OnStartups

Startup Lessons From 17 Hard-Hitting Quotes In "Moneyball"

Dharmesh Shah — Thu, 02 Feb 2012 14:20:00 GMT

I'm an idiot. Not all of the time, mind you, not even most of the time, but every now and then, I'm an idiot. Like the time my friend and co-founder Brian Halligan asked me to read the book “Moneyball”. This was back when we had first launched our startup, HubSpot. “But, I'm not a baseball guy,” I said. “It's not about baseball. It's about data.” And, I put it on my reading list, and then still failed to read it. I even bought the book, but still failed to read it That was a mistake.

I just got done watching the movie “Moneyball” for the second time. The first time I watched it was last night. It's the only time I've watched the same movie twice in two days. It's not just because it was a great movie (it was), but because I felt I missed so much the first time, that I had to watch it a second. If you haven't seen the movie yet, you should stop reading this article and go watch it. If you get distracted and never make it back to this article, I forgive you.

So, without further ado, here are some great quotes from Moneyball

Brilliant Startup Lessons From Moneyball

1. He passes the eye candy test. He's got the looks, he's great at playing the part.

Spectacular startup success often becomes a game about scouting and recruiting. A common mistake entrepreneurs make is recruiting team members early on simply because they look the part. In the long run, it doesn't matter if on paper, someone's perfect. You want people that can actually do the job. That VP of Sales candidate that has 15 years of experience at Oracle? Likely not worth it for you. They'll look the part, but they're not guaranteed to be able to actually do the job. And, like Johnny Damon, they're going to be expensive. Get good at seeing talent where others don't.

For example, at HubSpot, most of the early team did not look good on paper at all. Most of us had little or no prior background doing what we were setting out to do.

2. You're not solving the problem. You're not even looking at the problem.

Identify a fundamental problem and then focus, focus, focus on solving that problem. Don't get distracted by all the the things that are swirling around the actual problem. Don't listen too closely to those that have deep industry expertise and are emotionally attached to the status quo — it's possible that they're part of the problem. Figure out what the actual issue is, and solve it.

For example, look at Dropbox. Drew set out to solve a really hard problem -- getting data to synch across different devices. He had many people (including me) that were telling him that this particular idea had been pursued so many times before. He didn't get distracted by all that noise. He dug in and fixed the problem. Today, Dropbox is valued at billions of dollars and has millions of happy users.

3. We've got to think differently.

Reminds me of Apple. Only, Steve Jobs wrote it as ”think different” (intentionally going with the grammatically incorrect version because it “sounded better”). Like the Oakland As, your startup too is working under constraints. Often, big constraints. Often, unfair constraints. If you're trying to disrupt the status quo and beat competitors that are much bigger and better funded, you're not going to do it by playing their game. You'll need to think differently. Playing the old way when you're at a disadvantage is a sure-fire way to lose.

This is one that I'm personally very passionate about. When we started HubSpot, everything we had learned about startups -- and the convention wisdom was "do one thing, and do it very, very well." Generally, that's really, really good advice. Except when it's not. Like in our case. The problem we saw was not that there weren't great marketing apps out there -- the problem was that none of it was integrated or worked well together. So, we thought different. We decided to do the crazy, crazy thing of doing it all. Why? Because that's what we believed the problem was.

4. First job in baseball? It's my first job anywhere.

Experience is often over-rated. Some of the most successful startup teams consisted of people that lacked relevant experience at the time they joined. But, what they lacked in experience, they more than made up for in sheer talent and hunger. In the early days, hire athletes. People with raw talent and a propensity to get things done. Don't be resistent to recruiting people that are early in their careers. You're looking for arbitrage opportunities. You're looking for the future stars -- because you likely can't afford or convince the current stars.

5. Your goal shouldn't be to buy players, your goal should be to buy wins.

I'm going to illustrate this point with a quick paraphrasing with a conversation I had with an entrepreneur last year. It went roughly like this:

Me: What do you need?

Them: We need to build a management team.

Me: No, what do you actually need right now?

Them: Well, right now we need a VP Engineering.

Me. What for?

Them: Well, we need head up our product development effort.

Me. No, you actually need to write code and release a product. You need to respond to customer issues. You need to iterate quickly so you can learn quickly. You don't need a VP of anything, you need a doer of stuff that needs to get done. Don't think about buying titles — think about buying outcomes. Think about plugging gaping holes in the company. Signing up customers so fast that you can't respond to all the support emails? Don't hire a head of support, hire someone that helps you tackle the support issue. Someone that's maniacally committed to customer happiness. They can become your head of support some day.

6. He really needs to accept this as life's first occupation, a first career.

This statement was made to the young Billy Beane when he was trying to decide between the full scholarship to Stanford and a career in Major League Baseball. Billy's mom asked if he could do both. The answer was, he couldn't. And, that's true in baseball, in startups and just about any hyper-competitive activity. You can't straddle the fence, because you will get your ass kicked by someone who's almost as good as you, but much more committed. You can't take that investment banking job and do a startup. You can't maintain two feet firmly planted on the ground and take the leap of faith. You have to pick. It's not an easy choice, but you have to pick. And, if you're in school, my personal (and unpopular in some startup circles) advice is stay in school . Make learning and building connections your “first occupation”.

But whatever you do, don't sit on the fence. Commit to something. Don't hedge. Give it all you have. Make it your life's first occupation. If you can't get excited about it -- find something else. I've made lots of stupid mistakes in my professional career -- the stupidest was trying to run two startups at the same time. That's a story for another day. I'm going to close with a quote from my co-founder at the first startup: "If you sit on the fence too long, your genitals are going to hurt."

7. Why do you like him? Because he gets on base.

The startup world is filled with superstars that get overlooked or don't quite make it because they're "quirky" or otherwise don't fit preconceived patterns of what you think a person in a given role should look and feel like. None of that matters. When recruiting engineers, find brilliant people that write code that solves the problem simply, effectively and can be maintained without brain damage. When hiring sales people find those that have high emotional IQ and care about truly understanding customer problems -- and selling them a solution. Figure out what success looks like for a given role, and ignore the irrelevant details. (Note: Culture fit is not an irrelevant detail. Things that are irrelevant are age, nationality, gender, etc. -- things that have no bearing on the outcome).

10. Hey, anything worth doing is hard. And we're gonna teach you.

Your ability to teach is one of the single biggest levers you have in a startup. Why? First, because it's one of the biggest benefits you can deliver to your team members. They can get a higher salary somewhere else. They can get better perks somewhere else. But, at your startup, they can learn things. Second, it's unlikely you're going to find the "perfect" 5-tool player. Even if you found them, you likely couldn't afford them. If you're willing to help people with a specific super-power fill in gaps in their knowledge/experience, you create lots of value.

12. It's day one of the first week. You can't judge just yet.

Be a little bit patient. Often, your best people will take a little time to really shine. Don't judge too early. Determine the context. If someone's not cranking yet, is it because getting up to speed is hard? Everyone's too busy to show them ropes? Their lack of early performance could be the context, so be patient

But, don't be too patient. If someone isn't at least moderately productive in the first month or two, it's unlikely they're going to be super-productive in the following year. The really great people tend to deliver some value almost immediately.

14. Where on the field is the dollar I'm paying for soda?

It is good to be budget-conscious in an early-stage company. Instills the right kind of discipline that will help long-term. But, don't be a penny wise and a pound foolish. There are little things that don't cost that much, that makes people happier. It's not about the money (they can all afford the soda), it's about the inconvenience and the principle. Remember, deep down inside, people are human. [smile]

One quick example from HubSpot: We launched a book program whereby any employee can request any book they think makes them a better HubSpotter. I personally handle all requests and send out a Kindle version of the book immediately. It's not that expensive, but it's been super-well received.

15. These are hard rules to explain to people. Why is that a problem, Pete?

One of the best segments in the movie. Pete is troubled at how different what they're doing is, and why it's hard to get others to understand and accept it. But, the point was, when you're transforming something and making massive change, not everyone is going to understand. The important thing is to be right -- and then make the change happen. The best way to convince people that your theory was right is to be right and show them (not tell them) you're right. Most people will never be convinced otherwise.

16. I'm not paying you for the player you used to be, I'm paying you for the player you are right now.

Hard-hitting advice. I'd extend this to say: Recruit on potential but reward on performance. Customers are not going to be delighted by the code a brilliant engineer could have written. On a related note is the quote "If he's a good hitter, why doesn't he hit good?" Or, "If she's such a good sales person, why can't she sell?"

17. We're going to change the game.

And really, that's what it's all about. It's not about exiting for millions of dollars or going public. It's about changing the game. It's about seeing something that's not quite right in the world, and deciding you want to fix it. For me, personally, it was observing that marketing is broken. Most people hate marketing. we want to transform marketing into something people love. It's hugely ambitious, but I have this feeling, deep-down inside, that we're right.

How about you? What is the flaw (big or small) that you're seeing in the universe that you're trying to fix? Any favorite lines from Moneyball that you'd like to share?

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

Startup Tribes: Tips on Roles and Recruiting

Dharmesh Shah — Fri, 27 Jan 2012 16:22:00 GMT

The following is a guest post from John Greathouse. John is an entrepreneur and investor. He currently blogs at Infochachkie where he provides practical startup advice.

You may not realize it, but your adVenture's Core Team, the senior executives who make the key decisions which drive the company's strategic direction, is akin to a primitive tribe.

Primitive tribes and your startup both entail a small number of people banded together to battle an uncaring, hostile world. Like the tribe, your company's survival is always in question and never guaranteed. Success depends upon everyone pulling together for the common good and striving to accomplish common goals. Everyone's efforts must initially focus on survival

before the tribe can prosper and eventually evolve into a thriving, self-sustaining community.

Tribes are effective societal structures, as evidenced by man's ascension to the top of the food chain. Understanding the tribal organizational structure is vital to gaining an appreciation of the various roles played by your Core Team.

In partnership with Docstoc, I created the following video, in which I discuss the various roles in a tribal startup. You can watch the embedded video below or at YouTube: http://youtu.be/o_nEUIPS60U

Tribes and startups thrive when labor is efficiently divided. Long before Meyers met Briggs, people in tribal communities migrated to those roles which best suited their personalities, proclivities and skills. The key roles in tribes and startups are identical: Hunter, Skinner, Shaman, Chief and Tribal Elder.

Hunter

The Hunter provides for the tribe and literally brings home the bacon. These individuals are highly autonomous, independent and thrive on frequent recognition. When they have a successful hunt, they want everyone to know about it.

The Hunter is generally not a visionary. However, once they are pointed in the right direction, they are clever enough to improvise a tactical plan to achieve a strategic objective. They do not want to be told how to take the hill, just which hill needs to be taken.

At your adVenture, the hunter is the rainmaker, in the form of a Business Development Executive, VP of Sales or Corporate Development Officer. Once they are told the type of deal that is needed, they are capable of autonomously devising the appropriate tactics to get the deal done.

A typical Hunter's characteristics include:

Work hard
Driven to do right thing
Fast and furious
Under communicate - do not like to confer with or answer to the group
Excel under pressure
Emphasis on achieving goals - second guess their tactics at your peril
Deliver quantity over quality - close enough is okay
Work well outside the box

Skinner

The Skinner makes the Hunter look good. When the Hunter brings back the kill, it is the Skinner who dresses the meat, tans the hides and preserves whatever is not initially eaten for the tribe to subsist upon during lean times.

The Skinner at your adVenture will likely take the form of the VP of Operations, VP of Professional Services or Chief Operating Officer. They ensure that your company delivers on the Hunters' promises by exceeding your partners' and customers' expectations.

A typical Skinner's characteristics include:

Work correctly
Driven to do things the right way
Slow and careful
Service oriented - want to meet stakeholders' needs within the organization
Over communicate - encourage meetings and agreement regarding goals
Quality over quantity - do things by the book
Work well inside the box

Shaman

Shamans invent new tools and processes that improve the overall quality of life within the tribe. For instance, the Shaman will spend his days thinking of a better fishhook, a new tool for cleaning skins or searching for new medicinal plants to cure the tribe's ailments.

At your adVenture, the Shaman is often the Founder. They may also take the form of Chief Technical Officer, VP of Engineering or VP of Product. By whatever name, the Shaman is the person who devises and develops the innovations upon which your business is based.

A typical Shaman's characteristics include:

Work differently
Creative visionary
Communicate differently - requires careful listening
Seek a better way
Create quickly and freely
Tripped up by details
Prone to devise complicated solutions
Prize a solution's technical elegance over its functionality
Are unaware that a box exists

Chief

Every tribe needs a Chief, just like every adVenture needs a CEO. The Chief defines and communicates the tribe's strategic direction, such as a new valley to forage or a mountain retreat to escape the heat of summer. The Chief listens to the opinions of the other tribal members, makes decisions that impact everyone and ensures an adequate level of acceptance of such decisions to facilitate their ultimate success.

A typical Chief's characteristics include:

Work together
Shepherd the team toward its strategic goals
Slow and connected
Communicates clearly and supportively
Driven to maintain cohesion within the team
Indecisive
Prone to being railroaded
Defines the box

One of the best CEOs I worked with exhibited nearly all of the above characteristics. As a Hunter, I was frequently frustrated, as he was often slow to act. In his effort to keep harmony within the Core Team, he seemingly agreed with everyone, even people who held diametrically opposed opinions.

In retrospect, I now realize that his ability to sincerely empathize with everyone's respective positions, especially on difficult issues, was imperative in keeping our Core Team together during the numerous challenges we encountered on our road to a successful exit.

