09 important takeaways from this interview: Continue reading “97. How To Start A Startup: How Angel Investors Judge Startup Founders”
15 Important takeaways from this video:
00:01:25 Startups are very counter-intuitive; it is an area where you simply cannot rely on your intuition to be successful. Founders consistently ignore their mentor’s or partner’s advice because their advice usually runs counter to the founder’s intuition; it just ‘feels’ wrong, therefore your first impulse is to ignore it.
00:04:00 You can, however, trust your instincts about people. Just because the person you meet seems impressive doesn’t mean their advice should be taken or that you should get into bed with them. Choose your investors, partners, mentors… the way you would pick your friends. Work with people you generally like and respect, and that you have known long enough to be sure.
[EDITOR’S NOTE: William Channer, Designer & Entrepreneur and Cédric Quissola, Art Director offer similar advice on taking the time to choose who you will trust and work with, however once you have decided, trust them fully.]
00:05:30 Expertise in startups isn’t a requirement when starting up. At the end of a French course, you’ll be better able to speak French, which is what you need to know to communicate with a French-speaker. Classes on startups will teach you about startups, but knowledge about startups isn’t what you need to know; what you need is an expertise in your own users.
00:07:00 ‘Learning too much’ about the mechanics of starting a business may actually prove to be dangerous because the idea of ‘going through the motions’ of starting a startup: completing a ‘proven’ checklist of things to do makes the process easier to manage but in no way guarantees success.
Most of the time, entrepreneurs go though the motions of launching their startup because that is what they were trained to do their whole lives up to this point.The first thing young entrepreneurs usually do is to try to figure out what the tricks are: What are the tricks for convincing investors?
Certainly to some degree performing actions involves some degree of tricks, techniques and checklists, and other entrepreneurs charge a lot of money creating and selling their tricks and checklists to young entrepreneurs.Basically, the best ‘trick’ for attracting investors is to simply create a startup that is growing quickly, and then simply tell investors so.Okay, those young entrepreneurs will then ask “What are the tricks for growing quickly?”
00:10:00 Growth hacks is bullshit because the way to make something grow is to make something that users really love and then tell them about it.So yes, there are tricks, but they are not nearly as important as solving the initial problem: creating a product or service that meets your consumer’s needs.
00:11:30 Starting a startup is where exploiting weaknesses in the system stops working. Gaming the system MAY work if you go to work for a big company and spend your time sucking up to the right person, appearing to be productive, sending emails late at night, etc. This way of doing business, however, doesn’t work with startups because there is no boss to trick; you’re the boss and you’d only be cheating yourself.Instead, all there is is users, and all users care about is whether your product or service does what they want. You have to have something that people want, and you only prosper to the extent that you do.
00:12:56 Dangerously enough, faking does work to some extent with investors. If you really sound like you know what you’re talking about, you can fool investors over the short-term, but it’s not in your interest to do so.
00:14:36 Startups involve a large opportunity cost because they are ‘all-consuming.’ It will take over your life more than you can imagine; and if it succeeds it will take over your life for a long time.As the owner of a successful startup, you alone must carry the burden of making important decisions. Whether you want ot or not, you cannot show fear or doubt, and you cannot complain about having a difficult life.
Further, it never gets any easier. The nature of the problems change, such as construction delays at a new London office instead of a broken air conditioner in your small studio apartment, but the total volume of worry never decreases; all successful entrepreneurs have to continuously deal with this, however most of the time you, as the public audience, never get to witness this part of an entrepreneur’s life.
00:17:16 A lot of people seem to think that you’re supposed to start startups while in college, which is insane because as just explained startups take up all your time – time you should be investing in learning. Once a student starts a startup, that student is no longer a formal university student, or at least will not be a formal university student for much longer.
Can universities teach you about startups? Yes and no. But as already explained, there are no checklists and tricks to memorize. Anyone can teach you about startups, but knowledge about startups isn’t what you need to know. Remember, what you need is an expertise in your own users.
[EDITOR’S NOTE: In the video How To Start A Startup: The Importance Of Choosing Your Team & Your Execution, Sam Altman points out that young people have the advantage over older people in terms of startups and product-creation because young people have the future ahead of them, can see where technology is heading, and so can create a business that will be popular in the future while older entrepreneurs don’t have this same luxury or perspective.In the video Human Resources Management: Mega-Trends Which Lead To Competitive Advantage, Armin Trost explains that todays products will be obsolete in the future, and that it is only through innovation and anticipation that companies can compete and survive.]
00:18:30 If you’re asking yourself ‘Should I be a student and not be a startup or should I not be a student and be a startup?,’ the best advice would be to not start a startup in university. Why? People start startups with the larger objective of having a good life, not simply to start a startup. 20 years old isn’t the optimal time to do it because there are things that you can do while you are in your 20s that you cannot do before or after.
Mark Zuckerberg can rent private jets and rub shoulders with very influencial people, but he cannot simply hop on a plane and backpack around Europe on a whim with no deadlines or responsibilities in sight; he gave up the opportunity to do that. Facebook is running him as much as he is running Facebook.
In the astronomically unlikely case where you’re in your 20s and you have a side project that takes off like Facebook did, then you’re faced with the choice of passing on it or risking all and running with it. In this case it may be reasonable to run with it.Instead, the optimal thing to do while in your 20s (or at university) is to exploit the formal education process and learn powerful things, and then couple that with your own natural curiosity and inclinations. Domain expertise is what really matters with entrepreneurism; become an expert in something.
[EDITOR’S NOTE: One of the laws in the book 22 Irrefutable Laws of Advertising: And When to Violate Them by Michael Newman is the law of experience, whereby the more you experience, the more broad your knowledge-base and the more equipped you are at connecting dots in a unique and refreshing manner that others cannot see, be it for advertising or creating a new product that meets users needs.]
00:21:40 Starting a startup is REALLY hard and statistically speaking you have a greater chance of failure than you do of success. As an entrepreneur, you’re not estimating what you are now, you’re estimating what you could become; and nobody can confidently predict that. Not even investors who put their money on the line for your startup cannot accurately predict this. Every startup is at best a guess.
00:22:50 It’s easy to tell how smart a person is; the hard part is predicting how tough and ambitious that person will become.
00:24:25 There are only two things you need initially to start a startup: An idea and co-founders, and what you need to get them both is the same. The way to get startup ideas is not to try to think of startup ideas. The way to come up with good startup ideas is to take a step back and turn your brain into the type that has startup ideas unconsciously by:Getting yourself to the forefront of a technology so that you are in a sense living in the future and solutions to problems thus become obviousBeginning as a side-projectLearning a lot about things that matter
Working on problems that interest youWorking with people you both like and respect (which is how you procure co-founders)
00:26:40 History is full of people who everyone believed was working on something worthwhile when in fact it proved to be completely worthless; history is also full of people who were working on things everyone believed was a waste of time when in fact it proved to be priceless. For you, you know you are the latter when you are passionate about the problems you are trying to solve. They will eventually turn out be useful later in some worldly way. This will create a sort of internal compass in your head which will guide you in your future projects.
00:33:15 It’s not necessary to go to business school to launch a startup. Business school was designed to teach people management, and management is only something you really need once your startup becomes successful. Ideally, what you really need to focus on early on is product development. For that, you’d be better off going to design school. But experience is the best teacher, and just doing it is one of the best ways to learn something.