A few days ago, TechCrunch broke the news that inDinero raised $1M from angel investors. I thought it’d be cool to share, but it never struck me as a big deal. Raising money is possibly the most boring part of working on a startup, so if anything, I wanted to be done with it. What happened next was interesting: dozens of my friends and acquaintances sent me congratulatory emails and facebook wall posts, and the moment felt like I was being congratulated for giving birth or doing something actually monumental. Raising money, in my opinion, is the least monumental thing that can happen to ones company. But it sure is press-worthy!

While friends give me pats on the back, Paul Graham from Y Combinator tells me “Now you just have to not screw it up!” It’s like what a good asian parent would say; just because you got As in school doesn’t mean you’ll actually succeed in life. I sense that a lot of first-time entrepreneurs get too much pre-mature press (because it’s so easy to get), only to have it prevent them from doing what’s best for their newfound businesses.

To prevent having this problem myself, I’ve conditioned myself to get more antsy after getting any congratulatory letter. I translate “congratulations” into “don’t f*ck it up”, and it puts me in this ideal place in mind where I feel good about having accomplished a very limited milestone, but understand that it doesn’t actually mean anything as far the big picture is concerned. I highly recommend other first-time entrepreneurs do the same. Press is great, but in reality, nothing has changed since your writeup.

Now back to building product.

And this summer, I can honestly say that I’ve finally acquired that ability to say “no, I actually think I’m right”. Without self confidence…

1 - inDinero would be competing head-on with QuickBooks, trying to replace it as the premiere accounting system. Ends up that nobody likes accounting software, and I’d go insane working on a product that I didn’t love. Multiple successful founders urged us to go in this direction while we were still building out our product, because they couldn’t understand why someone would want to use a dumbed-down finance product. And it’s pretty difficult to speculate what customers will and won’t like before you build the product, so we decided to take the lean startup approach and release the first crappy product that we were able to build. Can you imagine inDinero being an accounting solution?

2 – inDinero would be focussing on marketing and user acquisition before finding happy, passionate customers. In hindsight, that would have been a huge mistake, but it was hard to tell at first if the bigger problem was marketing, or if it was product. Only after you find happy and passionate *paying* customers do you realize how bad your product was before. When starting the company, people would often tell us how great our product team was, but how none of us had a background in sales/marketing, and that we should focus on that. But since I think 100X more about my business than any potential investor does, I can quickly tell that businesses that think they have a marketing problem actually have a product problem. And our friends at FreshBooks.com reassured me that they just focussed on making the product great long before thinking about user acquisition, and it’s served them well. And I respect that, because FreshBooks is one of few companies in our space who “gets it”.

3 – inDinero would be raising money at a significantly lower valuation than what is actually market-rate for the company. Grown-ups typically advise young entrepreneurs to settle on what will clearly be a fair deal, and my personal opinion is that fund-raising should be the first test to train your deal-making abilities. Settling at a “fair” valuation doesn’t make any sense, especially for a founder who’s trying to hone their negotiation skills. I spent a decent amount of time studying negotiation from books like Bargaining for Advantage, and it made me realize that honing these skills during the busiest weeks of the Y Combinator program won’t be smart in the short term, but will ultimately be crucial if my goal in life is to be a world-class CEO. Therefore, I’ve ignored pretty much all advice on settling for a “lower than market-rate” valuation. The consequence: slightly less demand from investors, but a drastically higher price and significantly better outcome for the company.

If you’re a first-time entrepreneur, be mindful that you’ll have world-class entrepreneurs telling you what seems to be good advice. They’ll assert with confidence why their advice is the best advice, but in the end, you need to decide what the actual right thing to do is. Listen to your instincts and never be afraid to tell yourself “no, I actually think I’m right.”

I haven’t talked much about inDinero in the past because I didn’t think I had much valuable information to share with others. But I learned a lot from the launching experience, and it made me better understand lean startup principles: how to build a startup with very little money, and with very little time to experiment with ideas. Room for failure is super low because there’s only so much time you have before running out of cash. Here are some things we did and why they worked for us:

1) We built vaporware, and lots of it. I recently wrote that advertising a feature before actually building it should be highly encouraged while building a startup. For example, on inDinero, we would supposedly allow people to integrate data from web applications such as Freshbooks and Shoeboxed. (screenshots below) – but if they wanted to use the functionality, we would instead send them to a page that told them the feature was coming soon.

As a result of that, we quickly figured out what our users wanted us to build. And dozens of people would email me asking for Freshbooks and Shoeboxed integration, and others would even suggest Quickbooks Online integration. Nobody was upset that we advertised vaporware.

