Startup Founder

The interesting thing about these two articles is the fact that one is about startups (high growth) and one about lifestyle business.

The first one is Paul Graham’s article about raising money. I’ve met almost all the things he’s talking about there and it’s an article I would’ve loved to read about a year and a half ago. Still, even if you read it now and go look for investment afterwards I still think you will do as you think (after all, I would do it).

Most startups that raise money do it more than once. A typical trajectory might be (1) to get started with a few tens of thousands from something like Y Combinator or individual angels, then (2) raise a few hundred thousand to a few million to build the company, and then (3) once the company is clearly succeeding, raise one or more later rounds to accelerate growth.

Reality can be messier. Some companies raise money twice in phase 2. Others skip phase 1 and go straight to phase 2. And at Y Combinator we get an increasing number of companies that have already raised amounts in the hundreds of thousands. But the three phase path is at least the one about which individual startups’ paths oscillate.

Anyway, go read the article. Just be careful, it’s a long and detailed one.

The second article (articles, actually) are from a blogger that likes bootstrapping businesses, doesn’t want VCs involved (he is more comfortable this way). He is involved in software business and he writes some great articles about it. The ones I’ve read are about a business he’s bought (HitTail) and what he’s done to turn it around. The process is still ongoing, so I think he will write more about it. Here is the first part (out of three): The Inside Story of a Small Startup Acquisition (Part 1).

I’m all about figuring out what’s going to make a person happy and then going after that with ravenous determination, instead of pursuing what we’re told is going to make us happy by the tech press (raise funding! exit big! lose control of your company and get fired by the board!).

So I tend to focus on ideas that have a 1000x higher chance of success than the next un-monetizable social website you have in mind, but the success I strive for is a bit more modest. Probably close to 1/1000th of the payout of a big exit.

He also explains the process of acquisition, including the metrics he looks at when doing this kind of purchase. I think you will really enjoy it, so go read it. And remember, it’s about lifestyle business, don’t compare it to the article about VCs and startups above.

School started yesterday. And, for the first time in about 20 years, I’ve been present to the first day of school. Not as a student, obviously, but as a proud uncle.

I was looking at the youngest kids there, the ones just starting school. Everybody was telling them something, everybody was raising their voices to be heard and created chaos. One kid could, at the same time, hear 3 things to do: “Stay here!” (from the mother), “Go there!” from the teacher and “Kid, smile to me!”, from the grandfather (or uncle, in my case) snapping photos.

Obviously, most of these kids look kinda lost. After all, the experience is completely new, they don’t know who to listen to, since there are so many voices of authority there, what should they do?

Entrepreneurship is not that different, actually. And, seeing that, as a kid, you will start listening to your teacher once everyone else is gone, being an entrepreneur might actually be a little bit more difficult. I mean, who are you listening to when starting your first business?

Your friends? Could be, though it is almost common knowledge that people don’t really like change and your friends will not like it either. And it’s not because they are bad people, not at all, it’s because they want things to stay the same. They can also lie to you when it comes to their opinion, so that they do nt hurt you. And this could be even worse.

Family? Well, the people that are most close to you don’t want you to suffer, they want “security” for you. Entrepreneurship doesn’t really sound like a “secure job”, is it?

Mentors? Well, that’s better. But how do you choose your mentor? Is anybody suited to be your mentor? As a kid you are “given” to a teacher, but as an entrepreneur you need to find that person yourself.

Finally, the other entrepreneurs? These are probably the ones you will connect with the most. They are encountering the same issues, they are experiencing the same frustrations, the same anxiety, the same challenges. They might not give you the best advice (especially if they are first timers, as well), but at least it’s some kind of advice that you can use. Of course, if they are seasoned entrepreneurs, they might even become mentors.

I’ve tried to meet as many entrepreneurs as possible (especially when I was just beginning). Now it’s easier than ever, since there are so many meetups and communities (offline and online) that you can join.

If you are a Romanian entrepreneur, I would recommend the Romanian Startups Facebook Group. If you are Eastern European, I would recommend How To Web conference (in November), in Bucharest. Of course, these are some I know of personally, but I am sure you can find meetups anywhere (use Meetup.com and Linkedin groups to find some events in your area).

