Startup to Last

The main question we addressed this week was whether Rick should spend his time selling within his personal network (which would be sure to work, but isn't really repeatable or scalable) or start building out a repeatable marketing channel. The main takeaway is that the repeatable channel would be more effective if he had more budget to spend on it, and the way to get there is by getting his revenue up as quickly as possible (which means using non-repeatable methods for now).

Takeaways from this episode:

• It's important to separate marketing tactics from strategy. It's possible that specific tactics make sense, but you need to understand why you're doing those things? What's the goal?
• It's important to focus on a segment or niche, but not all niches are created equal. The goal is to find a niche where the people within it share with each other so that your work can have a multiplicative effect.

Takeaways from this episode:

• Rick isn't at a point where he needs to figure this out right now. He thought he might need to know this so he could start courting potential employees for the future, but he can do that without knowing the details of compensation.
• Compensation is a combination of salary, benefits, equity, and other perks. One way or another, you need to put a package together that is competitive. One reason a lot of startups give stock options is because they can't afford to pay a high salary.
• Companies that aren't planning on exiting might not want to give equity because it's not worth much without an exit.
• If you want to share upside with employees without giving equity, you can offer a profit share. There are different models, and you can structure yours to align with the goals and incentives you want to provide to employees.

There were a variety of different ideas thrown around in this episode. Here are some of the takeaways:

• Ideally, a healthy remote culture won't just mimic an in-person culture, it will actually take advantage of the unique characteristics remote has to offer.
• After companies start going back to in-person work, we shouldn't just go back to business as usual. We should try to maintain the things that are better about remote.
• There are a number of subtle elements of in-person conversations that break down over video chat because of the lag and worse audio quality. This makes it difficult to have more than 5-6 people in the same conversation remotely.
  • One solution to this is to break into smaller groups.
  • Another solution is to add structure to the conversation (e.g. everyone goes in a circle taking turns at doing something) so that people know who's turn it is to talk.
• Many relationship-building moments are based around sharing experiences. Consider what experiences can be shared online (playing games, watching the same video, etc.)
• There's not currently a tool for high-fidelity, asynchronous communication at a business. This is an opportunity to explore.

Here are some takeaways from this week's episode:

• There are two common reasons for a manager to feel impatient: someone isn't motivated to work hard, or they're working hard but not getting enough done.
  • The first type is best to avoid entirely by hiring people who are intrinsically motivated. If you can trust that they aren't intentionally slacking off, it takes a lot of pressure off your plate as a manager.
  • The second type is frustrating, but it's not the employee's fault. If they're working hard but not getting the results you want, either your expectations are off, or you're not putting them in a position to succeed.
• Deadlines can be a major cause of impatience and can cause stress for the manager and the employee. Avoid deadlines when possible. Instead, break projects into small chunks and set targets, but don't put pressure on anyone to hit those targets exactly.
• If someone misses a target, have a discussion about why. Was it poor planning? Did something unexpected come up? Try to learn from that, but don't let it cause you to become impatient.
• Trust is a huge element in terms of working with urgency without being impatience. Building trust with your team is more about the process than the result. Let employees in on decisions you're making and make sure they feel heard.
• Founders need to manage their own mental state. Design the company to be able to handle slower than anticipated progress because things rarely go according to plan.

Here are some takeaways from this week's conversation:

• It's easier to optimize interactions with existing customers rather than new customers who are onboarding because with new customers, every change is more likely to mess up your onboarding funnel. Existing customers have more isolated support events.
• Start by collecting data from the support team on what they're spending their time on. Iterate on that to find insights about why support interactions can be low value.
• Identify the types of customers who aren't going to be a good fit in a self-service way (e.g. a form when they schedule a phone call) so you don't waste both sides' time with a call that doesn't need to happen.
• Put more information on your marketing site to let people disqualify themselves before signing up for a trial.
• This is a big topic. All you can do is collect information, form a hypothesis, and test it. Do that over and over forever.

First off, sorry about the terrible audio this week. This is probably related to the fact that Tyler is recording from his apartment instead of his office due to COVID-19. We'll get this figured out before next week.

Here are some takeaways from this episode:

• There are three possible audiences for a startup manifesto: customers, founders, and employees
• The customer-facing version is very different from the founder/employee version because it should focus more on the problem that your company is trying to solve. Write that type of manifesto can be a great way to get people interested in your company before you have a product. It's mostly a marketing play.
• The founder version is mostly useful as a way of keeping you focused on your core values which makes it easier to make decisions. It is especially helpful for knowing what not to do.
• When you hire your first employee, that's probably a good time to take an informal founder version and write it up in more detail so that you can share your vision with employees.
• Because Rick isn't primarily focused on marketing or internal culture right now, he's going to wait to spend time on a manifesto. Instead, he's going to write a press release about what his product might look like in a few months. This will help unblock his product work, but it's not really the same as writing a manifesto.

Here are some of the takeaways from this episode:

• Even if your product is good for a large group of people (all small businesses in this case) it can be helpful to focus on a specific segment rather than "boiling the ocean" because it gets easier to acquire new customers as you become more dominant within the segment.
• There are different ways to segment your customers (industry, job title, age, location, etc.). The specific segment you should choose depends on your company, but it's helpful to pick one that can easily be targeted. It might be easier to reach a specific industry (trade shows, etc.) than a specific age group.
• Once you pick an industry, the key is to commit as many resources to dominating that industry as you can, for as long as you can. You won't see results overnight.
• Do everything you can to be known in the industry. Nothing is off the table. Go to trade shows, run ads, sponsor podcasts, write blog posts, build a referral network, etc. The more touch-points you can get with each person in that industry, the easier it will be to acquire them.

Rick's new business is ramping up, and he's starting to think about how he's going to fund it until it's profitable. He definitely doesn't want to give up any equity at this early stage, so he needs to consider non-dilutive options. Here are some things we cover:

• There are a few main ways to fund a new business without giving up equity:
  • Consult or work a normal job to make money and funnel that into your business
  • Enter pitch contests and apply for grants
  • Take on debt
  • Make enough revenue directly from your customers to pay your expenses (this is ultimately what every bootstrapped company needs to do, it's just a matter of how long it takes to get there)
• It's helpful to understand the different capital needs for different parts of your business. Some things might be risky and uncertain. Others might be proven. Rather than thinking "I need $x to run the whole business", break it down by expense type because some might be a better fit for debt (e.g. scaling proven customer acquisition channels) whereas others might need other types of funding (e.g. paying employee salaries).
• For each type of funding, consider how much you'll get out of it relative to the time it takes to get the money. The most obvious thing you get out is the funding, but there might be other benefits that are harder to measure. For example:
  • Winning a startup pitch could help you earn credibility for things like raising money from investors or finding early employees.
  • Making money directly from customers might be harder at first, but the effort you're putting in is moving you in the right direction vs. something like consulting which is probably unrelated to your startup's business model.
• This episode of the Out of Beta Podcast discusses ways to think about raising debt