I resonate a lot with these reasons. I definitely know I am not the most optimal employee, but often times the people I clash with are people that I cannot respect. Either
- They think they're higher than me (you cannot collab like that)
- They want it their way, despite there being multiple ways to Rome, and will cut off the conversation with orders, not arguments
- They pretend to be technical and are only making the bureaucratic back-and-forth worse. You can definitely tell when someone knows what they're talking about
Sadly a lot of companies will reward these type of people by putting them in the high seats.
This is really well written and clearly from someone who has loved through it. I think just about all of their observations are correct (except for getting a coach - incredibly detrimental in my experience).
Excellent writeup from someone who clearly cares about hitting the intersection of "good for customers, good for himself and investors, and good for employees".
We'd be much better off with people thinking and acting in line with this!
> there are two separate personas that you need to “create”: The user persona and the buyer persona.
Even more important: stop using personas, start using actual people. I've experienced many startups make unforced errors by conflating people into personas. A better way is to tag people with attributes, such as specific interests, explicit concerns, tasks to be done, usage goals, learning preferences, and the like.
When you switch from personas to actual people, it opens up many more product experiments-- many of which are surprising and may even feel counter-intuitive to founders. Increase your startup chances of success by carefully connecting with your actual users.
Maybe a simple question I didn’t see here: paying yourself a salary?
How true is it you’ll need to persist under extreme duress unable to pay yourself a salary? Relevant for us with kids / families where we provide the family’s income.
I'm not sure austerity wages for founders are really a thing anymore. Serious investors understand that team turnover is as or more scary than fiscal drama.
There was a longstanding "ramen profitable" ethos on HN, but part of that is rooted in a much older set of YC deal terms and lower expectations for seed rounds. But YC is now one of the principal components of all tech startup funding, the standard terms are much better, syndicated seed rounds have gotten pretty big; I think you're expected not to be silly about comp, but I don't think people are looking for you to signal commitment or virtue or asceticism with your comp package.
If you can't pay yourself a real comp package, something is probably wrong with your business.
I see a pattern where companies end up becoming consulting firms with a bit of proprietary tech. Then all their efforts are put into a handful of clients. The companies call them “design partners” but they’re basically clients.
Seems like a particularly risky trap for bootstrapped companies desperate for revenue. At the same time the best companies I see out there are relentlessly customer focused.
How do you draw the line between “design partner” and becoming someone’s consultant.
Do what Basecamp does [0]. They have one price for any size of customer and more importantly do not let any one customer, no matter how big, pay more for Basecamp and turn into a client as you say.
- If you are bootstrapped, you can build dual use technology.
- All of this is predicated on the idea that building software is hard, you need 8 years to build a product that people like. Maybe this is all going away in the AI world in a couple of years.
Great article! One question: you talk about market size, but you don’t address the existing competition in the space. In my opinion, two equally sized markets can have very different levels of competitive pressure.
Is that something you factor into your playbook? Or do you simply not find it relevant to judge whether to enter a certain space?
Assuming that you're not a commodity product, it all kinda nets out in the end. If you have a competitive market, you have proof that people want your product at a good price, else no one would be in the market. If you execute better than all of your competitors, then you can theoretically take every last penny of that market.
I don't think the competitive pressure changes the decision whether there's revenue to be made in a certain space, though it may change the personal decision if the operating tactics required in a competitive market are personally fun for you the human being.
If you have a thing people want that you spent a decade making that isn't easily replicatable, the rest doesn't matter.
If you don't have that, the rest also doesn't matter. Unless you're obsessed with money, in which case, you are very confused and should not be guiding anybody to anything.
Guides regarding minutiae from lottery ticket winners are tiresome. I think anyone over 30 has learned what these 'guides' amount to from looking at Paul Graham.
This is all great. One thing I wanted to call out in particular is Thomas' take on investor verbal agreements. YC has a thing about this: it's called the Handshake Protocol.
The idea is: you and your investor agree on (1) an amount to be invested, and (2) a valuation or cap. Maybe you shake hands. Then, after the meeting, you memorialize the deal in an email. The deal is then socially binding: reneging on a Handshake Protocol deal is a big thing, gets noted in Bookface, whatever.
There's nothing magic or even interesting about the protocol; all it does is eliminate a form of ambiguity that professional investors are facile with and founders aren't. Investors are very good at saying "yes" and meaning "no"; they want the option to invest without the commit. If you don't put it to them directly, they'll take the option! The Handshake Protocol puts it to them directly: "are you committing?"
Most of the time, you're going to get a "no" answer to that, which is exactly what you want: clarity, so you can make decisions.
We used to do this in the software documentation team I worked with for 9 years: we would discuss something verbally, then the person who'd called the discussion would summarise the conclusions in an email to team members. They could then edit the summary as needed. It really helped further down the line as a communal memory device.
I love it, amazing article! All the reasons listed apply to me and a while ago before realizing that a lot of other entrepreneurs share the same mindset, I always thought I am a loser unfit in any company I worked for, especially the interviews part, i simply suck at them, period! but I do wonders given the chance. I am just glad I don’t have to go through that anymore.