One of his favorite sayings infuriated me at the time, but I now appreciate its underlying wisdom, Some of the best decisions I ever made were the decisions I never made. Despite my Hunter-driven frustration at his hesitancy, more often than not, his resistance to making a snap decision proved to be prudent.

Tribal Elders

Tribal Elders spend their time sitting by the fire dozing and recounting the tribe's history. They cannot be counted on to do any heavy lifting nor are they in a position to execute the day-to-day tasks necessary for the tribe to thrive. However, they occasionally offer bits of sage advice that allow the tribe to avoid hardships and reap windfalls. As such, the wise Chief knows when to solicit their counsel and when to allow sleeping Elders to lie, as described more fully in Free Advice.

At your adVenture, the Tribal Elders are represented by your Board of Directors and Advisors. The Board Members likely have a varied and broad business history upon which to draw. They may be able to provide general guidance at certain pivotal points during your adVenture's journey. However, as noted in Your VC Is Not John Lennon, do not heed their advice blindly, as it is impossible for them to have your level of insight into the operational details of your adVenture.

Pop Quiz

Question: Which Tribal member is the most important?

Answer: All of them.

Without the Hunter, the Shaman's ideas would never be put into practice. Likewise, without the Skinner, much of the Hunter's efforts would be wasted. He might be able to feed himself, but he would not be able to sustain the tribe on his own.

Without the Shaman, neither the Hunter nor the Skinner would have the tools necessary to carry out their respective roles within the tribe. Without the Chief, the tribe would wander aimlessly, fighting among itself until the group eventually dispersed and the individual members were melded with other tribes with healthier cultures and a more focused sense of direction.

Balance is the key to a successful team. Thus, every member of your adVenture's Core Team is the most important member. Your Core Team is your startup's most important asset. Respect man's evolution and heed the tribal lessons of old. If you do, you may just end up on top of your industry's food chain.

So, what kind of tribal member are you? What types are you looking to hire and add to your tribe next?

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

Startup Branding: A Practical Guide for Entrepreneurs

Dharmesh Shah — Fri, 20 Jan 2012 17:40:00 GMT

The following is a guest post by Mike Troiano. Mike is a former New York ad man turned venture-funded entrepreneur, now a Principal at Boston-based Holland-Mark. You can follow him on Twitter at @miketrap, and connect with him elsewhere through About Me.

1. What does startup branding really mean for an early-stage company? Is it just picking a name and a logo?

"Brand" is one of those words everybody uses and nobody really understands, so I'll start with a definition.

It's important for entrepreneurs to understand that their "Brand" is the collective emotional response to their product or service. A brand is not a logo, and it's certainly not a URL. Those things are the stimulus, while the brand is the response. It's something out there, in the hearts and minds of the people you hope to sell to.

So... Do I think it's important for startups to be thoughtful about the nature of the emotional response that might serve their interests, and try to build a graphic identity designed to elicit that response? Abso-freaking-lutely.

2. Any favorite startup examples that they think are particularly clueful about brand and drawing out the right emotional response?

Sure, a few come time mind right away:

Zipcar a brand we've played a role in since the beginning - isn't about urban lifetstyle, or being green, or collective commerce, really. From day one it's been about Freedom, from both the hassles of car ownership and car rental (Wheels when you want them.) Focus on that emotional value proposition has guided everything from brand identity to vehicle selection at the company, and Zipsters around the world have responded with not just loyalty, but advocacy.

Path 1.0 was a decent execution of an interesting idea, that you could derive more value from a smaller social graph of actual friends than you could from Facebook's comparatively industrial-sized cohort. Problem was, there wasn't anything in the original UI to inspire an emotional response, and the service foundered. While much has been made of the radical turnaround in user experience for v 2.0, for me the result of those improvements is a kind of easy intimacy on the mobile device, something that distinguishes Path from other networks, and is the root of user's newfound enthusiasm for the product.

Instagram is interesting because they got it so right in the product, and so wrong in the messaging. Does anybody really love Instagram because it offers Fast, beautiful photo sharing on the iPhone? Really? I think Instagram helps us notice and share more of what we find beautiful in the world. And I know that promoting it that way would help them grow faster.

3. Speaking of names, how do I pick a great name for my startup? Does it really matter all that much?

I've always thought it matters less than people think.

10% of names are great and that helps a business at the margin, and 10% of names are crap and that hurts a business at the margin. The implication is that 80% of names are not a material driver of brand impact or business success, so sometimes it's just best to get on with it.

For proof of this, there's a great story George Lois once told me, about the first time he heard about a client called "Xerox," in the 60's.

"It sounds like a Chinese laxative," he said. I bet it did to most people, and they did OK.

The point is you can make just about any name mean something to people with great product execution over time. Spend some time getting the tactical fundamentals right - url-friendly, sticky, distinctive, that kind of thing then pick something 3 of your cooler friends think is decent, and move on.

4. What about logos? Can I just hack something together? Use a crowdsourcing service like 99Designs? Or is that a waste of time?

I think logos and the graphical identities of which they are a part matter a lot. They're something the West coast and NY-based guys seem to care about and do way better than Boston-based startups, and that's always bugged me.

Look... in the early going perception is reality for a startup. So is it worth investing a little dough to encourage the perception that you're professionals; that this is a serious and professional undertaking; that you care about design and brand response? I guess there are a few businesses where it isn't. But for the vast majority I'd say it absolutely is, that it's worth investing in a professional identity.

If you're among this vast majority, you want to work toward something smart, not just something pretty. What I mean by that is you want to start by being thoughtful about your brand meaning the emotional response you want your product to elicit as well as any practical ideas or metaphors that will help people understand what you do. Armed with that you should sit down with a reasonably-priced freelance designer to brainstorm some treatments, and keep at it until you hit on something you and others seem to like.

In my experience great design comes from the collaboration between someone with a clear vision for a problem (a thoughtful entrepreneur,) and a professional with the talent and craft to create something great (a real designer.) You just don't get that interaction using the crowdsourcing guys, which is why I think you get what you pay for there.

5. Any tips on where to find a great freelance designer for a startup logo? And, what would you consider reasonably priced?

Try checking the portfolio sites, like Carbonmade. Find someone whose work you admire, then call them to talk about your project. Look for someone with whom you have chemistry, who can bring ideas to the table and not just pictures. And take theiry're advice when they offer it they do this for a living.

Expect to pay $50-75/hour, and to be glad you did.

6. How do I decide what category my startup falls into? Is it better to find an existing category, or blaze the trail of a new one?

The short answer is, it depends, but on balance it's better to pick a category that already exists.

From a marketing communications standpoint, a category is a frame of reference for the buyer. If you think of it that way the value of one becomes clear, as does the time, hassle, and expense of creating your own.

That's not to say that sometimes it doesn't make sense to create a new category, and I've used HubSpot as an example of a company for which it was necessary. For entrepreneurs enamored of that idea, I often follow my HubSpot observation with the question, "So how's your book coming?" That question is usually met by a blank stare, but the truth is that level of commitment to IP is what it's going to take to create a category.

If the opportunity cost of doing that is too much for you, just hold your nose, pick a category, and focus on communicating your distinction within that category in a way that resonates with your target.

7. How much does good branding matter when trying to raise capital? Is smart money really fooled by that kind of this? Will I look foolish for having invested in brandinged in one?

I'll say it again: Perception is reality for an early-stage startup. One can argue that the world would be a better place if this were not so, if Excel drove more decisions than PowerPoint. But that argument is a waste of time, my friends.

VCs invest in the companies that win over their hearts and their minds, usually in that order. If you're trying to raise money it's important to remember this, and to invest the time and energy you need to court a little loving, and not just a good first look scorecard.

And the same is certainly true for customers, so sooner or later you're going to need to spruce up a bit and look like a brand they want to be a part of. Why not start now?

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

7 Lessons On Startup Funding From a Research Scientist

Dharmesh Shah — Mon, 16 Jan 2012 17:43:00 GMT

The following is a guest post by Ty Danco. Ty is an angel investor and startup mentor. Read more of his thoughts at tydanco.com.

My wife isn't in business, but she is wise in the way of funding. Just as I have experience on both sides of the funding table (as an entrepreneur and as an angel), so does she. As a research scientist, she gets her own grants and also reviews grants from others. While she doesn't talk in startup lingo (pivots, minimum viable product, etc.), she has taught me that many of the issues we face as entrepreneurs have a corollary in science. Here's what I've learned from her.

1. Always seek funding from the best people, even when you have easier alternatives.

Before the bootstrappers hang me, I didn't say that you have to raise a lot of money or that you should be working fat. But consider this story: my wife was slaving away writing one particular National Institutes of Health (NIH) grant knowing that the funding rate was ~5%. Why not look for a less competitive foundation to underwrite it instead, I asked. I figured that this could save her time and trouble, and that she could proceed with her experiments that much faster.

That's not how it works, she replied. That's like self-publishing a paper instead of getting it peer-reviewed. If she couldn't convince sophisticated research centers to part with their dwindling cash, she continued, obviously the project wasn't good enough. If it's not good enough to get other people to write a check, it's not good enough to be spending time on. Startup corollaryjust as a paper published in an inferior journal has less impact than the same paper in a good one, when you go for funding, get it from great people. If you have to take dumb money, you're doing it wrong.

Personal application: I'm temporarily self-funding my new startup, FX Aligned, but I'm pitching it to the best East Coast VCs who understand the space. The same logic appliesif I can't convince people who see 1,000 deals that my idea is worth funding, it isn't worth doing.

2. Proposals are always stronger once edited.

Nothing beats peer review, especially from people with deep expertise.

My chat with one VC surprised me. He thought our initial target market was too small. And upon reflection, he was right. At the same time, I was talking to another VC, and I explained to him that we intended to go after that smaller market first, get established, and then work closely with our alpha clients to find solutions to their real pain points. He quoted his senior partner, whose rule was if a new startup is counting on a two-part process to make money, don't fund it. This is exactly the tough love I needed to hear, and it saved me months to time I would have lost if I had self-funded and drunk my own Kool-Aid. We didn't need to do a two-step dance to discover the real market opportunity.

3. If the specific aims of your experiment (company) undergo too many major changes, that's a sign that you haven't thought through the issues yet, and it's too early.

No scientific grant ever makes it from start to finish without changes. Similarly, no VC or angel should be so nave to think that business models turn out perfectly on the first try. However, when a fundamental concept keeps shifting as the idea evolves, there is a problem.

My new company has gone through one major change as we search for product-market fit. However, our edit did not change the core concepts. Our pivot came as we realized that our solution for our original market would, with some minor systems tweaks, serve not only our target market of public pension funds, but now solve an industry-wide problem faced by all institutional managers buying and selling foreign securities. The aim — giving our clients a means to quickly, cheaply, and more efficiently transact foreign exchange without getting ripped-off remains the same, but now the same basic company has a far bigger potential market.

If your concept is not robust at its core, no iteration will help. Before you pivot, ask if the underlying ideas are still valid. If they are, take your time and get the change right.

4. Don't keep it secret.

Scientific grants and paper submissions are kept confidential during the review process to allow for brutally honest feedback, but generally that's the only time of secrecy. The point of science is to advance knowledge, which is done through sharing. Even before a paper is published, preliminary results typically are presented publicly at conferences and ideas are exchanged before the lengthy process of publication. These public discussions can bring in new collaborators, just as startup events can introduce co-founders to each other. Don't hide, network!

Initially I was reticent to talk to angels too much. While my angel friends were good at giving me feedback on presentation matters, none I knew had expertise in fintech, which is where my new company fits in. So I initially wasn't getting a lot of strong commentary. Thanks goes out to James Geshwiler of CommonAngels, however. While he didn't have expertise in my field, he sent me to two angels who did. One of those two angels is now on my Advisory Board, and the other is giving me solid advice on a technical matter that is critical to the company, but outside of my own expertise. What's the result? A lot less risk in our prospects. And besides, as Dharmesh says, stealth mode is for fighter jets — not startups. Read “The Real Reasons Startups Don't Talk”

The more you discuss your idea, the luckier you'll get. Never miss a chance to pitch your idea, but then keep your ears open, especially for the chance contacts that can turn out to be key.

5. It's easy to get funding in trendy areas, but focus more on impact.

I've tagged along to dinners with my wife's scientific colleagues, and once heard a story about zebras grazing. Those zebras that want to play it safe in the middle of the pack can get by, but the juiciest grass — and the greatest danger of being eaten is out on the edges. While it's tempting to go where the funding is, science is about more than just getting another grant.

Find a problem worth solving, not just something convenient for funding. And hopefully, that will be something different. The world doesn't need yet another daily deals aggregator.

By the way, no one should go through the rollercoaster that is startup life unless they are a) certifiably crazy, or b) intending to go big. (See Don Dodge on Google Dreaming BIG.) If you're pitching something, make sure it has potential to change the world.

6. Don't even think about pitching a project without preliminary data.

Scientific grants rarely get funded without substantial preliminary data. It's not just about feasibility, i.e., showing that the method can work; in addition, enough data needs to be submitted to statistically demonstrate the likelihood of the project's success.

This one is a little harder in my case, because it will take a few months to crank out a minimum viable product. However, that doesn't mean we can't test out the markets. We're talking with as many institutional investor customers as we can to get their input on what they need.

This is just customer development 101, a la Steve Blank. For startups, customer data is the best data.

7. The first funding is the hardest.

In science, like in startups, the experienced team always has it much easier rounding up backers. That's just the way it is.