2) Making real money. I’ll admit that I was scared that introducing a free plan would divert attention away from the paid plans, but people continue to upgrade everyday. I was also scared that our pricing structure wouldn’t be right out of the gate, but ends up that it doesn’t matter too much – it’s a continuously iterative process, and we’re still trying to figure out what fair and ideal pricing looks like. One thing that’s definitely helped us was publishing a phone number on the plans pages. When people are uncertain, they want to know that humans are around – so we’ve answered peoples’ questions on pricing, learned about our users’ needs, and even got customer testimonials just from offering a phone number. As Tony Hsieh from Zappos.com says, great customer support (and especially great phone support) is a fantastic way to get users to evangelize and love you.

3) Continuous Iteration. This is just the start of inDinero. I have no clue where we’ll be in a few months from now, and it’s hard for me to even know what the product will look like in four weeks from now. But I’d highly stress launching sooner rather than later, even if your bugs aren’t fully fleshed out, because you’ll realize what the actual top priorities should be. At inDinero, we hesitated launching on the basis that our screws weren’t bolted in tight enough. But it ended up that after launching, none of our users cared about the problems we would have spent our time working on. If you’re asking yourself the question “are we ready to launch yet or should we continue solidifying product?”, I’d probably lean towards launching. You’ll know exactly what’s wrong with the product, you’ll get emails from hundreds of people excited to use your product, and it’ll give you enough adrenaline to continue during times good and bad.

Curious with where inDinero is going in the next few weeks? Read my blog post called “inDinero’s Vision for August“.

This post was originally written on the official inDinero blog, where we talk about our product, business finances, and entrepreneurship.

inDinero is a relatively new company – we’ve been a corporation for a little over a year, we’ve been fulltime for only a few weeks, yet we’ve put a lot of thought into what we stand for as a company. Since deciding to work on the startup as our fulltime jobs, a lot of people have suggested we shoot for early acquisitions, suggest that we build out the ultimate Quickbooks replacement, without putting much thought into what we wanted to do with the company.

I actually found it pretty shocking that friends and classmates would suggest flipping the company as quickly as possible for a few million dollars, and they would find it shocking that a quick flip wasn’t something that interested us.  It’s because Andy and I have put a lot of thought into why we’re doing inDinero and what we stand for.  We know precisely why we’re building our company, and every decision we make is aligned with the key motivator for why we’re working on inDinero: because we want to have fun.

Sounds pretty cheesy, but if you think about it, what keeps you going during times good and bad?  The common answer is “the prospect of finding success”.  Or unfiltered, “the prospect of becoming a millionaire.”  The problem with that type of thinking is that during gloomy times, you might consider a quick pivot into a completely different business idea.  Or some friends I know would just leave entrepreneurship and go into a banking job that’s guaranteed to make them rich.  But among everyone working here at inDinero (all four of us), we’re purely in it for the fun and joy of building a great product.  And as long as all of our big “strategical decisions” are aligned with the purpose of optimizing for fun, we know we can’t fail.

People frequently ask me why I’d want to go into the accounting space.  Quick answer is that we’re not – we’ll always stop short of doing formal accounting, simply because I don’t think it’s fun.  And we won’t build comprehensive tax-management features either, because I don’t think it’s fun.  If the company doesn’t make as much money as a result, it’s ok, because we’re fulfilling our core purpose as a company:  and that’s to have fun.

I probably feel more insane about my company than most entrepreneurs – in fact, I know that I’m 99% more fanatical about inDinero for reasons I’m having trouble describing.  I had the stark realization that as long as I continue to build inDinero, I know that everyone in the company is going to have fun, which by obvious logic means that we’ll obviously be a successful company.  And the true beauty behind that statement is that we’ve already achieved great success by merely having fun.  So in order to be successful, we just need to stay in business.  Continue what we’ve been doing for the past three weeks, but manage to continue this trajectory for the next 60 or 70 years of our lives.  This statement holds true for everyone in the company right now.

Having massive amounts of fun while building a company also needs to be rationalized.  What comprises fun?  1) People, 2) Product, 3) Vision.  Having fun while building product is relatively easy – just don’t build features that you find useless, and don’t build complex accounting features just because people want them.  Frequently, there are simpler ways to solve the same problem.  I’ll describe “vision” further in a future blog post, but I don’t think that’s immediately important for having fun in an early-stage startup.  Which leaves “people” as the most important factor to consider.

