Category: Startup

Passive founder deadlock

Startup Founders are like toes
Startup Founders are connected like toes on a foot. Photo by me.

A “deadlock” is a state in a computer program where parts of the program is waiting for other parts to finish who in turn are waiting for the other parts. The result is a freeze where nothing happens. This has probably happened to your computer some time.

A similar situation can occur in early stage startups. Before a startup gets funding or revenue the only thing that drives it is the passion of the founders. But, the passion in every individual founder is deeply connected to the passion of the other founders. You need to have a passion balance equilibrium otherwise the startup will freeze just like the computer program!

As an example, you’re three founders, you get started, energy is high and you’re all excited to do this thing. Then after a while one of the founders starts drifting. Maybe her daytime job takes too much time. Maybe her spouse doesn’t like that she spends all her free time working on your startup. Maybe she just lost interest, the reason doesn’t matter but the fact is that you are now extremely close to a passive founder deadlock situation.

Her drain in energy will drain the other two founders as well. It’s Sunday evening and you have the choice between playing with your kids or working on your startup. Why should you sacrifice your spare time when the other founder don’t? You go play with your kids (a wise choice anyway). The startup dies.

The same situation can occur in later stages, when funds are limited. As long as your startup doesn’t have its wings in the air passive founder deadlock is probably your number one risk.

So, how do you prevent it? At the end of the day, you can’t. This is simply one of the facts of life for a startup. But you can limit the risk somewhat.

  • Of course you should make sure you have written agreements between the founders. This sets the baseline of what you expect from each other. It should also describe how a breakup should be done.
  • Too much administration can kill the passion too but some simple way of tracking who does what will help you see early on if someone is dragging behind. A Kanban board is an excellent tool.
  • One rather extreme way is to define an equity value for each task that needs to be performed and then split the equity after the task has been done based on who contributed the most to finishing the task. With this approach all the founders together make a list of what needs to be done and decide on an equity value for each task. When the task has been done the founders meet to “split the boot” with the founder who contributed the most getting the most equity. The downside with this approach is that you will spend a lot of time arguing over who did what and how much they contributed but if it works out it’s probably the fairest way to do it.
  • Do the startup alone is one way but the chance of success is even smaller with this option so this is not recommended.
  • If you’re OK with not an equal split of equity you can appoint one of the founders as “CEO”, give her more equity and the authority to be the driver of the startup. It’s then her task to “hire” co-founders and pay them with equity for the work they do. This approach also has downsides.
  • Of course the best way to solve this is to just simply get your wings in the air as soon as possible. You really should hate being in the startup phase.

What do you think is the best approach to prevent passive founder deadlock?

Hacker News discussion.

You should hate being a startup

We tend to glorify the startups too much. As Steve Blank says “a startup is a temporary organization designed to find a scalable business model”. What this actually means is that each day you spend in “startup mode” is a failed day. You still haven’t found the scalable business model!

You should celebrate the day when you’re no longer a startup. That means you’ve succeeded.

(Thanks to Gullfot for inspiration.)

Update: got some feedback on this elsewhere and I would like to point out that I personally love the startup phase. The problem is that the startup itself must leave this phase as soon as possible. This creates an interesting tension between the entrepreneur and the startup which is one of the reasons you as a startup entrepreneur should build a system, not a product.

Zero, One, Infinity – The Only Three Numbers Your Startup Should Care About

Zero. Getting started. Launching. Finishing the first version. Deciding on a name. Registering the company. Signing the co-founder agreements. Everything that gets you from a non-startup to a startup. We call that “getting to zero”.

One. Your first paying customer. Before you have a paying customer you don’t have a company, you only have a dream. A paying customer means someone thought your solution to a problem they had was worth paying for. A paying customer means you have a purpose and a reason to exist. A paying customer means most likely there are other paying customers.

Infinity. Scaling the company. A first company is a good milestone but to reach infinity you have to have a system that runs by itself. A wealth generating machine. An engine of growth. Something that is built to sell.

Zero. One. Infinity. Three milestones for your startup. The three most important numbers in your business.

If you read this far you should follow me on Twitter.
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5 principles that will help you succeed with your startup

This post is an attempt to explain this tweet and flesh out the five principles I mentioned in the tweet: Make stuff people want. Do the work. Build a system. Don’t be evil. Don’t give up.

Make stuff people want.
This one is from Paul Graham, the founder of the startup accelerator YCombinator. The original post is here. This is also the core of the lean startup movement.
It sounds easy enough: of course you should make something people want! What a silly principle. Yet, all too often people fall in the trap of instead building something they think people want – big difference!
For example, if you’re writing a business plan and have no finished product, haven’t talked to an actual customer and haven’t verified in some way that your idea actually works on a real market – then you’re building something you think people want – not something they actually want. The only way to make sure is to build something as early as possible and try to sell it.

Do the work.
This one comes from the book with the same name. It focuses on the challenge every day to get up and just do the work. There are so many things fighting for your attention. You will have to struggle extra hard with your startup as long is it doesn’t make money enough to support you (the wings are not in the air). Just like going to the gym it’s a question of self discipline to see results.
Every day is a fight for survival for your startup. Every day you must do the work.

Build a system.
A company is a value producing system that should run without its founders. The sooner you realize this the better. What does this mean? It is far too common for entrepreneurs to build their company around themselves. Without the founders everything fall to pieces.
Instead, you should identify the processes that makes your company tick and detach yourself from the every day work as much as possible, either through automation or through employing people to do the work for you. Your goal as a CEO is to make the company sellable. The way to it: build a system.

