation and hypothesis testing, it is okay to go forth with makeshift technology backend. Treat this like a technical debt that you have to pay later.
  16. Working hard does not matter: Building the right product is better than working hard on the wrong product.
  17. Tracking:  Track the milestones weekly, monthly and quarterly. Time runs so fast that you wont realize what you did.
  18. Keep probing customers: What would you do if you could no longer use this product? What was the primary benefit you received by using this product? Would you recommend this product to someone else? Why?
  19. Be open: Be open to change your product based on feedback from customers. Things you think will work, will not always work. Be very open to what customer means. Listen to customers, don’t just hear them. Dont just stick hard to the early business plan.
  20. MVP is easier said that done: It is not just coming with reduced set of feature sets. MVP means testing your core hypotheses most cheaply.
  21. Start with MVM: MVM is minimum viable market. Become a big fish in a smaller pond and increase the scope.
  22. Product usability: Remove the resistance to product usage. Easier the product to use, lesser motivation is required behind using it (Check my Notes on Behaviour Design)
  23. Dont repeat yourself (DRY):  Leverage existing apps / infrastructure / frameworks / web services and tools.
  24. Who is the CEO?: Whether you are a single founder or multiple cofounders, you need one CEO – the one where buck stops.
  25. Vesting for founders: Always have a vesting clause for founders. Standard is to have monthly vesting with 100% vesting in 4 years.
  26. It is not about working on your startup, it is about working on yourself
  27. Be honest with yourself: It’s not about being honest in literal sense but about bringing your suppressed emotions or doubts in front of you. It’s difficult and you might need someone’s help to bring them out.
  28. Learn public speaking: Comes handy when you need to present your ideas to other people.
  29. Write a Blog: Writing does bring out some suppressed idea and also consolidate and channelize your thoughts.
  30. Dirty your hands: At least in the initial days you will have to dirty your hands with things you are not comfortable (unless you are obscenely funded)
  31. Read books: Read as many books you can get hold on. I wish I had read these books before starting up – Lean startup by Eric Ries, Customer Development by Steve Blank, Founders Dilemma by Noam Wasserman. Dont expect to learn and follow all that is written in these books. But it will help in building new perspective.
  32. Cash flow: Always keep 1 year worth of cash in your account. Assume zero revenue when you calculate this one year buffer.
  33. Funding Philosophy: Decide on if your company really needs VC money. Only few types of companies need VC money.
  34. What is the exit: Get acquired / long-term IPO / I don’t care about exit
  35. Eat lunch with your team: Spend some quality non-work related time.
  36. Office environment: Have an inspiring atmosphere in your office. Use motivational posters. Buy a TT table.
  37. What are core values of your organization?: Core values define your culture.
  38. Core values: Core values should be clear to the team and everybody who joins. These are non-negotiable business principles.
  39. Customer service: All employees should take turn for customer service. The empathy with your customer will bring a lot of ideas.
  40. Customer service: Good customer support is the best marketing
  41. Distribution: What is your distribution strategy? A good product means nothing without good distribution. Check Peter Thiel’s lecture on distribution.
  42. What are your drivers of growth? Paid, Organic, Viral, PR, Push based Sales? Do you have model for your growth? Check out this great article on how to model viral growth.
  43. Try a lot of things: Try many things but treat everything like an experiment. Use the output of an experiment as validated learning for next experiment.
  44. And be ready to fail: Treat failure just as an outcome of an experiment. However, don’t make failure as an excuse to fail deliberately.

Looking forward to learning more in coming years.

Lessons Learnt As An Entrepreneur For One Year

Customer relationship
Customer relationship (Photo credit: Claudio Cicali)

It has been a year I have been a full-time entrepreneur. Like any other entrepreneur I have had my share of peaks and troughs, the latter more than the former. We, as a startup, also made lot of good decisions and several mistakes. In the hindsight, it is always easy to rationalize our acts but it is equally important to analyze and learn from success as well as mistakes. Here are some lessons I can think of –

Product-market fit is more important than creating processes for scaling up: So you are driving fast to reach your destination, but what if the way you chose is itself wrong? Startups like ours face a lot of uncertainty. There are hundreds of things that can go wrong.    Sometimes, we spent a lot of time in thinking about [and doing] things like creating the cheapest delivery service or increasing the size of the team. These things are definitely needed but concentrating on these things unless you are sure that your product will work is just like driving fast at the risk of choosing the wrong way. Scaling up, setting up most optimized delivery processes etc can be de-prioritized over quick validation whether the product will really work.

You cannot find answers in meetings: We also spent a lot of time in discussing about the right markets, product features, business models, ideas etc. We also felt disappointed lot of times when we were not able to find the right answers to our questions. One thing that I learnt is that no matter how much you research or read, there is no alternative to test your hypothesis. So instead of finding answers in the meetings, we should discuss more about tests that can be done as quickly as possible to get the answers.

There are two type of tasks in a startup: Any task in a startup can be classified into two parts – customer-centric tasks and non-customer centric tasks. Although all tasks in a business are customer-centric since the primary objective of business is to create a customer. I define customer-centric tasks as only those tasks that are directly related to customer – be it sales, support, customer feedback, product delivery etc. While non-customer centric tasks are indirectly related to customers – setting processes, server benchmarking, designing visiting cards, stationary, making perfect facebook page etc. Now when I look back, we spent a lot of time on non-customer centric tasks. While these wer also important but some of these could have been conveniently postponed for later time after customer-centric tasks were taken care of.

You cannot do too many things at the same time: There was a time when we were considering 3 to 4 business models and working on all of them simultaneously. This testing was required to understand the market better but being a small team, it took a big toll on our mind share. Then there are growth models – we worked on multiple of them at the same time. I think it would have been lot better had we experimented with one model at a time and ingested the learning going forward.

You should measure the right metrics: Numbers that look very encouraging can start looking very depressing if looked from different perspective. It can also be vice versa. And if you are making decisions based on these numbers seen from a wrong perspective, it can have serious repercussions. We were lucky enough not to fall for any vanity metrics  [ for eg. 10K FB fans or 800 registrations etc]. We are also trying to come up with right metrics to measure our business.

Not hiring is better than hiring mediocre people: At least not when you are starting up. We were lucky to get really awesome people and it was great to see how much they were able to contribute considering the zilch experience they had. On the other hand we also made couple of mistakes – hiring unfit people. The worst part here is not the monetary cost to company but the amount of mindshare and overheads involved in keeping them  in sync with the company’s culture and business objectives.

Things that you think are important may mean nothing to customer: So we designed a cool feature in our product, we discussed about it for hours and we were happy about it. Then customer says “oh ok” or doesn’t even notice it. I think by middle of the year, we started to realize, to some extent, what matters to our target customer and what does not. We might be still biased about it but now we are aware about this bias. Our customers are not “us” and hence what we think is cool does not matter to business. And to add to this, what customer says is not necessarily what customer wants and it’s the latter that matters more. Fortunately, we did not make many mistakes in investing heavily on unwanted product features.

And the biggest of them all – There are some things you will learn only by doing, sometimes learning the hard way. You can read hundreds of books or get advice from many wise people, you cannot learn swimming unless you jump in water. Before starting, if I were given objective type questions to answer based on the above points, I would have answered most of these according to what I have learnt now. But it would have been like knowing the theory of freestyle or backstroke swimming – which is almost worthless.

[These views are biased on what I think and it may be or may not be different from what my company, team or cofounder thinks. Also there is high probability that I will have to unlearn some of these in next few years because these will be not applicable in different settings]