Among my entrepreneurial classmates at Berkeley and friends in the YCombinator program, I’ve found that a lot of them have trouble recruiting talent.  Finding technical expertise is often considered the most difficult part, with less consideration being placed on culture fit.  With inDinero, we quickly brought on two early members – Chris and Borden.  The main reason for bringing on more coders so early in the life of the company was primarily because we didn’t know how long it’d be before we could find other incredible computer scientists who we would consider family.  Consider this thought:  you met the woman of your dreams, and she wants to get married soon.  If you don’t propose now, she’s definitely going to leave you.  Even if you’re not entirely ready to get married, it makes obvious sense that you should marry her.  Andy and I made a similar decision for bringing on Chris and Borden – simply put, we wanted them to be family, and if we didn’t do it now, we probably never would.

inDinero is actually like a family.  We cook and clean for each other, treat each other like playful siblings, work as hard as you’d expect from a group of asian immigrants, and it works out incredibly well.  The interesting thing is that many software companies have cultures equally as unique. I’ve seen other early startups with cultures that resembles that of a fraternity, class project team, united nations delegation, or for the unfortunate business-people-only teams, a fortune-500 company.  All startups pride themselves on having a “hip” culture, but the interpersonal dynamics are vastly different from startup to startup.  Some people say that your culture is solidified from the first people you hire, but from personal observation, it’s usually based on the relationship between the original cofounders.  For example, my co-founder Andy is practically family to me, and therefore, our company has been shaped around the idea of being a very cohesive family.

While I run the risk of one day contradicting myself, I think it’s important to give some tangible examples of what this means going forward:  Anyone we involve in the company will feel like family.  This includes employees, and even investors and board members.  If I wouldn’t adopt them into my family (and if the rest of my family doesn’t want to adopt them), it’s a no go.  And this is consistent with our company’s purpose of existence, because we’ll continue to have massive amounts of fun as long as there’s nobody here to crash the party.  Based on these thoughts, we’ve been able to narrow our hiring process down to a single question:  do we trust them enough to adopt them into our family?

Is it too early for a technically three-week-old startup to be thinking about these kinds of things?  Perhaps, but it didn’t take us long to come to the conclusion that we were in this for the fun.  And it won’t take others to realize that they’re in it for the money, the excitement, escape, or challenge.  As your company grows, continue to be mindful of the original reasons for why you decided to go into business.  That way, you’ll somehow find certain success.

My first attempt to drop out began after freshman year. Three summers ago, I met a few other young entrepreneurs in a hot tub at a programmer’s party called “Super Happy Dev House”, and we all discussed the idea of dropping out of college so that we could start our startups. How to break this news to our parents and why dropping out makes sense to do. Being the ignorant kids that we were, no alternative argument existed. By the end of the evening, we had convinced ourselves that it was the optimal path to success. And in this hot tub three summers ago, I befriended another young founder and computer science major named Brian. We kept in touch by email, and I ultimately found out that only Brian and I remained in college. The other young upstarts kept to their word and dropped out.

In the three years since that night in the hot tub, I’ve received the education I dreamed for, and unique lifetime experiences that I wouldn’t otherwise have in the real world. Among them being a great education in computer science, and most importantly, meeting my cofounder and best friend Andy Su. While I realize that I may just be justifying the decisions I made, I would do college all over again just to meet Andy.

Andy and I have been incubating side projects for almost two years now. We launched internshipIN together in November ‘08, did most of our computer science class projects with each other, recently launched a Java IDE called Breve, and started inDinero before summer break last year. It was through UC Berkeley that we got the Lightspeed Ventures Summer Grant. It was through UC Berkeley that we won the Venture Lab competition and got free money + office space on campus. It was also through UC Berkeley and the CSUA on campus that we got hooked into the YCombinator community, and recruited two more great hackers to join inDinero. It’s just weird to think that none of this would have happened had I dropped out three years ago.

I owe thanks to my friends for supporting me, my advisors for keeping me in college, UC Berkeley for hooking me up with an incredible team of co-founders, and my parents for supporting me through the past four years. This is just the start of an incredible journey.

Holding up my achievement award for my work on CSUA.

If there’s one thing I learned from my asian parents, it’s “failure is not an option“. I hated my parents for this growing up, but I’ve come to appreciate it.

When you go into something knowing that there’s no option to fail, you hustle in ways that the less paranoid never would. The impact of this is incredible, and I think that a good way to increase your chances of succeeding is to find ways to make it so that failure is as far from an option as possible.

This means burning all of your ships: leaving school, quitting your job, and telling everyone you know that you’re working on a startup. Since taking grant and investment money from numerous people, I’ve felt a personal pressure to push forward that I hadn’t before. I’m obliged not to fail, and my productivity is noticeably stronger now.