That's one reason why I suggest that people who want to start their own companies begin by working for some rocketship company first. Your own startup becomes more bankable because you'll slowly be absorbing experience that will stand you in good stead in your own future startup. Whoever writes a check wants to see a return on that money, be it in science or in startups. You increase your chances of funding success when you de-risk your venture, especially when a team (or lab) has had time to gel previously.

Thankfully, the team at our new company has had success together before. And that, probably more than anything else, makes it easier this time around. Not that this stuff is ever easy

And a bonus, once you have that funding:

Always be running little experiments on the side. Especially those that can surprise you. For more on this, read Eric Ries' book, The Lean Startup. And while you're doing those experiments, make sure that they are sufficiently well-designed to give you answers.

Any other funding lessons from the lab I missed? Please leave a comment.

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Oh, and by the way, you should follow me on twitter: @dharmesh.

The Big List: The Best and Worst Startup Stuff In 2011

Dharmesh Shah — Mon, 02 Jan 2012 16:17:00 GMT

The following is a guest post by Ty Danco. Ty is an angel investor and startup mentor. Read more of his thoughts at tydanco.com. Or, check out his recent article "What To Do If You Don't Have An Idea"

It's time to review the past year, so without apology for personal taste, here's my list of the best (and a few of the worst) of 2011.

Best Startup Book of 2011: Mastering the VC Game by Jeff Bussgang of Flybridge Capital

I keep a loaded Kindle copy of this book on my iPad, and I'm constantly showing it to startups raising money. The money chapter: When the Dog Catches the Bus: Making the Pick and Doing the Deal tells you what YOU should be checking out about VCs.

Runners-Up:

The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses, by Eric Ries. Had to rethink my whole approach to my startup after reading this. And I'm going to re-read it again soon.

Venture Deals: Be Smarter than Your Lawyer and Your Venture Capitalist, by Brad Feld and Jason Mendelson. A little dry, but will save you a ton of headaches.

Running Lean, by Ash Maurya. Pragmatic and quick.

Honorary Runners-Up (read by me this year, but written pre-2011):

Inbound Marketing, by Brian Halligan and OnStartups.com's own Dharmesh Shah. Simply put, a seminal book that gets you traffic.

Do More Faster, by David Cohen and Brad Feld. Really fun.

Pitching Hacks from Naval and Nivi of AngelList.

Best Interview Podcast/Webcast Series with Entrepreneurs: Andrew Warner's Mixergy

If James Brown was the hardest working man in music, Andrew Warner must be the same in startup journalism. He cranks several hundred of interviews a year, so you can't expect every show to be pure gold, but he's produced more good ones than any three other people combined in 2011. A big differentiator: he spends a lot of time looking at failures as well as the easy success stories. You can search through transcripts quickly to see if you want to download the interview, either in audio or video modes. A few favorite interviews from the last half 2011: Joel Spolsky of Trello and Stack Exchange; Sarah Prevette of Sprouter talking about rising from the dead; Eric Ries on Lean Startups; Naval Ravikant on AngelList; David Friend of Carbonite; and for me, the one that hit closest to home, Harley Finkelstein of Shopify talking about biz dev.

Runners-Up:

This Week in Startups, with Jason Calacanis. Jason remains the master entertainer, and he invented the startup webcast genre. You either love him or hate him, but believe me, you'll have an opinion. Cranking out 2 shows a week.

Founder Dialogues, with Eric Paley of Founder Collective

Founder Stories, TechCrunchTV with Chris Dixon of Founder Collective

While Founder Dialogues features lengthy, in-depth interviews, and Founder Stories is cut into smaller segments, the shows are similar: Eric Paley and Chris Dixon are both VC partners at Founder Collective, both have started and sold multiple companies, and both host shows featuring great guests.

Best Intervew Podcast/Webcast Series with Investors: Mark Suster's This Week in Venture Capital. It's hard to pigeonhole this showMark's guests include both entrepreneurs and investors, but, like the sister show This Week in Startups, he gives a lot of advice on how to work with VCs. I tend to prefer his earliest shows, which featured more VCs and less entrepreneurs, but regardless there's something to be learned every time.

Upset pick for Runner-Up: The Frank Peters Show Frank's audiocast is not aimed at entrepreneurs, but rather to his fellow angel investors. He covers the nuts and bolts topics that no one else does, such as best practices for angel due diligence, and different techniques to value companies. (Disclaimer: I've been on his show twice, including this time in 2011.) A good example of Frank's work: his 4 part series All About Angel Investing. If you're looking to hunt down angel money, you should understand your prey. The best way to understand angels other than sitting in on an angel group is listening to a few of his shows, although entrepreneurs can skip the international shows or the stray episodes devoted to cycling.

Best Startup Blog: This, the most hotly contested award goes to Both Sides of the Table by Mark Suster. OnStartups already tracks the most-read startup blogs, and you should check them out. Many are great. So why did BothSides get the nod? Well, in sports, not only do you have to perform day-in, day-out during the regular season, but you need to raise your game in the playoff. And my favorite blogpost in the last week of December is this one on profitability, so Suster takes the prize--but he cranked out many equally good in the regular season throughout 2011.

Runner-Up:

David Skok of Matrix Partners' For Entrepreneurs. Every piece is gospel.

Ben Horowitz of Andreessen Horowitz's Ben'sBlog.

I go for quality, not quantity. All three write fewer, but deeper, articles. Funny how almost all of the best VCs started out as entrepreneurs, by the way.

Best Startup Answer Sites Other than OnStartups

Three-way tie between Venture Hacks, Quora, and AsktheVC.

Favorite Blog posts of 2011:

For sheer density of learning, the verdict was already delivered by early January: Tom Eisenmann of HBS posting his startup curriculum for his coming class.

Best blog post by an entrepreneur:

A tie between this postmortem by Justin Hall about Gamelayers, and

Rand Fishkin on how a funding round got screwed up.

Runners-up: Jason Baptiste talking about how to kill it on DemoDay (which he did.)

Best blog post on an unknown backstory goes to Lee Hower's post on raising Series A for LinkedIn in 2003.

And from the personal side, my favorite blogpost I co-wrote was:

Raising Money On AngelList: 21 Tips From Two Active Angels which was co-written with Dharmesh. That post received more views in 3 days than the other 49 posts (including the companion piece on AngelList hacks for angel investors) I wrote on my own blog for the whole year. You gotta hand it to him, Dharmesh knows how to get those inbound eyeballs.

Best Communication from a Startup to its Investors: From Objective Logistics as described in this blog post. I kick myself for not investing in these guys. Talk about the right attitude.

Best Accelerator Structural Innovation:

, for coming up with the HackStars program. It sticks together massively talented hackers who want into a great startup with the killer companies that make it into TechStars. The result: a serious increase in global startup mojo.

Runner-Up:

500 Startups, for providing Designer in Residence help. Almost all of the companies accepted already have a hacker and a hustler onboard, but not all of them have (although everyone needs) some serious design. Dave McClure gives UI, UX, and beautiful design its proper due, but having not just great mentors, but trained staff in design gives a big boost to his companies.

Best Accelerator Financial Innovation:

This feels like ancient history now (it happened in January 2011), but Y-Combinator, the big Daddy of them all, wasn't resting on its laurels when it announced that Yuri Milner and SV Angel were combining to offer every YC company a $150k uncapped, no-discount convertible note. Angels and VCs gasped, but it was great for the startups on the receiving end.

Runners-up: Thomas Korte's AngelPad, TechStars and 500 Startups for following up with similar deals. Like Y-Combinator, the original AngelPad funding came from 2 entities. TechStars spread it out wider amongst its network of VCs. Both firms were reacting to Y-Combinator, (hell, every accelerator is a reaction to Y-Combinator), but both quickly reacted and recognized the merits of the program. Lessons to startups: never be afraid to copy a good idea.

Funniest Twitter Feed in 2001: @fakedavetisch. He was only active for two days, but what a great two days!

Best business card execution: Any business card from moo.com that has a face with it. If you want to make a solid impression, you should consider these heavy, slightly different-sized, super high quality cards.

Runner-Up: Jeff Clavier's business card has a wordcloud that totally describes the types of companies he's looking for. It's a perfect summary of his investment interests on a tiny card.

Best business card app: CardMunch. With one iPhone snapshot, get all data entered into your phone and get connected via LinkedIn. (Also, my favorite angel investment of 2010 and the fastest exit I'll ever have.) Thank you Manu, Bowei, and team.

Best present for an Entrepreneur:

A T-Shirt or Poster from Fake Grimlock.

Best Bank for Working with Startups:

Silicon Valley Bank

Runnerup: Nobody. Almost every startup I've invested in (plus the one I'm in now) use SVB.

Best app I can't live without: Video Skype

I pitch my company with it, entrepreneurs pitch me on it, I talk business on it nearly every day. It saves time, money, everything. And you can archive and edit it. Runnerup for telemeetings: GoToMeeting. Never fails.

Best big push by a city to build a startup ecosystem: Montreal.

From very little in 2009, the startup tribe there has launched a new incubator last year(FounderFuel), gotten big institutional and government support from the province to create funds to match angel investments and subsidize programmers, built the largest angel group in Canada soon to be one of the largest in North America (AngesQuebec), hosted a successful first international startup festival, pulled off a successful startup competition, and created a vibrant co-working space (Notman House). And it keeps on going.

And now for the flipside:

Worst Spat of Two Co-Dependents:

Arrington and Calacanis. You're both rich, you're both successes, you don't need to piss all over each other. Guys, work it out and play nice, or even ignore each other. Just leave us out of it.

Worst Meme:

Comparing Silicon Valley to anywhere else. OK, we know it's great there. Yes, it is still on top. Yes, you can build a great business anywhere. Next.

Runners-Up: We are in a tech bubble.

VCs Suck.

Worst Upgrade since Windows Vista: iOS 5 on my formerly trusty iPhone 3GS. Buggy, crashes, mysterious data losses, I could go on. I promise from now on to wait to hear others' stories before installing updates.

Worst startup launch viewed from afar: Color.com. But don't ask me about it, ask the Scobleizer, who also wins a related Best Rant for his review of their launch.

Worst startup mistake: Having a big burn rate.

Runner-up: Procrastinating by reading (or writing) blogs. Excuse me, I gotta get back to work.

Who did I miss? Anyone you think deserves a shout-out (or a call-out) for being the best or worst in 2011? Please leave a comment.

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

13 Ways To Think About And Crush Your Competition

Jason L. Baptiste — Tue, 27 Dec 2011 16:55:00 GMT

A few weeks ago, there was an article that came out called "Google Currents, Onswipe's Nightmare?". I'm also preparing for our first board meeting with newly elected independents and one of the points we are talking about happens to be competition. As you start to grow competition becomes a healthy thing to think about. Here's how I think about competition as a cofounder and CEO of a growing venture backed startup:

Don't Worry About Google

Almost every growing startup comes to a point where they have to worry about "what if Google does it." If it is a market worth getting into, then Google or someone else as large as them will almost certainly get into the market. What you aren't remembering is the fact that it is probably going to be a smaller effort with little or no budget inside of the larger company. The main focus of any large company is their main profit driver, which is almost certainly not your startup's experimental business model. Microsoft, Google, and every other large company lacks the main asset of a startup: speed. By the time that a larger company really puts momentum and force behind competing against you, then the game is most likely over for them. Google took over seven years to truly compete against Facebook, which had 800 million users at that point. Everyone heralded Facebook Places as the end of Foursquare forever and that they should pack up shop. A year later, Facebook Places has faded into obscurity while Foursquare's traffic has soared. When a large incumbent comes into your space, largely ignore them and use the press for validation.

Find A Giant As An Ally

The enemy of my enemy is thy friend. If a giant such as Google comes into your market to compete against you, odds are one of the other giants are taking notice as well such as Amazon, Yahoo, Microsoft, Facebook, etc. . They might be planning to come into the market as well or already exist in the market with a flawed product. You should see this as the opportunity to partner with one of the other larger companies out there. You get massive distribution and they get the benefits of being in the space without a loss of speed or manpower. This route can also be one that leads to an acquisition at the end of the road.

Copycats don't have the roadmap

Before someone like Google comes along to compete with you, a slew of copycats will spring up. We recently had this happen with Onswipe as an unoriginal 100% ripoff popped up using our name to gain press with a shoddy product. Along the way, a copycat will constantly try to play fast follower by copying your latest and greatest feature. The problem is the fact that, copycats are always one step behind and often stay that way. They never started out creating the company as a problem they wanted to solve, but as a way to capitalize on the great opportunity that you shed light upon. The copycats will create confusion in the marketplace, which should be your greatest worry. Potential customers may ask how you are different than them. The way to combat this is to sell more than just the current snapshot in time, but the longer term vision. Since the copycat does not have your startup's longer term vision, you can out sell them.

Mis-education creates false competitors

If you are similar on the surface to another company, the press and potential partners may be fast to label you competitors. Many people think of Flipboard as a direct competitor to Onswipe. This happens because we both provide beautiful interface on the iPad, but our businesses are entirely different. The same false competition between Facebook and Twitter happened many years ago as both were thought of as Social Networks. Over time it has become very clear that Facebook and Twitter are two very different companies. To combat mis-education in the market, you should have a simple and clear 2-3 sentence reasoning of why you are different. Over time as both companies in a space mature towards their individual visions, it will become apparent to anyone the difference between the two companies. Up until that point, it will likely take a mix of explaining the difference to the market while having many one on one conversations.

