Startup Diary: Read, listen and research to avoid fatal mistakes
When you found a startup there is one fundamental truth that you cannot avoid: you will make mistakes. The trick is to avoid making fatal mistakes.
So long as you have some money in the bank, a few customers and a small team, you can always find a way forward. The best strategy is to avoid making mistakes in the first place. The second best is to recognise mistakes that are under way so that you can correct them.
One selfish reason that I write this startup diary is so that I am forced to analyse my business every week and take a look at my decisions. For example, we've always focused our marketing efforts on the newsletter that we write for speakers. This newsletter now has 2,558 subscribers, which is pretty good for a newsletter on a niche topic that's only 10 months old. Conference speakers are a key constituency for us and will be a big part of the community that we want to build around the company.
But getting all those subscribers has meant most of our inbound marketing efforts have focused exclusively on the newsletter. The only other major marketing initiative so far has been launching the Dublin Event Professionals Meetup (next one is on July 19 in Dogpatch). One consequence is that our basic social media presence has suffered.
Another factor is our name change - we rebranded as "voxgig" in March, and left our old name behind. We had built up a Twitter account with 670 followers. Instead of renaming the account we decided to start afresh. Our current account, twitter.com/voxgig, only has 350 followers. So the decision to start again has not worked out that well. We made this decision as the old account was too focused on speakers, and we need to be more inclusive of everyone in the events industry.
Another factor here, and probably more pertinent, is that the social media strategy has been under-resourced. We've focusing instead on the newsletter, and we are now focused on launching a podcast. So this is a fire that's burning, and one we can't really put out. We just don't have the resources yet. This is often the way with startups - you know exactly what's wrong across the company, and you have to make the least-worst decision. Unfortunately, this mistake, under-resourcing social media, is one that we've only just started to really pay attention to.
So let's return to this question of mistakes - how can avoid them, and how can you recognise and fix them? You need to learn as much about the art of doing startups as you can. And you need to very quickly lose the notion that you learn better in certain ways ("I'd rather read a blog post than talk to people"). Such luxuries are not given to us founders. You need every scrap of insight you can get.
There are lot of ways to learn about startups, so you have to be careful how you allocate your time here. You should understand the return-on-investment. Let's take a look at some of the options.
You can find mentors. You might have to pay them, but they are still worth it if you find the right ones. Mentors are most useful for applying their knowledge to your specific situation. Not finding mentors when I started my previous businesses was one of my biggest mistakes.
Mentors sound great. Problem solved? No. They won't do your thinking for you, and they certainly won't be following you around day to day.
Another group that can be useful are other founders. Be careful here, as you can all drive each other over the cliff of optimism. That said, with other founders, it's more about emotional than intellectual support. In the last few years a new learning opportunity has arisen: podcasts by experts. I can recommend an app called "Breaker" for podcasts - they have a wonderful search feature.
What should you listen to? Try to cover your business domain first. We're a software-as-a-service startup, so I listen to podcasts on that theme. The most useful tend to be interview-style episodes, where the host gets out of the way and lets the guest's knowledge shine through. You should also listen to a few podcasts from investors. This is a fast way to get inside their heads. People tend to be more open in conversation, and will say things they probably would edit out of written work.
Finally, we get to the hard yards: background reading. It's very easy to convince yourself you're learning everything you need to know just by "networking". It doesn't work that way because you end up with "unknown unknowns" and leave yourself open to fatal mistakes.
For example, if you do decide to incorporate your company (or a subsidiary) in the US, you need to opt for Delaware as the state, and you really need to make sure you submit a Section 83(b) election form before you start handing our shares. Now, I'm not going to explain why in this article, and in reality, your lawyer needs to guide you through the details of the process. But you should know you need to do this before you start signing bits of paper-the Internal Revenue Service will not be very forgiving if you mess this up, and it's very, very, expensive to fix later. Oh, one last thing, you only 30 days to file that form…
So you must do your homework, and read as much as you can about startups. Where to start? There are many bad books. How do you find the good ones? Luckily, you can kill two birds with one stone - start by reading blogs. So how do you find the good blogs? Well, all you need is a few to get started, because the good ones all refer to each other.
Joanne Wilson writes at gothamgal.com - she's a long-time angel investor and her blog will give you insight into the concerns that angels have, and the best tactics for closing your seed round. As she is based in New York, her blog is also a refreshing change from some of the more inward- looking Silicon Valley blogs.
Paul Graham write at paulgraham.com - the founder of YCombinator, the original startup accelerator. Paul doesn't blog as such, his style is more as a philosophical essayist. You need to read all of his essays. It is one of the best investments of time you can make as a founder. "Do things that don't scale", about the early days of AirBnB, is a real classic.
Steve Blank, at steveblank.com, is a long-time teacher of the art of founding and running growth stage companies. My favourite quote: "Get of the building!" You won't sell anything if you're not talking to customers.
Fred Wilson writes at avc.com - one of the original startup bloggers, and one of the original bloggers on anything. From Fred I first learned the mathematics of venture deals, and how you can calculate just ho many shares you're actually giving away, and how much money you'll really be left with when you sell. Invaluable, foundational stuff. Read his stuff on liquidation preferences, and your blood will run cold. But you'll be wiser and more prepared for the tough times ahead.
Finally, learn from your own mistakes. Keep a decision journal, a record of the decisions you've made, and the outcomes. This helps you make better decisions. You're reading my one right now.
(Newsletter update: 2,558 subscribers, open rate 12pc)