A few things that I don’t approve of:

1) People who do “consulting on the side“. These almost always fail, because the entrepreneur isn’t in a sink-or-swim mentality. They justify it by citing how much money they make through such little work, and that’s all true. But no matter what, at the end of the day, the entrepreneur is giving him or herself the permission to screw up the company and go back to the financial security that freelance consulting provides. I say they burn their ships and focus on what they actually care about.

2) Doing school while building a company. It doesn’t work at all. I tried it back in middle school, I tried it in high school, and I tried it as a junior and senior at Berkeley. Even if you say that you don’t care about your grades, it doesn’t matter, because you’re inevitably going to lose productivity and give yourself more permission to fail. As Paul Graham says in one of his essays that student entrepreneurs can always go back to school and discount their failure as a side project that didn’t go anywhere. And that’s why it makes me cringe when I hear my classmates applying to grad school or jobs so that they have a “backup option”.

Which brings me to the worst offender:

3) Keeping your job, making business a “side-thing”. This implies that you won’t quit the security of your job until there’s traction or investment funding, yet you’re not going to find either unless you’re working day and night on your startup. It’s a catch-22, and something has to give. I remember meeting people last year who said they were working on a startup, yet keeping their jobs in the meanwhile. They said that they were “considering leaving their job”, which meant that they were too scared to do so. A year later, they’re still in the same job, and their startup didn’t go anywhere.

The main critique to burning one’s ships is that you’re incurring huge risk by doing so. If you don’t have any backup options, what happens if and when your company fails? If I had to answer, I’d say that it won’t come to that, because you forfeited all permission to fail by leaving your backup options on the table. But realistically speaking, it’s not that bad. You’re a great engineer working on your new startup, but Google’s trying to recruit you to work there. Tell them to go away, and they’ll probably be back in the event that your company fails.

Now proactive things you can do to decrease your permission to fail:

- Telling everyone you know about your company. Every time you see friends, they’ll ask you “how’s your company doing?” And you’re going to want to have good things to say.

- Join an early stage accelerator program like YCombinator or TechStars. I think this is critical, because you feel an immense amount of pressure to stay on top of all of your peers. You want to save yourself the embarrassment of having a crappy product to show for, and you don’t want to let down your earliest backers. Because they’re counting on you.

To sum this all up, it comes down to one thing: psychology. There’s an incredible psychological impact of knowing that you can’t fail, and it’s artificially tapping into your evolutionary instincts. If you perceive that you’re about to get killed, you’re going to work that much harder to stay alive.

I’ve been applying the idea of having “virtual mentors”, where I pick just 3-5 people I respect and follow their supposed advice as religiously as possible. To keep it simple, I find one mantra that gives me context for any advice they would give me in person.

1) Paul Graham: “No distractions.”
2) Dave Mcclure: “Focus on core product, stop adding useless features.”
3) Sean Ellis: “Focus on product/market fit. Until then, nothing else matters.”
4) Eric Ries: “Build minimum viable product for everything.”

The key isn’t in figuring out everything they would tell you, but rather in living by your virtual mentors’ rules. And you’ll find that if they were actually your mentors in real life, their advice would revolve around the mantras that you listed. The interesting thing about this is that you might yield up to 50% of a mentor’s value just by asking yourself “what would so-and-so say about this?”

For example, some people have been giving me the advice of thinking about marketing and distribution more than I do about product. But if I go through my checklist of virtual mentors, all of them would have something unique to say:

“What should I do about marketing and distribution?”

Paul Graham: It’s a distraction at this point. Focus on building something useful first.
Dave Mcclure: AARRR – optimize everything. Fix your landing page. Measure the funnel of conversions. Optimize signup page, make it as few steps possible. Fix core product to increase engagement, build in ways for users to refer their friends.
Sean Ellis: You don’t have product market fit yet, and until you do, focus on product.
Eric Ries: Resist the urge of launching. You’re locked into positioning, and you can’t launch again. Better to screw it up with early customers.

Of course, I don’t know exactly how they’d respond to my question, but simple role-play can go a long way. Consider this an alternative method of getting free world-class mentorship

Last summer when Andy and I started our company, we just put up a crappy webpage that told people what our product did. And of course, we didn’t have a product. So people would try to sign up, only to find a form where they could leave their email address. This was important for three reasons:

1 – we immediately knew that our problem was worthy of solving.
2 – we got instant feedback from people telling us what they wanted to see from our product.
3 – it gave us the motivation to push forward.