Don't try to win on features

Competitors will try to constantly battle you by adding an incremental amount of features. It's tempting to want to constantly play a game of one-upping a competitor with features, but that usually results in a product that no one wants. It's the path that many tablet makers have taken when competing against the iPad. There is a constant game of one-upping on features like processor speed or 3D screens, yet nobody has even come close to overtaking the iPad in the tablet market. Why is this? Everyone is trying to BE Apple, not BEAT Apple. When it comes to features, march to the drum of your own roadmap and vision.

Price wars are a race to the bottom

Many entrepreneurs think that a competitor will come in and beat them on price. You may lose some customers, but in the long haul, a competitor can't be you by just being cheaper. If a competitor does come into your market and competes solely on price, do not be tempted to constantly lower your price to beat them. Instead you should fight on product quality and the true return on investment for the user. When it comes to a competitor that comes into your market and offers a product for free that you have charged for, then you may have a problem depending on what type of business you are building. If you are building a company built upon fast growth, then your business model may be flawed in the first place. If it's not, then you should dig in deeper as to why the competitor is offering the product for free. They will eventually have to turn a profit, whether it is by charging YOU or someone ELSE.

Speed wins

Larger companies are often slow, though large in size. They may ENTER your market, but they will often not have the speed to STAY in the market. Speed comes in a few different varieties when competing against a large company like Google or Microsoft. The first variety of speed is iteration. How fast can you iterate on a product after market feedback? A large company is going to have to stick to a much larger roadmap and won't be able to turn a ship on a dime. The second variety of speed is feature addition. Large competitors won't be able to add features as fast as you and will most likely be trying to play catch up to what you already have.

Focus on the normals

Pinterest has become a huge success and has < a href="http://allthingsd.com/20111222/pinterests-growth-hockey-stick-would-make-a-great-craft-project/">grown tremendously over the past year. The largest part of Pinterest's success story has not been its adoption by the inner circle of Silicon Valley or sex crazed college students, but those of women from Middle America. Most competitors will come into the market and try to create buzz amongst the early adopters of the tech community. Instead of falling into this trap, try to attract the normal users of the world ie- women in the midwest or a teenager that wants to find new music. It's hard to reach this audience and once you have a grasp on it, it will be hard for a competitor to come in and compete against you.

Cash matters when scaling

If you have started to grow and a new competitor comes into the market, it's wise to have enough cash on hand to really ignite your growth. Everyone thinks that products take off and that it's all taken care of. There are always financial barriers in place when rocket fueled growth kicks in. If you are lucky enough to hit that point, you want to make sure that you have the cash to leave your competitors in the dust.

You are your biggest competitor

You are often your biggest competitor. You should not completely ignore your competition, but the biggest battle happens inside of the four walls of your startup's office. Startups come down to pure execution of a strategy on a daily basis and maintaining the faith for the long haul. Most startups don't lose to competition, but because they lose the will to fight.

Avoiding the build versus buy problem

Many startups will not be competing with other startups, but with the internal development teams of their larger customers. Moveable Type lost the blogging wars to Wordpress by not moving themselves towards being a fully flexible platform. Instead of having conversations that are a build versus buy scenario where it's either your startup or your customer's internal development team, you should be positioning yourself into a build OR buy scenario. In order to do this, your product needs to become a platform that others can build upon to meet their needs. This will let you grow overtime to meet the needs of any customer without sacrificing your own roadmap. This will often require you to sacrifice some short term gains for long term sustainability. Any and all changes you make to your software have to be applicable to the greater good of the platform. That means no custom development and no bending to the wills of customers crazy demands.

Bring traffic to the table

The largest successes of the past few years have been audience driver. Twitter and Facebook have been killing search as a referral source, while YouTube has opened brought forth a new audience for professional and amateur creators alike. Tumblr has seen widespread adoption by major publishers due to the viral nature of the platform. Pinterest is getting adoption by mainstream fashion brands due to its ability to drive more traffic than Facebook. If you can bring traffic to your users, then they are going to be addicted to your service like crack cocaine. Once network effects kick in, a publisher is very unlikely to leave your service.

Bring money to the table

Most partners want two things. The first thing I touched on before, which is traffic. The second and most important is M O N E Y. If you can make partners money, then they are likely to side with you and stay when a competitor comes along. Cash is a powerful force and if your company can be a direct or indirect way for people to make money, then you are going to be hard to unseat. Everyone thinks that Google won the search wars by having JUST the world's best algorithm. They had a great product, but they gained distribution by powering search for publishers. With this, they were smart enough to make money for publishers and win the search wars. How have you dealt with competition in your space? Another interesting angle that I wish I could analyze is, what it is like to enter the market as a competitor to an existing incumbent. Whatever the scenario may be, the most important of the 13 lessons above is to remember that you are your own competitor. Keep fighting the fight and be prepared for the war, not just the battle.

You Should Follow me on Twitter: http://www.twitter.com/jasonlbaptiste, Friend me on Facebook: http://www.facebook.com/jasonlbaptiste, Email Me: jbaptiste@onstartups.com

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Visiting The Valley: Why It's A Special Place For Startups

Dharmesh Shah — Mon, 12 Dec 2011 17:01:00 GMT

The following is a guest post by Jason Evanish. Jason is the founder of GreenhornConnect.com, a hub for resources, events and jobs for Boston entrepreneurs and is presently working on a new startup. You can follow him on Twitter at @Evanish and connect with him elsewhere through About.me.

Visiting The Valley: Why It's A Special Place For Startups

I've spent the past two and a half years in the great startup community of Boston, where the ecosystem has been quietly growing stronger every day. During that time I've had the opportunity to visit a number of other startup ecosystems as well as interact with leaders of other cities. Despite this, I'd never really visited the Valley. With airline tickets cheap between Thanksgiving and Christmas, I decided it was time to finally make a pilgrimage to the center of the startup universe: Silicon Valley.

When I set out to visit Silicon Valley, I hoped to get a taste of all the Valley has to offer. I heard that San Francisco, Palo Alto and Mountain View were the key hubs, so I spent a couple days in each area. By doing so, I maximized the breadth of my experience as well as who I could actually meet and what I could see.

The Valley truly is a unique place unlike any other ecosystem I've been to (including the runner-ups, Boston and New York). I wrote elsewhere about some of the myths and facts of Silicon Valley, and there I mentioned I'd love to be able to bottle up the Valley’s special elements. Below is my attempt at capturing what these elements are based on both my experiences and discussions with native entrepreneurs and investors I met on my trip.

#PayItForward

If there's a single thing that stands out about the Valley, it's the openness of everyone there. Every person I met was excited to meet with me even with the coldest of intros I received. More importantly though, at the end of every meeting *everyone* asked me "How can I help?" and insisted on working with me until we could come up with a way they could help.

Dial O for Optimism

It's easy to dismiss wild, big vision ideas that just don't make sense to you. However, in the Valley, that's not an obstacle. Everyone is encouraged to start a company and no one is doubted because they lack a clear revenue model or doesn't pass someone's analytical test. As one Boston transplant put it, "the Boston brain in me thought the idea of 'Pandora for Shoes' was dumb, but the more I thought about it, I realized it just might work."

Beyond how people view others' ideas, there's an overwhelming sense of hope there; it's difficult to explain, but you get hit by a wave of it when you're there that makes you think anything is possible and that you’re surrounded by greatness.

Culture Counts

Yes, there's a talent war in the Valley, but there's a talent war in every tech hub. As one person I met put it, “the Valley is the Major Leagues”; there's more of everything: more founders, more capital, more startup employees, more competition. When that's the case, the only way to recruit and retain talent is with a great work culture and a fun environment.

I visited the Twilio office while in San Francisco and was floored. They have nailed culture in so many ways it can be its own post, but the key is that I heard that HR gets over *250* applicants for every job. The talent war is won and lost inside your office.

Everyone’s an Evangelist

Every person I met was telling me I have to move here. Every. Single. One. There's a "join a winning tradition" kind of attitude that I think is the same thing the Yankees do to recruit free agent baseball players. This attitude comes from a confidence in good things happening here (see ‘Optimism’, above) and also the welcoming environment; San Francisco was described to me as an incredibly transient population, so everyone is looking to make new friends.

These beliefs feel like a self-fulfilling prophecy; if you think you can, you will, if you think you can't, you won't. Believing you can succeed and so can others breeds optimism and a risk-taking attitude.

Winning with Weather

You can't change the weather of your ecosystem, but it is an advantage of the Valley. On a warm sunny day, you're more likely to go outside and not work from home. You're also able to move around before and after events more freely. Both of these cases leads to more serendipity and may contribute to the optimism (as a counter, see Seasonal Affectiveness Disorder).

Signs, Signs, Everywhere a Sign

Startup signage is simple, but actually a big deal. There's a serious cool factor to walking or driving by a building and seeing the logo of a company you recognize. It's also fun seeing startups on billboards. While on the 101 (the main highway running through the Valley) I saw signs for Box.net, Salesforce, Huddle, and Zynga. As a startup geek, I find this as cool as others do when they see a celebrity on the street. This omnipresence of startups goes a long way to thinking about a place being the home of great startups and is a hot topic in other ecosystems like Boston.

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Much of what makes the Valley special is hard to describe; you really need to see it for yourself to truly understand. If you’re starting a company, already running a company or just interested in startups, I highly encourage you to check it out. Many great entrepreneurs in other ecosystems visit quarterly to take advantage of what the Valley has to offer and after visiting, I understand why.

Have you visited the Valley? What do you think makes it such a unique place?

Special thanks to @Wayne of Crashlytics for help in refining this post

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

Insider Tips From HubSpot's Launch of Marketing Grader

Karen Rubin — Tue, 06 Dec 2011 16:28:00 GMT

The following is a guest post from Karen Rubin. Karen is a product manager at my company, HubSpot. I asked her to write this article sharing some of our "playbook" around launching new applications. She loves getting new twitter followers: @karenrubin

Today, HubSpot announced the launch of a new tool called Marketing Grader. Like our other Graders, Marketing Grader is a free application. It asks you to enter a website URL and returns a comprehensive report on your marketing efforts.

The team has been building Marketing Grader for a number of months, and it is our most ambitious free tool since Website Grader debuted in 2006. The team knew it was important not just to build an awesome product, but to get the message out there, and to do it right. These are the tips and guidelines we followed to keep the launch on track.

Stay Focused & Simplify

Like many startups, one thing we never lack at HubSpot is ideas. As the team started brainstorming the launch campaign, there was talk of many different approaches we could take to announce the new tool. We could write a series of Top 10 lists or reveal the Top 100 Marketers. We could create personalized videos á la the Old Spice Man. We could somehow involve the HubSpot unicorn. The list of possibilities was endless (as it often is in a good brainstorming session.) We spent a couple of weeks tossing ideas around and trying to figure out which would make the biggest splash and launch the tool to the most fan fare.

But a couple of weeks into the planning, we realized that the main message we wanted to get out, namely, that HubSpot was launching an AWESOME new tool to grade your entire marketing funnel, was getting lost in all the other cool things. Top 10 lists go really well with Marketing Grader (since the tool can be used to build and analyze such lists). But were people just going to remember that we were doing new lists? Or that those lists were backed by a super cool new tool called Marketing Grader?

We decided to take a step back and regrouped around the idea that the launch of Marketing Grader was the real message, and that we needed to simplify in order to effectively communicate that message -- especially in the first month. It doesn’t mean we won’t try our other ideas (some of which are a bit crazy) in the future, it just means this month everything we do is laser focused on our top message.

Making Our List, Checking It Twice

Once we focused on our message, we had to think about what tools we were going to use to get the message out there. Some were easy; we’d use the blog, our email list and the other Graders to drive people to Marketing Grader. Others needed some more thought.

For social media, we could tweet about the new tool and post its launch to Facebook, but we thought that this wasn’t enough to get the message out there. So we put a plan in place that included personalized tweets to influencers as well as previous users of the Grader tools. We are also planning to participate in multiple Twitter chats, a new mechanism we have recently started experimenting with.

When planning a campaign, it also helps to think of people as tools (we mean that in the nicest way possible.) We came up with a list of bloggers and journalists with whom members of our team have relationships. We then identified the best people to reach out to them personally, introduce them to the new tool, and answer any of their questions. We also planned ways to get our customers and partners involved with using and sharing the tool.

It Takes An Entire Company To Um, Raise Launch A Product

Lastly, we realized it wasn’t enough for just the few of us working on the tool to promote it during its launch; we needed to get the entire company on board. We sat down with the marketing team and brainstormed ways to get everyone involved. This includes writing special blogs posts (like this one), creating infographics, running competitions for our partners, integrating the message with other campaigns and making related videos to promote the tool. By including the company in the campaign, people thought of new and innovative ways to get the message out and implemented these ideas on their own.

We trained our consulting, support, and sales teams on the tool so they can start using it with customers and prospects. We also came up with a sales contest to encourage the sales team to share the tool with as many of their leads in their funnel as possible. The day of the launch, we sent an email to the entire company reminding them of the launch and giving them some lazy tweets to share with their networks. For the twitter rookies out there, a "lazy tweet" is when you provide a sample tweet, fully written, so that someone who is inclined to help you, but a tad lazy/busy, doesn't have to think. They can just copy/paste the tweet or retweet an existing tweet. The easier you make it to help you, the more people do.