I remember being so happy that I would go to school for the first time. A whole world would open in front of me. Entrepreneurship is the same thing. Just a lot better :)

Photos from Shutterstock

Freshome is one of the most well known design blogs in the world, reaching 4 million pageviews monthly. I’ve known Mihai since before starting it and I was able to follow the entire adventure of the site and I often talked to him asking for tips on blogging :)

I’ve read today an interview with him for the design and tech blog Hongkiat. Here are some ideas I thought they are worth mentioning (with italics from me):

It’s a good thing to do something you like, you are already involved in:

I wanted a dream house, so I started checking out different sites for inspiration. I started finding different ideas for furniture and interior design stuff and I noticed that the guys running those sites were actually doing it as a business. I thought hey, I could do it too. So it all started with me trying to imagine my dream house.

It’s great, as an entrepreneur, to set your own working hours, but it’s still more than 9 to 5

The site isn’t on auto-pilot. I carry the weight for different updates, ad optimization and sales. I don’t see anyone replacing me yet. There’s no fixed schedule, I couldn’t say how much I work daily, but I would say it’s more than a normal 9 to 5 job.

Blogging as a business might not be the best idea right now, look for better opportunities (mobile?)

So to answer your question, no, I wouldn’t start over. Today there are better opportunities, especially in the mobile world. It wouldn’t be wise for me to invest in blogging today when you have areas in which those resources would be put to far better use and enojoy a faster growth. I always try to find a rising industry.

Before starting something new, think of a “transition business” (great term!):

Well, if you’re a freelancer wanting to become an entrepreneur, start with a ‘transition business’. For example, if you’re a designer, you can easily stop selling your time for money and instead go to themeforest.net, where you can transform your skill into a passive income by creating and selling themes. That’s one example of a ‘transition business’.

Read the entire interview here.

Ask a startup founder about the revenue for the month. Or the number of users his/her business has. Or the amount of servers and the load on them on an average day. The answer should be immediate (there can be some hesitation, but only to take into account or not today’s numbers). Obviously, ask each founder the questions specific for him: I would hate to be asked about the servers, instead of Elvis. Obviously, I now a general number, and I know how much we spend on it, but that’s it. My job is not to know how many they are, but how they impact the cash flow.

Surprisingly, though, I have met so many startup founders, especially in early stages, that don’t have a clue about their numbers. And I have no idea how that happens. How can you think about your business every minute of every day and not know those numbers?

When I ask about this, they say there are so many numbers, how can they remember all of those? And I give them the example of Cristi, the other co-founder at MavenHut, who follows several hundred indicators permanently and he probably knows by heart about 50 of them (the most important ones). Or it takes him 2 minutes at the most to give details on the others (after looking through Excels and stats). It may sound huge, but gaming is a metrics driven business and that is his job. If he doesn’t know those, he can’t do what he’s supposed to do: create great games that are played by lots of users.

You may say that you don’t have the time to look at the numbers, because you are busy building a business. How do you know how to build it, what it needs, if you are not looking at the numbers?? It’s mind blowing for me how many times I hear this, though.

And, as a side information, every investor I’ve met asked me about numbers. User numbers, growth, revenues, if any, estimates, industry numbers. You NEED to know numbers!

Photo from ShutterStock

One of the most important skills of a startup founder is considered to be networking (Emi actually wrote on article on how important it is for a CEO).

When we talk about networking, people usually think about meeting business partners, investors and so on. And yes, it is one of the best ways to get to your targets, but I also take into consideration the smaller things.

Two days ago we’ve been expecting a huge traffic surge from Brazil on Solitaire Arena. While happy for it, one of my colleagues said: “Guys, you know we do not have the translations finished for Portuguese, right?”.

And all of a sudden, all hell broke loose, since we needed the translation in 4 hours, tops. Because not having it would mean worse retention, worse monetization, worse everything. So what did we do? Well, we went to our networks. I went to mine, of course. First option: Facebook (click on the image to see the bigger version). Initially as a simple status, then with a $7 promotion to all my 3000 contacts on Facebook (you can see the results and the reactions in the screenshot below):

The result: in 4 hours we had the translation completed and everything was good again. While it may not seem like much, most of the people replying gave us at least 2 days deadline (and that was pretty fast). Which is how it should be done. But we didn’t have two days.

The network you have is a lot bigger than the one you actually think it is. So nurture it, even it is a virtual one (on Facebook, twitter, blog). It might help you a lot someday, even when you not expect it.