In fact, I’ve taken this to the next extreme: my focus is on the vaporware itself, since it solves the problem of not knowing what to build. Engineers are terrible when it comes to solving problems that don’t exist, and I knew that my co-founder and I had a similar risk. I now spend about 50% of my time figuring out what needs to be solved (by fixing the website, validating screenshots of our vaporware), and 50% of my time on building the product that has so far been vaporware.

This works in many arenas of life – for the CSUA (computer science undergraduate association) here at Berkeley, we’re co-hosting the annual “Engineering Demo Day”. Which means we had to find a) a lot of engineering demos, b) sponsors for the event, c) people to attend. To take my focus on vaporware to the extreme, we signed up dozens of demos and secured out sponsors before even finding a venue, because none of the logistics would have mattered if there was no demand in the first place. We set up a facebook event advertising the event to see if anyone would RSVP. This took less than an hour of our time. My CS friends hate the idea of selling vaporware (and in this case promoting an event that doesn’t yet exist), because it’s “morally questionable”, but I don’t think so at all. Let’s say that Demo Day had no demand. We’d tell the demoing teams that the event is off, and we’d tell our sponsors they could keep their money. No problem, at all.

Let’s say inDinero had no demand in its first product. What if I told you that it didn’t have much demand? Truth is, we didn’t get any compliments until I redid the website for the third time. And through each iteration of the user-facing website, I learned of what prospective customers wanted, I figured out what our website didn’t advertise, and I had a much better idea of what people were looking for in a finance product. And all of this knowledge came from my selling vaporware.

The bottom line: Vaporware is good because 1) it’ll save you time and money, 2) it’s a completely legitimate method of doing customer development, and 3) You’ll learn so much about your product without even having to build a prototype.

This type of mentality needs to be eliminated as swiftly as possible, and it’s built into all of us from birth. There are two distinguishing factors I see in good entrepreneurs: 1) they actively solicit advice, 2) they immediately act on that advice. Most “entrepreneurs” have this false sense of productivity by doing part 1, yet they don’t follow up with part 2. Why is this?

I’ve had and still have this issue myself. And when I nod my head in approval at a good idea, it’s usually because it’s a good idea. I don’t follow up with part 2 not because I’m lazy, but because I can’t figure out how to get it done in the limited time I have. So then the idea gets tabled, never to return to unless I hear the same advice again. But even when I hear the same advice from a second source for the second time, I’ll probably get stuck in this endless loop of not listening to very good advice.

Here’s my advice: every time you hear good advice, do SOMETHING SMALL that helps you in the direction to achieve that advice. If someone says “start doing test driven development”, you’ll nod your head in approval because it’s a good idea. But then you get back to your desk and have no idea where to begin, the idea gets swept away in the back of your brain, and you’ll continue writing shitty untested code. Herein lies the problem that all of you face, even if you pride yourself on getting stuff done.

In fact, that’s the precise story of what happened last summer. We brought in great summer help from a guy named Sam Liu, and he coded his ass off, but things were breaking. “Jess, Andy, let’s do testing!” Andy and I were so busy were other things that we tabled the idea for a “free weekend” when we had nothing more important to do. But startups being startups, no free weekends exist. And therefore non-urgent tasks don’t get done. Ever.

But I started doing things with a new attitude. We started testing our code incrementally, knowing that it wouldn’t be perfect. We didn’t look into doing things perfectly; instead, we followed the Steve Blank model of doing “the minimum viable product”, yet applying this to everyday things such as following advice. And it works brilliantly because the advice you seek actually has an impact. And most advice never gets that far!

Next time you hear good advice, nod in approval, then write down the LEAST POSSIBLE thing you can get done in order to be making progress in that direction. Then when you get home, allocate an hour or two to get that thing done. This means that half hour meetings with prominent people should actually take up three hours from your day, because you’ll need time to execute on all advice. And if you think that’s too much time to spare, you’re wasting your time by taking the meeting.

The sad thing is that you probably won’t listen to any of this advice.

The student organization I work with (Computer Science Undergrad Association) is hosting the TEDxBerkeley conferenece on Saturday, April 3rd. I wanted to offer my readers priority to attend.

Essentially, TEDxBerkeley is a full-day immersion of TEDtalks and live presentations by some of the Bay Area’s most accomplished people. After going to my first TED conference, I felt the need to share the experience with my friends and classmates. And then TEDxBerkeley was born.

On the registration page, just mention that you found out via jessicamah.com to get priority. Half of the 700 seats are already gone.