Launching a new tool like Marketing Grader takes blood, sweat, and tears, but the result is a tool that you’re so proud of, you want the whole world to see. That result makes the process of properly launching your new tool all the more important. we wanted to give Marketing Grader every opportunity to get out there to the public and be a rocking success. Staying focused, using all your tools and resources, and leveraging the skills of everyone in your company are great ways to get your new tool the publicity it deserves.

Here are answers to some questions we think you might have.

Why the big hoopla over the launch this time? Usually, HubSpot trickles out grader tools with an inocculous tweet from Dharmesh.

You're right. In the past, we've been much more subtle and measured when we launch a new grader product. This is largely because our new grader tools are often a crazy experiment -- we're not sure whether the market actually wants it or not. By avoiding a big launch, we avoid a big "unlaunch". In the case of Marketing Grader, we've had lots of evidence from our customers and friends (who have tried the tool) that it is super useful. We've made a big investment in this app, and we wanted to match it with some marketing. And, like all things at HubSpot, this is an experiment too. We wanted to see if we could reach people beyond our co-founder Dharmesh's twitter followers (which admittedly, is over 100,000 now).

How did you build your media contact list? What tool did you use to manage it? We try to keep things simple at HubSpot. Our media contact list is a simple Google Spreadsheet. The people on the list are a combination of folks that we know individually and someone on the team has some relationship with. Now that we've got another twitter celebrity (Laura Fitton, aka @pistachio) who happens to know just about everyone, our VIP list was bigger and better than ever.

Why use Marketing.Grader.com on its own domain? Wouldn't the SEO have been better to put it on HubSpot.com? We basically had three choices when picking domain names for our free tools. We could use HubSpot.com -- which has advantages, including brand-building and SEO. By launching on HubSpot.com, the Marketing Grader page would get some SEO authority relatively quickly because of the power of the main domain. Another option would be to put it on a completely separate domain, like MarketingGrader.com. But the option we picked is to use Marketing.Grader.com (so, make it a subdomain of grader.com). This approach has a couple of advantages. Getting a sub-domain of an established main domain to start ranking is much, much easier than a completely new domain. And, since we use this model for our other free tools, our users are already used to it. (But, of course, either domain will work -- one simply redirects to the other).

What's the difference between getting all of these efforts to happen on the same day? Couldn't you have easily just "spread them out" over time and gotten he same level of overall usage? This is a tricky one. For the most part, you are right. Rather than have 20 things happen all on the same day (which is a challenge to orchestrate) we could have spread the news out over days and weeks. The advantage to trying to "compress" some of the news into a smaller window is that there's the potential for the news to hit a "tipping point". If news of the launch hits several different channels, all around the same time, it gets "noticed" by other channels that we didn't have direct access to. Those people then might write about it, causing more people to see it. We get a snowball effect. Doesn't always happen, but it's much more likely that it will happen if we can get some strong media pickup all on the same day.

It's not fair! You folks have a reach of millions. How can my tiny little startup match that? It's a good point. We do have exceptional reach, across many different channels. That makes our jobs much, much easier. It's fun to be able to put something new out there and know that it's going to get some attention. Our advice to you would be two-fold: You don't have to have a massive reach to get attention. (We had some great successes even when we were a struggling young startup). The key is to be remarkable and even more importantly, create useful content. For example, if this article were written like a standard marketing schpiel, it would never have gotten posted to OnStartups (despite the fact that Dharmesh is one of our founders). By wrapping the "nugget of news" in a nice, useful layer of tips, tricks and lessons learned, the article becomes something people (hopefully) want to read. Maybe even share.

Does Karen Rubin actually exist or did Dharmesh just conjure up an attractive, charismatic persona as part of some weird A/B test he's running? Attractive and charming? Oh, Internet reader, you flatter me so (batting eyes in best impersonation of Scarlett O'Hara). But rest-assured, I do actually exist. What you don't know for sure is what parts of this article were part of my original submission, and what parts are late-night edits from our crazy co-founder. I'll leave that as an exercise for the reader.

So, what questions do you have? What can we tell you about the HubSpot marketing machine and how we do things? What lessons have you learned launching your own apps?

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

Cult of Product: Marketing Isn't Just For Losers Who Pay For Sex

Dharmesh Shah — Wed, 30 Nov 2011 15:18:00 GMT

The following is a guest post by Mike Troiano. Mike is a former New York ad man turned venture-funded entrepreneur, now a Principal at Boston-based Holland-Mark. You can follow him on Twitter at @miketrap, and connect with him elsewhere through About Me.

Product, product, product. More focus on product was at the center of Brad Feld's comments at last week's Silicon Valley Bank CEO event, in response to a question about what he'd do differently if he had it to do over. More focus on product is at the core of the Lean Startup Revolution we're all getting behind, and in the spine of the Steve Jobs bio we're all reading, and in the frequent posts of the startup bloggers we all pay attention to.

And it's all true. Product is the key, at the very center of building a viable business from nothing. And by implication, marketing is so 15 minutes ago. Marketing is for products unworthy of passionate advocacy, a crutch for nice-to-have startups who invest in sprawling web sites and launch parties like losers with no choice but to pay for sex.

I spend a lot of time fighting this perception, talking about the difference between the kind of strategic marketing that can corrupt your vision with the external reality, marketing communications, which consists largely of the promotional sham-ware of the mid-twentieth century.

But you know what? I'm giving all that up. I'm going to take another approach, one I think will resonate more clearly with the Cult of Product sub-culture which seems to be sucking all of the oxygen out of the shill-o-sphere.

Ready? Here it is: You should focus on the desired response to your product, not just on the product itself.

Why must you focus so intently on your product? Isn't it because you want people to respond to your product in ways that propel your businesses to greatness? Isn't your product, then, a means to an end? Isn't it a stimulus hoping to evoke the right response on the part of the customers who buy it?

In a very real way, I'd argue yes. More than that, I'd argue that the primary dimension of product response that propels businesses to greatness is emotional response.

What do great un-advertised, Billion-dollar brands like Dropbox, Facebook, and even (until recently) Google have in common? We love them. They make us feel respectively Liberated, Connected, and Empowered in ways that enrich our lives. They make us grateful, make us want to share with others. A brand is nothing more than an emotional response out there in the world, but building brands with products instead of print advertising doesn't make them any less important, or any less worthy of early focus, thoughtful strategy, and effective execution.

It's becoming a cliche to say your product is your marketing, in an era where customers trust each other more than they do media. Well if that's true it might be time to bring a little more marketing into your product, in the form of treating the softer science of brand development with the same respect you give the harder sciences of product management and engineering.

What do you think? Where do you stand on the Cult of Product? Would love to read your comments.

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

12 Things Entrepreneurs Should Be Thankful For

Dharmesh Shah — Wed, 23 Nov 2011 16:22:00 GMT

A simple thanks to all the people that have made it possible for me to be an entrepreneur. There are few more fulfilling things in life than finding one's calling. And, for millions of entrepreneurs around the world, that's precisely what it is.

A special thanks to all the people that have joined existing startups and small businesses. Joining an existing effort requires risk and a degree of selfnessness. You are all entrepreneurs in my book for one simple reason: You're crazy enough to join a merry band of misfits even though it makes absolutely no sense. You're my kind of crazy. Cheers.

12 Things Entrepreneurs Should Be Thankful For

1. Customers.

2. Getting to pick the exceptional people we work with.

3. An opportunity to add value, big or small, to people's lives.

4. Not having to ask permission to try something crazy.

5. The patience and understanding of our family and friends — especially when we likely don't deserve it.

6. Receiving payment for value delivered. There's no feeling like it.

7. The joy of seeing a sliver of light after some dark, dark, days.

8. The freedom to change what's not working. It's sometimes painful, but at least it's possible.

9. Not having to rationalize to your family and friends why you took that Wall Street investment banking job.

10. Day 2,743, when the world celebrates your “overnight success”

11. The pleasure of helping team members create memories and experiences that will last a lifetime. Most of them good.

12. The chance to try. To fail. To try again and flail around. Then, with some luck, to flourish.

Your turn. What do you think entrepreneurs should be thankful for?

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

DON'T start a company...yet

Dharmesh Shah — Mon, 21 Nov 2011 18:40:00 GMT

The following is a guest post by Andrew Payne. Andy is a Boston-based entrepreneur and angel investor, and a HubSpot director. You can read his blog at blog.payne.org or follow him on Twtter at @payne92.

I was visiting Harvard a few weeks ago and the professor said, "yea, every undergraduate here is working on a startup!" Nearby, MIT is practically putting "startup" in the school water supply, and incubator programs for new graduates abound (e.g. TechStars, Y Combinator, etc.)

For those new graduates itching to start a company, I'm giving some very contrarian (and possibly unpopular) advice:

Don't do it. At least not yet.

Instead, go join someone else's early stage company as employee #3-50 (or so). The experience you'll get over the next few years will be invaluable, and you'll be in a far better position for success when you decide to leave and start your own company. You'll see many processes (e.g. fundraising, product management, leadership, etc.), you'll learn from mistakes (yours AND other's), and you'll build a great network of contacts.

There's just nothing like learning on the job, in context, from those with more experience than you. There's a reason why the apprenticeship system has been the dominant method, for over a half-millennium, to pass the experience of a trade or craft to the next generation.

I sometimes encounter startup teams that are thrashing on basic things, and it's almost always because they're lacking experience. Skill is a combination of (a) knowing what to do, and (b) knowing when/where/how to do it. The Internet is a seductive source of "what", but isn't a substitute for judgement. Reading someone's blog post on their Agile development principles is helpful, to a point. But remember: these anecdotes are necessarily simplified and abstracted, and are missing important bits of context. Someone else's experience may not translate to your situation.

I am not an astronomer, but I long ago remember reading the fastest way to grind a good 12-inch telescope mirror was to first grind a 6-inch mirror. Few builders are successful grinding the larger mirror as their first project, and that's sound advice for startup entrepreneurs as well.

What do you think? Is better for would-be entrepreneurs to just "jump in" or is there value to spending some time learning the ropes at another startup first?

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

The CEO Should Be The Chief Experience Officer

Dharmesh Shah — Tue, 15 Nov 2011 19:51:00 GMT

Earlier this week, I was chatting with my friend, co-founder and CEO of HubSpot, Brian Halligan. We were doing one of our ad-hod strategy sessions about the business, and working through some things.

After that conversation, as I was driving to a dinner meeting, an idea occurred to me. The phrase “Chief Executive Officer” doesn't convey much, if anything. There's a better way to describe the role.

I will posit that in a technology company, the CEO should be the Chief Experience Officer.

If the CEO can make the following set of experiences amazing, by definition, she will make an amazing company.

1. Product Experience: What is the experience like using the product and getting value from it? Does it solve the problem simply? Does it make users happy, productive and hopeful when they're using it, or does it make them frustrated, angry, agitated and depressed?

2. Purchasing Experience: What is it like to go through the sales process and buy the product? Was it easy to figure out whether the product was the right fit? Was the pricing straight-forward? Was the buying process smooth without unnecessary steps and complexity?

3. Brand Experience: What is it like to interact with the company's brand? Does talking about the company with others ignite passion? What kind of emotions does it evoke? When people see the logo online or offline, what's the visceral reaction?

4. Support Experience: What is it like to receive support from the company? Do people dread having to call in and get help? When they do make contactl, do they feel like the company cares not just about appeasing and pleasing — but that the actual problem is addressed?

5. Exit Experience: What is it like to leave the company, cancel the subscription and no longer be a customer? Sometimes you can tell more about a company by how it treats customers on their way out, than on their way in.

6. Employee Experience: What's it like being recruited by the company? Working for the company? Being let go from the company? If you have a terrible employee experience, you will not attract the kinds of people that will make the customer experience amazing. It just doesn't work.

Notice that most of the above experiences are all about the customer. How does the customer experience the company? I think that's the primary set of experiences the CEO should worry about. The reason is simple, by improving the overall customer experience, everyone wins. Including the investors/shareholders (and yes, the CEO also needs to manage the shareholder experience too).

So, Don't just improve the product, improve the experience. This is one of the points I made in my Business of Software (2010) presentation (I think it was one of my better ones, full video and transcript available).

What do you think? Am I over-thinking the importance of the overall experience? Any lessons learned or tips on how to measure and improve the end-to-end experience?

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

The Backuisition and 9 Other Types of Acquisitions [humor]

Dharmesh Shah — Fri, 11 Nov 2011 15:58:00 GMT

It's time for some Friday fun. The following list was sparked in part by my hatred of the term "acquihire" (which no matter how many times I try to train myself, I can never say it correctly in my head when I read it).

Hope you enjoy reading them as much as I enjoyed coming up with them.

10 Types of Acquisitions

1. Backuisition: A few rogue employees from BigCo went off and started their own company (NotAsBigCo) a couple of years ago. The CEO never got over it, so worked out a deal acquire their startup to get them back.

2. Crackuisition: BigCo is addicted to acquisitions. If more than a few weeks go by where some sort of deal isn't consummated, the twitching and shakes start. They need their “fix”. Like right now. Before somebody gets hurt.

3. Hackuisition:

BigCo: “How many hackers do you have?”

NotSoBigCo: “You mean programmers?”

BigCo: “No, we need more hackers. People that read The Hacker News blog. Do you have hackers?”

NotAsBigCo: “Um, sure, we have hackers…”

BigCo: “Great! We need to get ourselves some hackers.”

4. Sackuisition: This is a deal that's all about the customers or the IP or anything other than the people. Once the deal is done, most of the people get laid off. [Not to be confused with the deal where most of the people get laid. That's the mythical, inthesackuisition]

5. Shaquisition: BigCo has a company basketball team consisting mostly of white guys that can't jump. They're embarrassed and want to remedy that.