Don’t be evil.
Everyone in the web industry knows that this is the corporate mantra for Google. The source of the statement is Gmail-creator Paul Buchheit (who now also works for YCombinator). Keeping your conscience clean makes things so much easier, especially in the capitalism 2.0 world of social media and transparency. If you’re in it for the long run, be nice. Do you want to explain things like this to every potential customer, investor or employee? No, you don’t.

Don’t give up.
In the must-read book Founders at Work: Stories of Startups’ Early Days Jessica Livingstone (co-founder of YCombinator – for some reason every wisdom about startups comes from this company) interviews a number of startup entrepreneurs. The one thing they all say is the most important in order to succeed is: persistence. Not giving up.

That’s it: Make stuff people want. Do the work. Build a system. Don’t be evil. Don’t give up. Follow these principles from the leading startup minds and your chances of success are greatly improved. Most important of all, though, is to actually get started and do it. What are you waiting for?

If you read this far you should follow me on Twitter.
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Lean Startup Books

I just set up a new blog, dedicated to books about lean startup. Right now, there are only two books there, but I will add more later.

Why did I do this? One reason is for my own sake, I want a place where I can make notes about the books I’ve read. I also wanted to make it sort of an experiment in using the Amazon Affiliate program to build one of my two Ps.

Three hard startup milestones

Long way

How hard is it to start a company? Not hard at all! You just send in the papers to your local government office and in most cases you’re done. It’s not the starting of the company that’s hard, it’s other things. Here’s three of them that I know you will struggle with.

1. The name
The name is hard because it is on the surface a very simple decision but with wide reaching consequences. It’s also one of the first decisions you make. Should you name it what you do as in “Programmers Inc.” or should it be more generic as in “Purple Scout“? Is it easy to pronounce and spell? Are the domains available? Does anyone else have the same or similar name? Can I say it over the phone so that people hear what I say? Should I SEO-optimize it?
The name is also something everyone can have an opinion about. It’s a “roof on the bike shed”-decision, you don’t have to be an expert to have an opinion, you will get name suggestions from everyone.
The name will be with you for a very long time (hopefully) so this is a big decision. That’s why it’s hard.

2. The first customer
You don’t have a business without customers. Period. The first release of your software, your first employee, your first office these are all internal milestones with no real significance to your business. The fact that someone pays for your product or service is a proof that you have something other people want. This is a big step and a major milestone.
Of course now the trick is to set the price at a level that makes you profitable too, but that’s another story.

3. The first million
Depending on how fast this takes, the first million is proof that your company scales – this is a very important milestone because it should mean you have a system, not a product.

So there you have it: the name, the first customer and the first million. This is the hard stuff. Actually starting the company or having an idea for a business are both the easy parts.

Updated: when I studied math and computer science I was taught that on a large enough level there only exists 3 numbers: 0, 1 and infinity. These are the only three numbers you need to care about for your startup.

Another way to put it:
0) get started .
1) first customer.
infinity) scale it.

Wings in the air

What do you need to succeed with your startup?

You need persistence, because it will take a long time. Longer than you expect.

You need passion, to endure.

You need the right kind of money. Most often this is money from your customers. Not VCs. Not banks. Not your friends. Customers!

You most definitely need to get started.

But in order to succeed the most important thing is to get your wings in the air.

You know how ducks sort of run on the water before they take off and fly away? Running on the water takes a lot of energy. It makes you less agile – and you may run out of water to run on even if you don’t collapse from exhaustion first.

The duck running on the water is you.

It’s you running your startup without sufficient revenue to support yourself. It’s you without “porridge money” (enough money to buy porridge to live on).

Make sure you can take off and get your wings in the air before the water runs out. Once you’re flying things are completely different.

Different kinds of money

Porridge
(Porridge.)

It’s not apparent at first sight but there are actually different kinds of money. I can think of at least the following.

  • F.U. money. The money that makes you quit your day-job.
  • Porridge/ramen money. The minimum amount of money you need to survive each month.
  • Fat money. Money that drags you down and makes you slower. Like money from that investor that refuses to change.
  • Lazy money. Sibling to the fat money. Money that makes you lazy is money that you simply count on and have stopped fighting for. Never stop fighting. Big companies usually have lots of lazy money.
  • Sweat money. This is money you’ve worked hard for to earn. This is the best kind. You value sweat money much higher than any other kind of money.
  • Easy money. Doesn’t exist. Don’t be distracted by easy money. Move on.

When looking for money, be sure you know of what kind.

What other kinds of money can you think of?

If you like this post, follow me on Twitter. Maybe you also like these posts:

Svenska startups

Jag har börjat samla ihop en snabböversikt över svenska startupsSweden 100. Fokus här är antal och hastighet, dvs så många som möjligt (där är inte så många just nu men jag lägger till fler löpande) och inte så mycket information om varje. En bild och en mening ska räcka för att man ska förstå vad det handlar om.

Förebilden är Emily Changs eHub där diverse Web 2.0-tjänster listas.

För en djupare dipp i den svenska startupmyllan rekommenderas Arctic Index som täcker hela Norden och har betydligt mer information om tjänsterna och personerna bakom.

Annonskartan.se Release-partaj


Jonas “Bloggy.se” Lejon och Joakim från Booli blir förevigad av IWs Miriam.

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