> “we really do not want any distraction now, if you feel that strongly you can always send an unsolicited term sheet to the board to consider”
Nope, don't do that. If you receive a credible term sheet at a meaningfully higher valuation, you'll have to rerun your 409A, even if you don't take the investment.
I don’t know about the advice on market size… nearly every 2nd founder says go into beach head markets and stay away from markets with high competition.
The ones in beach head markets seem to succeed more often on average (anecdotal)
> I love working with great people on problems just on the verge of the possible. This can be hard in large organizations, as large orgs tend to (unintentionally) avoid having too many good people on one team (the value for the large org is maximized by spreading out great people to guide many teams - so most teams will only have 1-2 great members).
The problem is in my opinion a little bit different: these good people would love to make the team in which they are working better, but are actually actively kept down by work colleagues and bosses. Thus, the organization does not profit from these good people, because is has no use for their greatness. Instead, this approach introduces a lot of (political) infights into the teams, where often the good people are treated as the evil troublemakers at the end.
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[ 3.0 ms ] story [ 72.9 ms ] thread- They think they're higher than me (you cannot collab like that)
- They want it their way, despite there being multiple ways to Rome, and will cut off the conversation with orders, not arguments
- They pretend to be technical and are only making the bureaucratic back-and-forth worse. You can definitely tell when someone knows what they're talking about
Sadly a lot of companies will reward these type of people by putting them in the high seats.
We'd be much better off with people thinking and acting in line with this!
Even more important: stop using personas, start using actual people. I've experienced many startups make unforced errors by conflating people into personas. A better way is to tag people with attributes, such as specific interests, explicit concerns, tasks to be done, usage goals, learning preferences, and the like.
When you switch from personas to actual people, it opens up many more product experiments-- many of which are surprising and may even feel counter-intuitive to founders. Increase your startup chances of success by carefully connecting with your actual users.
How true is it you’ll need to persist under extreme duress unable to pay yourself a salary? Relevant for us with kids / families where we provide the family’s income.
There was a longstanding "ramen profitable" ethos on HN, but part of that is rooted in a much older set of YC deal terms and lower expectations for seed rounds. But YC is now one of the principal components of all tech startup funding, the standard terms are much better, syndicated seed rounds have gotten pretty big; I think you're expected not to be silly about comp, but I don't think people are looking for you to signal commitment or virtue or asceticism with your comp package.
If you can't pay yourself a real comp package, something is probably wrong with your business.
Seems like a particularly risky trap for bootstrapped companies desperate for revenue. At the same time the best companies I see out there are relentlessly customer focused.
How do you draw the line between “design partner” and becoming someone’s consultant.
[0] https://www.inc.com/magazine/201606/jason-fried/saying-no-to...
- If you are bootstrapped, you can build dual use technology. - All of this is predicated on the idea that building software is hard, you need 8 years to build a product that people like. Maybe this is all going away in the AI world in a couple of years.
Is that something you factor into your playbook? Or do you simply not find it relevant to judge whether to enter a certain space?
Assuming that you're not a commodity product, it all kinda nets out in the end. If you have a competitive market, you have proof that people want your product at a good price, else no one would be in the market. If you execute better than all of your competitors, then you can theoretically take every last penny of that market.
I don't think the competitive pressure changes the decision whether there's revenue to be made in a certain space, though it may change the personal decision if the operating tactics required in a competitive market are personally fun for you the human being.
That said: A good market will become crowded quickly in either way.
If you don't have that, the rest also doesn't matter. Unless you're obsessed with money, in which case, you are very confused and should not be guiding anybody to anything.
Guides regarding minutiae from lottery ticket winners are tiresome. I think anyone over 30 has learned what these 'guides' amount to from looking at Paul Graham.
The idea is: you and your investor agree on (1) an amount to be invested, and (2) a valuation or cap. Maybe you shake hands. Then, after the meeting, you memorialize the deal in an email. The deal is then socially binding: reneging on a Handshake Protocol deal is a big thing, gets noted in Bookface, whatever.
There's nothing magic or even interesting about the protocol; all it does is eliminate a form of ambiguity that professional investors are facile with and founders aren't. Investors are very good at saying "yes" and meaning "no"; they want the option to invest without the commit. If you don't put it to them directly, they'll take the option! The Handshake Protocol puts it to them directly: "are you committing?"
Most of the time, you're going to get a "no" answer to that, which is exactly what you want: clarity, so you can make decisions.
https://www.ycombinator.com/handshake
Nope, don't do that. If you receive a credible term sheet at a meaningfully higher valuation, you'll have to rerun your 409A, even if you don't take the investment.
The ones in beach head markets seem to succeed more often on average (anecdotal)
Great people are racehorses, not donkeys. And racehorses tend be skittish. But they win races for you.
The problem is in my opinion a little bit different: these good people would love to make the team in which they are working better, but are actually actively kept down by work colleagues and bosses. Thus, the organization does not profit from these good people, because is has no use for their greatness. Instead, this approach introduces a lot of (political) infights into the teams, where often the good people are treated as the evil troublemakers at the end.