6. Packuisition: Executives in corporate development at BigCo are used to traveling a lot. For some reason, they looked at their calendar and saw that there were 3 straight weeks with no travel coming up. This would drive them and their family insane. So, they go off looking for an out-of-town acquisition to do. Choice of potential company to acquire depends primarily on two variables: weather and availability of golf courses.

7. Snackuisition: BigCo tends to do really, really big deals. The kind that get written up in all the newspapers and magazines (and also, in something called “blogs” that the executives have heard of). But these big deals sometimes take time, and in-between, their blood sugar can get low.

8. Knackuisition: When a deal is done because the company being acquired has a particularly valuable and rare knack for doing something. Like building operating systems. Or natural voice recognition algorithms. Or the ability to use MongoDB successfully while resisting the temptation to eventually simulate SQL-like features.

9. Attackuisition: A deal that's done specifically to attack another company in a particular industry, primarily out of spite and CEO arrogance.

10. Frackuisition: When the value trying to be extracted from the deal is so deep, it requires knowledge of hydraulics and a really good PR firm to convince the world that you're not going to destroy the company, the industry and the world in the process of getting to this value.

Do you have any of your own that you think I missed?

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

From Deadpool to Acquisition: Lessons From Sprouter's Almost Fail

Dharmesh Shah — Tue, 08 Nov 2011 14:47:00 GMT

The following is a guest post by Erin Bury. Erin is the Director of Content and Communications at Sprouter.com, a site that connects startups with expert advice. She's also a startup columnist for the Financial Post. Find her on her blog at erinbury.com, or on Twitter at @erinbury.

A few months ago I had a brilliant flash of business inspiration, as so often happens when you're in the startup world. Why not start an online marketplace where new startups can buy furniture and office supplies from startups that enter the deadpool? A depressing Craigslist, well at least depressing for the companies liquidating their stuff.

The irony wasn't lost on me when, mere months later, we announced that our startup Sprouter was shutting down (for the record, we did get rid of our furniture, and I do think my business idea has legs). We launched in 2009, and I've been part of the four-person team since the beginning, building the brand from zero users to a vibrant community of entrepreneurs and startup experts.

The reason for the shutdown was simple: we ran out of capital. We were supported by angel investment, and had big plans for how we'd become profitable. But the investment dried up before we could actually execute on those ideas.

The morning we announced we were closing our doors was hard, but it made it easier to see the outpouring of support from the community. Media outlets covered our shutdown, lamenting the fact that the resource for startups would be gone. Community members voiced their dismay on Twitter, our blog, and via email. By the end of the week we were out of our office and all unemployed.

What happened next could be straight out of a Disney movie: think The Mighty Ducks for startups (The Mighty Canucks?). One of Canada's largest media companies Postmedia Network Inc., owners of national newspaper the National Post and countless other newspapers across the country, expressed acquisition interest. They wanted the team back together, and were interested in integrating our content and digital presence with their properties.

So on October 3rd, two months after we announced our shutdown, we announced our acquisition. Being part of the Postmedia family means we have a bigger platform for our startup content, and can continue to expand our offerings. We have a new office in downtown Toronto (yes, with new furniture), and we're almost doubling our team in the next month.

While not the ideal route any startup would take to acquisition, it really is a case of all's well that ends well. But there are some key lessons to take away from the whole ordeal, and not just that making millions of dollars is more advantageous than running out of capital and shutting down. We got that message loud and clear.

Here's what our team has taken away from going from deadpool to acquisition

Lessons Learned

Don't underestimate the power of your community. We figured our shutdown announcement would cause a stir, but we could never have predicted the outpouring of support that resulted. Our community of supporters rallied together, suggesting ways we could stay afloat and even offering to pay for our service to keep it active. Your community is a powerful resource in itself, and don't underestimate how they can support you in times of trouble.

Crisis communications are imperative. The first inclination when you're shutting down is to hide under your desk and not show your face again until SXSW 2012. But we decided that we would respond to user emails, Tweets and media requests the week of the announcement. Being transparent and responsive when you have a crisis seems like a no-brainer, but it can be difficult for founders to face the public during hard times.

Embrace the failure. The startup post-mortem seems to be the latest trend for deadpooled companies. Startups who've failed offer their take on where they went wrong, hopefully steering new entrepreneurs in the right direction. In another ironic twist of fate, our founder Sarah Prevette had agreed to speak at FailCon Paris before we announced we were shutting down. Her presentation there, How I've Failed So You Don't Have To, outlined the major lessons from our growth and failure. Namely, you need focus at a startup. Oh, and sales are important.

Users aren't customers, and brand doesn't equal sales. We built up a big community of startups, and were featured in media outlets around the world. But at the end of the day, our great brand equity and user base wasn't paying our bills. While it's important to focus on marketing and user acquisition, those things don't matter if you're not bringing in revenue.

Strive for success but prepare for failure. This encapsulates how founders should approach their companies. Everyone wants to be the next Dropbox, Zynga or Airbnb, but the stats tell us only a few will actually get there. Be optimistic, but realistic. Prepare for the worst, and always have a contingency plan for times when you aren't hitting your sales goals.

While I hope your team never has to experience what we did, it was truly a learning experience. The path to startup success never does run smooth. Oh, and one last lesson: don't get rid of your furniture until you know you're 100% gone. If you need us, we'll be putting together Ikea desks.

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

Forget The MBA: How About a Masters In Startup Awesomeness?

Dharmesh Shah — Mon, 07 Nov 2011 16:59:00 GMT

This weekend marks the 6 year anniversary of OnStartups.com (it was launched on November 5, 2005). The OnStartups community has grown -- a lot. There are now over 30,000 RSS subscribers, and 218,000 members in the OnStartups LinkedIn Group -- making it the largest entrepreneurial community on LinkedIn. There's also OnStartups on Facebook, with over 27,000 people there. And, of course, the Q&A OnStartups powered by StackExchange.

Thanks very much for all of the support and encouragement over the years. The blog started as a birthday present to myself, but it also had an academic purpose. I was working on my master's degree at MIT at the time, and as part of my degree requirements, I had to write a graduate thesis. The title of my thesis was “On Startups: The Patterns and Practices of Contemporary Software Entrepreneurs”. I needed some “real world” feedback from actual software entrepreneurs to include in the thesis. I figured out quickly that this would involve talking to humans (something I found reasonably unpleasant). And, I had heard about this “blogging thing” so decided to give it a shot. I took the first two words of my thesis title, tacked it together, and came up with OnStartups.com.

I had a really good time in business school at MIT. Learned a lot, met some exceptional people. But, I think the whole MBA thing is a little old-fashioned. How many people do you know that want to get really good at business administation? What would be cool instead is a Masters in Business Awesomeness. The coolest would be a Masters in Startup Awesomeness. Of course, there is no such thing, and no university you can go to get that degree yet (but there should be). The good news is MIT -- and other great universities are starting to introduce much more entrepreneurial content in their programs. [Shout out to my friend Bill Aulet, chair of the MIT Entrepreneurship Center]

So, below, are some of my favorite (and I think most useful) articles from 6 years of OnStartups.com. If I were to design a curriculum for the Masters In Startup Awesomeness, some of this material would likely be included. I recognize that this a lot of stuff, so feel free to just bookmark this article and read later.

The Best Articles From 6 Years of OnStartups.com

Sales and Marketing

Startup Websites That Work

Startup Marketing: Tactical Tips From The Trenches

17 Mutable Suggestions for Naming A Startup

The 5 Minute Guide to Cheap Startup Advertising

Building Startup Sales Teams: Tips for Founders

How to Pick a Company Name: Tips From The Trenches

A Geek's Guide to Hiring Marketing People

5 Startup Sales Tips From Turkish Rug Dealers

The 900 Pound Gorrilla: Why Strategic Partnerships Aren't

People

Choosing A Minimum Viable Co-Founder

14 Ways To Be A Great Startup CEO

The 11 Harsh Realities of Being An Entrepreneur

SaaS 101: 7 Simple Insights From Inside HubSpot

Startup Founder Compensation: The Good, The Bad and the Irrelevant

17 Pithy Insights for Startup Employees

Startup Hiring: Why You Should Date Before Getting Married

Pricing

Important Questions Startup Co-Founders Should Ask Each Other

How to Price Software Without Just Rolling The Dice

Startups and the Challenges Of The Freemium Pricing Model

Strategy

4 Quick Tips on Raising Funding Without a Plan or a PowerPoint

14 Reasons Why You Need To Start A Startup

The @dharmesh Test: 16 Questions for Better SaaS Companies

Startups: 10 Things MBA Schools Won't Teach You

Startups: Your Customers Are Not Ignorant, Selfish, Control Freaks

Development Shortcuts Are Not Free: Understanding Technology Debt

17 Pithy Insights for Startup Founders

—-

Thanks again for all of your support. If you want to find me online, I'm @dharmesh on twitter and +Dharmesh Shah

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

Startups: You're Not Really Ramen Profitable, You're Ramen Sustainable

Dharmesh Shah — Fri, 21 Oct 2011 15:17:00 GMT

A new phrase entered the startup vocabulary a little while ago: “Ramen Profitable”. The phrase is used to reference startups that are making enough money for the founders to live on the startup staple of Ramen noodles. [For our friends in India, Ramen noodles are similar to what you would know locally as “Maggie”, which is what I grew up on. I like the Masala flavored one].

So, here's my issue with the term “Ramen Profitable” — in most cases where it's being applied, the company's not really profitable. Reason? Because the entrepreneurs/founders are paying themselves negligible (if any) salary. This distorts the actual value being created. Some of you might argue that founder's are simply making an investment of their time/energy, in lieu of salary. That's a wonderful thing, but from an accounting perspective, just because you're not properly calculating expenses, doesn't mean it's profit. To be fair and more accurate, founders should look at their fair market value to determine actual profitability.

For example: Lets say you happened to inherit some prime real-estate in downtown San Francisco. You got it for free. Now, you open a really swank gelato bar for Python developers. If you weren't charging yourself any rent for that space, nor paying yourself anything, and the business made $100/day, would you really consider that profitable? You could have rented the space out at fair market value for much more money than that. I'd argue you're losing money -- and I'd be right.

My point: It's awesome for startups to get to a point that they're not reliant on external funding sources to survive. Paul Graham describes this well in "Ramen Profitable". Great article and I agree with his points -- particularly around the morale boost. But, I'd call this stage of a startup “Ramen Sustainable”. This stage gets a startup “infinite runway”. This can be a very good thing, because the entrepreneur can than tweak, iterate, pivot to her heart's content. But, that's also the problem with Ramen Sustainable startups. The entrepreneur may keep going longer than would have been warranted, instead of moving on to their next big idea.

Oh, and on a closing note (which came up in discussion as a result of an article by Scott Kirsner (of the Boston Globe), titled “Is Boston spawning too many startups, and starving growth companies for talent?” My thoughts on this:

You can never have too many startups, but you can have too few shutdowns.

Do you think I'm right about the Ramen Sustainable vs. Ramen Profitable characterization? Any thoughts on the pros and cons of reaching this stage in a startup? How do you know when your Ramen Sustainble startup is better off being shutdown so you can move on to bigger things?

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

I Am Not Steve Jobs and Steve Would Have Wanted It That Way

Brian Halligan — Thu, 06 Oct 2011 14:32:00 GMT

The following is a guest post by Brian Halligan. A friend, my co-founder at HubSpot and a fellow Jobs fanboy.

Ok, I admit it, I'm a Steve Jobs fanboy. I use virtually all of his products, I've read every book there is about him, and I probably never would have founded my company had it not been for his inspiration.

As our company's defacto first product manager, I did what any new product manager probably does, I gobbled up virtually everything I could on how Steve Jobs builds products at Apple. I read how Steve obsessed about every detail, his brilliant aesthetic, his occassional mercurial management style, etc. After reading so much about him, I started copying everything I could. After all, how hard could it be? ...Well, it turns out its a lot harder than it looks!

If I watched every minute of basketball Michael Jordan played, read all of his biographies, listened to his interviews, and practiced his moves non-stop, I'd become an adequate basketball player, but I'd be missing the genetic code that makes him a great basketball player. For starters, no matter how much I practiced and learned, I was never going to be 6 feet 6 inches tall. It turns out the same is true for Steve Jobs. No matter how much I read and practiced, I was not going to develop his design aesthetic and was not going to develop his attention to detail.

As you read all the content that comes out today on Steve, my advice would be to take in the inspriration and emulate what you can, but also be true to yourself. You have your own super powers -- don't completely forget those and try to be someone else.

Or, in Steve own word's from his Stanford commcencement address:

"Your time is limited so don't waste it living someone else's life."

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

Choosing A Minimally Viable Co-Founder

Dharmesh Shah — Wed, 05 Oct 2011 17:09:00 GMT

If you're starting a company, one of the most important decisions you'll make early on is the selection of a co-founder. Some might advocate just “going it alone” because finding a great co-founder is hard and fraught with risk. It is hard and it is fraught with risk. But going it alone is harder — and riskier. Startups are very challenging and having someone to share the ups and downs with, to be a great sounding board for ideas and to just help get things done is immensely valuable.

One additional thought: I'm an introvert. I don't enjoy being around people very much. If you're like me, the notion of just doing something all by your lonesome might seem appealing. And, it is — but I think it's a mistake. Even for introverts, having someone on your side is useful and fun.

Another consideration is speed, captured well by this African proverb: If you want to go quickly, go alone. If you want to go far, go together.

So, you might be wondering: “Hold on there! As a startup don't I want to go quickly? Isn't it all about speed? Why should I wait to get started…I should go NOW!”

These are reasonable sentiments. Great entrepreneurs have a proclivity for action. I'm not suggesting that you stop everything and spend all of your time on the holy quest for the perfect (and mythical) co-founder. I'm suggesting that part of what you're doing should include being on a deliberate lookout for her. And, I'm saying that when you find someone that is awesome, resist the temptation to worry too much about things like dilution and control and what-not. If it's the perfect person, none of that will matter. Back to the African proverb. Yes, you want to go as quickly as you can, but what's more important is going far. You want to build a company that attracts amazing people and solves important problems. A company you can look back on and be proud of. There are very few experiences in life that can match that feeling.

So, I'm going to assume for a minute that I've convinced you (or you were already convinced) that a co-founder is a good idea.

Choosing A Minimally Viable Co-Founder

1. You trust them and they deserve to be trusted. Not just in the “he won't cheat me” sense, but in the “if I'm being a dolt, she'll call me on it” sense. And in the “even when I can't be there, he'll keep my interests in mind” sense. By the way, as it turns out, this need for trust is not an abstract thing. During the course of your startup there will be many occasions where you are vulnerable and dependent on the integrity of your co-founder. You want to find someone that is constitutionally incapable of screwing you.

2. They have to be brilliant at building or selling. They're exceptionally good at building something people want or they're exceptionally good at selling something people may not know they want yet. And by exceptionally good, I mean, they're one of the best you've ever met. Also, I mean they're good at of one those things not just good at convincing you they're good at hiring people that are good at those things. You don't want someone that can manage [X] but actually do [X]. Example: You don't want someone to manage product development or even the better sounding “own” product development. You want someone that can actually do product development. Same with selling.

Related note: In my opinion, marketing can be selling. If you find someone that can “sell” by simply writing exceptional content that pulls people in to your business, and then writing great copy on a landing page that converts them to customers — that's awesome, and it counts. Being brilliant at selling doesn't necessarily mean talking directly to humans and selling. It means getting customers to pay you money.

3. They’re committed to the company, not just the current idea. Anecdotal data suggests that as fantastic as you may think your idea is, your idea will likely change. A great book to read is “Founders at Work” by Jessica Livingston. It's a great collection of stories from some great entrepreneurs and you'll see a recurring pattern. Even spectacularly successful startups ended up changing their idea along the way. If your co-founder is married to a specific manifestation of an idea, trouble will brew when the company is no longer pursuing that exact idea in that exact way. You need a co-founder that's committed to the cause — and committed to you.

4. They are likable. You and others enjoy spending time with them. You’re probably going to be spending more waking hours with your co-founder than you are with your friends and family. (You might even spend some non-waking hours with them too — some founders I know sometimes dream about their startup. No, it's not weird at all.) So, it’s imperative that you like the person and enjoy spending time with them. If you dread having meetings with them. If you can't have a 4 hour dinner with them. If you can't see yourself locked in a room with them for a weekend. There's something wrong. Beware. Another reason that them being likable is important (outside of the “life is short and you want to maintain your sanity” argument) is that it's imperative for others to like them too. Future members of the team that you're trying to recruit. Maybe investors. Maybe customers. They don't need to be cruise-director level nice, but if you join forces with a jerk simply because they are dazzlingly brilliant at something, you will likely fail. And it won't be fun. Don't talk yourself into it.

5. They do stuff, not just think about stuff. They do a lot of stuff. They do whatever is needed to move the company forward. This includes unpleasant things. This includes banal things. This includes things they didn't go to MIT or Harvard undergrad for (like ordering pizza). Startups are not just about the fun stuff. Not just about the building and the selling and the late nights cranking. At some level, a startup is still a business. It exists in the physical world, and as such, it often requires doing boring things (like opening mail and paying bills and such). You should try to minimize that ugly stuff as much as you can, but any task should not be beneath any of you.

6. They crank and grind. They are not working under the delusion that there will be work-life-balance in the startup. There are two kinds of co-founders in the world. The kind that work maniacally, just like you do, and the kind that you're likely going to resent someday. I also don't think there's such a thing as a part-time co-founder. Sure, there are people that are willing to help you in the early days. Maybe they're just wrapping up their day job and figuring out how to exit and come on board full-time. That's fine. But they're not a real co-founder until they're fully committed and cranking.

7. They're reasonable, rational and realistic. A surprising number of startups die because one of the co-founders gets some weird notion in their head. Causes vary. Sometimes it's ego. Sometimes it's insecurity. Sometimes it's greed. Sometimes it's just pure schmuckiness. Whatever the cause, the situation becomes toxic creating much unhappiness. Remember, competition is much easier to contend with than co-founder conflict. One way to address this issue early on is to have some of the hard conversations up front. A good place to start is my article on the questions co-founders should ask each other. Have those discussions early. Even though you may not get to closure on all of them, it'll give you a sense for how you both deal with difficult situations. And, be prepared for some surprising reactions/responses to those hard questions.

That's all I've got. I know I've set a pretty high bar for what I labeled as a “minimallly viable” co-founder. There's a reason for this. If you get it wrong, you can get a bunch of other things right and you'll still likely fail. If there was ever a time to be selective and spend some calories — this is that time.

What do you think? Any other criteria you'd put in the “bare essentials” bucket? Any positive or negative experiences you've had with co-founders?

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Oh, and by the way, you should follow me on twitter: @dharmesh.

Why The Value Of The Fund-Raising Process Is Not Just The Funds

Dharmesh Shah — Thu, 29 Sep 2011 20:10:00 GMT

The following is a guest post by Rene Reinsberg (@followrene). Rene is a recent MIT Sloan graduate and the CEO and co-founder of Locu, a company that helps close the gap between offline and online by building a real-time, structured repository for small business offerings data such as restaurant menus. Disclosure: I'm an angel investor in Locu. -Dharmesh

Raising Money Isn't About Raising Money

Our company has raised more than $600k in seed money over the summer. In a matter of a few months we transformed from a group of students working on what one notable Silicon Valley investor called a “class project” in early April 2011 to an eight-person company, with a unique technology, a clear value proposition and strong customer interest for our product. I'd like to share some highlights and lessons learned from our journey.

Back in April, we had been bootstrapping for about half a year, building our first prototype and some interesting back-end technology and learning a lot about our market. We also realized we had been working well together as a team and were all ready to commit full-time.

Testing the waters

One of our early inflection points was a team trip to the Bay area for a week in late May. We had been selected to present at a startup showcase and had also set up a few meetings with investors while out there. The four of us shared a double room at the cheapest hotel we could find, the Ramada Silicon Valley in Sunnyvale. It worked out perfectly: free WiFi, a good enough breakfast buffet and an In-N-Out down the street.

We went to almost all pitches that week as the whole team. While this is not sustainable for the whole fundraising process, I highly recommend it early on. It helped us grow stronger as a team and develop a common lens for feedback. Also, rather than insisting that our approach was the right one, we explored all possible directions to make sure we were not missing the bigger picture. After our daily debrief by the hotel pool, we would prepare for the next day. One night, Marek, one of my co-founders, built a prototype to test an idea that had come up during the day and that has now become an integral part of our product.

Learning

That brings me to learning. Looking back, these early meetings were invaluable. One thing that became clear really fast was that investors were much more interested in learning about the menu acquisition and data curation technologies we had been building than about our recommendation application. We had stumbled upon a potential solution to a big problem the local search industry had been battling with for years. Going forward, we built our pitch more around the technology and how it could enable a data platform for local business data and had much more success.

Network

A lot of people have asked me how many investors I spoke to and met with in order to close the round. You might have seen the Anatomy of a Seed deck by Brendan Baker who analyzes AppMakrs $1m seed round, involving 173 people and taking 130 rejections to get to 14 commitments. Our round was a bit smaller and we were fortunate to hit a few super nodes early on, but I still ended up talking to around 100 people in the process.

While I prefer meetings that lead to investments, there is thing to be said about the ones that don't. Raising money is about building a network. A lot of people might be interested or intrigued by your idea but not end up investing for one reason or another. However, they might end up introducing you to potential business partners, clients or other investors. I talked to one potential investor and even though he did not end up investing, a month later, he emailed me and introduced me to a potential client.

Filter

At an early stage, it is important to surround your startup with people that can support you and extend you network in the areas you most need it. For us, we were targeting investors with backgrounds in data platforms, local, small business marketing, and the restaurant industry. AngelList turned out to be invaluable in the process of filtering. As Scott Kirsner from the Boston Globe recently put it, they are a true matchmaker between investors and startups.

A few words on due diligence: You probably expect your investors to do due diligence before investing. You should do the same. In a world of LinkedIn and AngelList, it is relatively easy to find people in your (extended) network that have worked with or can vouch for an investor. Even if it means delaying the closing of your round, don't take money from investors you don't think have the best interest of your business in mind or from whom you get a bad vibe.

Looking back, raising money was much more than just getting money in the bank. The process helped us to grow as a team, significantly refine our product and business model and most important of all, bring on investors on board that understand our technology, support our (ambitious) vision and will help us build a better company.

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

43 Pithy Quips On The Business of Software

Dharmesh Shah — Wed, 28 Sep 2011 21:05:00 GMT

My favorite conference both as an attendee and as a speaker is the Business of Software Conference. I've spoken there for the past three years and am once again speaking this year. There's a full video and transcript of my 2010 talk.

To give you a sense for how much I like the conference, I will share this embarrassing piece of data: Though the conference has been held in Boston for a couple of years (and again this year), and I live in Boston, I still stay at the conference hotel. I do this for one very simple reason -- I just enjoy hanging out with the BoS folks. They're my peeps.

Note: I do not make any money promoting the BoS conference. I don't even charge for speaking there (note to self: I probably should charge and just donate the proceeds or something). The only reason I write articles like this one, is I enjoy the conference and think others would too. I'm selfishly trying to draw in as many cool software people to the conference as possible, for my own amusement and enjoyment.

One quick word of warning: The registration fee is not cheap (the ticket price is currently $2,295). The show is just about sold out, but I have a discount code for OnStartups readers that brings the price down to $1,895. Use the code OSBoS11 and register on the Business of Software website.

In terms of price, I think the time you spend attending a conference far exceeds any registration fee. BoS does a great job making the most of your time. You will not hear speakers making sales pitches. No sponsored speaking slots. No booths. No multiple tracks or boring panels. Just great attendees, great speakers, in a great venue and well managed.

The conference is coming up (Oct 24-26) in Boston. If you can make it out, you should.

Here are some of pithy insights learned from prior Business of Software conferences (to whet your appetite)

Pithy Insights From Business Of Software

1) The right time to hire the first person is when you think you are going to die. [tweet]

2) Do what you are naturally good at. Starting up is hard enough as it is. [tweet]

3) Be prepared for serendipity. Viagra was originally a failed heart medication. [tweet]

4) Don't reward people with bonuses. They don't remember them. Give them experiences. [tweet]

5) HubSpot has an unlimited vacation policy. No one has abused it. If someone did it means we hired the wrong person. [tweet]

6) Long term thinking: I've always wanted to build something that will survive beyond me. [tweet]

7) One model doesn't take you through. We had to move from generalists to specialists. [tweet]

8) If no one is copying it try harder next time. [tweet]

9) Venture capital is not a necessary evil. It's neither necessary nor evil. [tweet]

10) Tech support is sales. [tweet]

11) The power of being ready to walk away is amazing during M&A. [tweet]

12) Forget about competitors! You want to create something so good people will want to copy it. [tweet]

13) Developers like email, sales people prefer the phone. They're just a different kind of human. [tweet]

14) Negotiation 101: "Shut up" [tweet]

15) Build your software with your customers. [tweet]

16) You set the rules in your start up. Don't live inside someone else's box. [tweet]

17) If selling your company having multiple offers makes it easier not to have to compromise what's important to you. [tweet]

18) Ask simple direct open questions and LISTEN! [tweet]

19) At Squidoo every job that can get written down is done by a freelancer. [tweet]

20) Be so good they can't ignore you. [tweet]

21) B2B tribes are much more valuable than sexy consumer tribes who won't pay you anything. [tweet]

22) Companies spend about 10% of the time hiring a person compared to getting rid of a bad one. [tweet]

23) Different & Crazy can look the same at first. Real difference requires some risk. [tweet]

24) Don't change the model! Change your management practices! [tweet]

25) Don't follow a map. Make a map. [tweet]

26) Founders bring with them personalities and philosophies that set the tone for the company culture. [tweet]

27) Great ideas are fragile at birth because they are indistinguishable from crazy stupid ideas. [tweet]

28) If you can write it down I can have it built cheaper. [tweet]

29) If you invest in the experience (not just the product) everybody wins. [tweet]

30) Just because the tide is out doesn't mean that there's less water in the ocean. [tweet]

31) Passion is an extreme version of caring and believing. [tweet]

32) Love your inner salesperson. [tweet]

33) People like to be sold to in their own language not yours. [tweet]

34) Pricing is a lot about psychology. $25 and $35 feels the same to people. [tweet]

35) Problems should be the currency in your company. [tweet]

36) Prototyping helps figure out what to leave out. [tweet]

37) The factory is about interchangeable parts -- and interchangeable people. Factories don't work in software. [tweet]

38) Customers will always tell you how to improve but not how to be different. [tweet]

39) Southwest Airlines value people who 'get it' vs people who 'know it'. [tweet]

40) Steve Jobs doesn't go home at night and boot up Windows. [tweet]

41) Traction requires friction. The mini cooper chafes. [tweet]

42) When selling your company walk away at least two times or you have probably been screwed. [tweet]

43) Work definitely feels like work unless you're passionate. [tweet]

Hope to see many of you at the conference. If you're there, please say hello.

And, if you've been to Business of Software before, how did you like it?

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

MIT Startup Bootcamp 2011: Notes and Musings

Dharmesh Shah — Mon, 26 Sep 2011 13:51:00 GMT

This past weekend was the 3^rd annual MIT Startup Bootcamp. It's one of favorite startup events in the Boston area (I spoke at the first one in 2009. Video of my talk available). I didn't get to attend in person this year, but watched most of the sessions remotely. Thankfully, my friend Andy Cook (co-founder of Rentabilities) attended and volunteered to capture some notes from the sessions. [Disclosure: I'm an investor in Rentabilities, but Andy would have volunteered anyways, he's a great guy]

These are not polished or edited, but still should be useful. Enjoy.

I've also taken the liberty to add in some of the tweets I posted while watching the live stream. They're included inline below.

Paul English (Kayak)

Twiter: @englishpaulm

How Kayak recruits - Hire for team first, customers second, and profit third.

Kayak evaluates potential employees on bandwidth, attitude, diversity of experience, and lack of dysfunctional behavior.

Bandwidth – Smart, fast, and can do things quickly. Need to have one minute conversations and GSD.

Attitude – Aggressive, focused on output, producing result. Can ship product and close customers. Have experience and working with teams. Look for people who enthusiastically talk about success with past teams.

Diversity – Look for people who are successful at something. You want someone who has been successful. It doesn’t matter if they have the current skills. Hired a rowing Olympian and a chessmaster. If they could achieve at that level, then they must be good. Chessmaster. You want people who got stuff done. Creates a well rounded team.

Lack of dysfunctional behavior – No something? Rule. If you find people who are very team positive and in your face in a fun way, you’ll end up with a good team. Find someone who is focused on having fun at work and creating a good product.

How investors evaluate startups - 70% team, 20% market, 10% on what you actually do.

Look for people who have been successful, aggressive, ethical, and work hard. Have confidence but humility to ask questions when they don’t know.

A large market that is going through transformation gets investors excited.

What you build doesn’t matter as much because VC and investors assume you know how to operate and compete in the market.

Don’t spend money on marketing at first. It’s much more important to build a product first that is so compelling that the 10 users who use it first will buy it, then that’s a time you’ve proven theirs a spark and your ready to raise money.

Make sure your cofounder is someone who when you’re facing dark days, you need someone who is going to aggressive when you’re done. Play off each other in terms of confidence.

Don’t outsource your tech if you’re a tech based company. Find a CTO who has shipped something. If you’re a tech founder, think about what function you need the most. You can hire a firm to do all the other stuff, but finance is the most important.

You need speed and team to out compete your competitors. If you believe in your idea, if it’s really important to you, then they won’t be able to execute as well as you.

Leah Culver (Convore)

Twitter: @leahculver

Reasons @leahculver sold her startup: Big competitor, market downturn and team was not doing great. Pretty good reasons. @dharmesh

Made a solitaire game in college. Like hobby coding and built stuff in her free time.

When working on her first start-up, she was happy and doing what she loved. Was able to create something from scratch that she loved working on, and it is totally worth doing your own thing and trying it.

You only get one life and one opportunity to do the things you want.

Learn to cowboy code. You’re willing to do code that isn’t perfect but works. You need the ability to write things quickly and implement them fast, so it’s great to do it when you’re not afraid to write bad code. Hire people who can get stuff done instead of over-optimizing.

Leah’s Secrets to Success

Show up – Successful rock bands show up to their gigs (her dad’s advice). Actors go to Hollywood so you should go to the Valley. (I disagree with this…). She met Kevin Rose, her first cofounder, at a party.

Be nice to other startups and say congratulations. It’s important to have a strong ecosystem for you to rely on.

Luck is important

Iterate - Most start-up founders don’t stick with the exact idea they had in the beginning. Be prepared to fail then try again.

Andrew Sutherland (Quizlet)

twitter: @asuth

Don’t do market research. If he did, he would have found the crappy products out there and used those. Instead, he built something for himself and what he wanted, and now their site is 10 times bigger than it’s competitors.

Observations by me:

Demo – Make sure your product works before demoing, and make it sure it’s interesting. Andrew made it interesting by being funny and super geeky. He didn’t know if audio would work, but luckily it did. If audio didn’t work, then it wouldn’t have been a good demo.

Quizlet puts a lot of personality into their product. GraveDigger backflip for a 100% on a quiz,

Andrew had been hacking on Quizlet for 3 years, but had never spent all of his energy working on it. Left MIT because Quizlet was growing so big and needed so much attention that he had to make a decision. It was a fork. He could give it away, or go full time. It was worth it to leave school because it’s been intense and fun. When leaving MIT It wasn’t a decision made in a short period of time like two days. It was over the course of 2 weeks.

Copied Wufoo’s fanaticism about feedback by building an internal feedback system. They get almost 100 feedback messages a day from users. Everyone at the company does support. When everyone does support, there’s no one guy who makes decisions and is overly concerned about one feature.

In the beginning, the people building the product were using QuizLet differently than the actual users. That created a dilemma because they can build new features and verify they are working as planned, but that doesn’t mean they are helping students actually learn.

The Quizlet team decided to start a Spanish class in office. Hired a Spanish teach to come in once a week, and gives them homework. It forces them actually use their product. (Eat your own dogfood). They realized a lot of issues when they started using their own product. Right away they fixed 10 or 15 small things that were obvious once they started using as a user would.

Naveen Selvadurai (FourSquare)

twitter: @naveen

Worked at two startups before starting FourSquare. Got to code on real products. Got to get a sense of how they work on team, how to deploy code, etc.

“When you’re in a big company, you’re physically fit. When you’re a startup founder, you’re the opposite. You’re mentally fit, but not physically.” (FourSquare 15)

Random observation by me:

He just had a slide that said “hi.” and started talking. Apparently he was clicking through the slide on the TV, but didn’t know the weren’t changing on the project. No one even noticed until it was pointed out. He spent some time trying to get it to work and stopped talking. IMO – It would have been better if he had just kept talking because his story was so compelling.

Naveen’s rules for sucess

1. Keep good company. Hang out with great people who are smart. Have good friends. Have people you can talk to about stuff you’re trying to figure out. Start-up hubs are powerful because the more you get to talk about ideas, the better you’ll understand it and the better stuff you’ll build. Even the people you hang out with shape your product.

2. Make something people want.

3. Build around an atomic action – Facebook = status update. FourSquare = check-in. Square = swipe. Focusing around the action will narrow how the app will look and keep it simple.

4. Seek mentors early – Have someone you can relate your stories, tell your problems and get feedback.

5. At first, hunch, then data.

6. Balance unknown with knowns – Creating a startup is an emotional rollercoaster of ups and downs. There is no steady pace. Balance your life with steady friends, exercise, diet, etc.

7. Always be recruiting – A huge part of your job as a member of the founding team is to find great people. Encourage your current people to always find more great people. Engineers want to work on great problems and they want to work with really smart people.

In the beginning, FoureSquare only hired friends, and then friends of friends. Hiring trusted people has added benefits, such as the ability to trust people to not steal your ideas or create a competitive company.

Charlie Cheever (Quora)

twitter: @ccheever

It’s important to work with people who you have really high bandwidth communication between each other. You’ll be able to understand how the other person is thinking and be able to resolve it fast. When you don’t have to spend time articulating problems and just know what your cofounder is thinking, you’ll get more done.

It makes sense to invest in technologies and systems when you know what you’re doing. Quora created a framework for coding only when they were ready to build something usable.

Find the wave of change to help propel your startup. You can’t just outwork people or innovate better. You need to find a compelling market and change it.

In response to Naveen - Qualitative data is an important middle ground between hunches and aggregated data.

Any opportunity that is interesting, there’s going to be a bunch of competitors. Google beat all other search engines by making a better product and out executing.

Stand for something – Quora stands for great design and user experience. They want to help anyone who needs to an answer to a question connect with the person in the world who knows it.

Good engineers did not want to work at Quora until they had a good product and traction. Up until that point, it was all people they knew.

Drew Houston (Dropbox)

For the record, @drewhouston from Dropbox has one of the best accomplishment:ego ratios I've ever seen. Smart and super modest. @dharmesh

Everything big starts small. Drew though that creating a startup is like climbing Mount Doom, with everything being big, scary, and insurmountable.

The reality is that every founder starts in the same place and at the same point, which is completely clueless. Apple, Google, Yahoo, Oracle, Facebook and many others were started by first time founders in their 20’s. Facebook was just a project that Zuckerbug was hacking on, and he didn’t’ set out to redefine the face of communication.

You need to get out of your comfort zone. In the beginning, everything is about code. But quickly, you’ll have to learn communication skills and how to design a system of people to build something at scale. History says that it usually starts as a hacker who turns into a great entrepreneur and not an MBA who becomes a great engineer. Most founders started out as super awkward, but then were able to build great companies.

“The technology and product is just one piece of a much bigger picture.”

“You get good at understanding startups by joining or starting one. It’s the most efficient way to learn the ropes.”

Dropbox’s journey to where they are now started with them being complete noobies. Dropbox joined YC, got Sequoia interested, and when they wanted to invest, they didn’t even know how to do a wire transfer.

“Along the way of startups, you’re going to keep running into problems that you just have to figure out. The only thing I knew about wire transfers I had learned from James Bond.”

“Make something (a lot of) people want. One of the great things about the internet is it doesn’t cost much more to serve a problem for a million people instead of ten people.”

Starting a company is one of the best ways to change the world.

The only thing @drewhouston knew about wire transfers was what he learned from a James Bond movie (Golden Eye) @dharmesh

Alex Polvi (CloudKick)

“We were not trying to sell the company when we sold it. When you don’t want it is when you get all the attention. “

CloudKick did a pilot with RackSpace, and then one day got a phone call to discuss something strategic.

“If anyone high up at the company says the word strategic, they mean acquisition.”

Period of figuring out the details for the acquisition was about 45 days.

2^nd pro tip – “No matter what they offer, stop, count to ten in your head, and then seem as disappointed as you possibly can.”

“Once someone starts sensing an acquisition, everyone else starts sensing it. They got three acquisition offers.”

When you have leverage and talking to a VP of Corporate Development, you can get them to the actual numbers really quick. (pending acquisitions create a sense of urgency)

Motivations to think about being acquired

- Do you like the company you’re working with and can you grow with them

- Timing – What is your IRR for the acquiring company.

- Personal choice for the team.

They had one employee who only owned a quarter of his vested stock. Everyone else owned nothing up to that point. Part of the deal was that they were able to fully accelerate every employee on the team. Was fine with investors, founders, and RackSpace. The founders wanted to make sure the team was treated right.

have no retention mechanisms on the team except regular salary. Everyone on the team is still there because they all wants to be there. 0 attrition from RackSpace so far by the CloudKick team. They were able to pull this off because RackSpace believe heavily in culture.

“Don’t forget where you came from. If you have the opportunity to give back to your family, you should.”

“Best negotiation positions you can be in is a position of truth. If you’re building a product that people want a technology that is real, you’re set. Investors and acquirers will show up.”

Anthony Volodkin (HypeMachine)

twitter: @fascinated

Think of all the things you want to make, and if getting capital will really help you. If you’re a pharmaceutical company, then getting capital will definitely help you. If you’re a consumer company, then getting capital may not help you.

Prototype must be useful to you, but not perfect.

You don’t need anyone’s permission to make stuff.

Chances are when facing a tough decision, you already know what to do. You started your own company and no one knows it like you do. Listen to advice, but find your own way.

If you start with different inputs, you automatically get the same results. Most competing companies do not start with the same inputs, so the results will be dramatically different.

“TechStars? YCominbator? Just fucking make something.”

When thinking about selling your company, you need to think about why you started it, and if selling it will help you accomplish that.

Nathan Blecharcyzyk (airbnb)

twitter: @nathanblec

"The kind of people who ask for advisor shares are typically the kind that have less to offer." @nathanblec @dharmesh

The first 5-6 months of airbnb were pretty much flat.

Plans in 2008 – Forget hotels, extra rooms, save money and experience local culture, focused on overflow housing, no sustained traction.

In 2009 – Ebay for Space, all types of unique properties, vacation rentals are broken, focused on NYC, meet users, understand the levers, do things that don’t scale.

They were able to raise money from Sequoia for the following reason

Problems with Deck in 2008 – Drew analogies of things that were different but similar. Went top down which was suspect, and thinking too small. The site could have been interesting for a niche audience, but not distruptive.

Success with Deck in 2009 –

eBay of space + new name. - eBay = large thinking.

Booking a vacation rental online is nothing like booking a hotel.

Fragmented industry leaves property owner without a marketplace.

$17B vacation rental market + other large industries

Demonstration traction in a graph that made it look badass

$250,000K reservations, 10% commissions (demonstrated traction and stong revenue)

Wanted to be the world’s largest hotel chain without the overhead.

Investor + Advisor Advice

It’s important to only take money from the best investors. You want investors who are value adding.

Mentors and advisors are incredibly important. (it sounded like one of the reasons they’ve been successful is the network they procured from YC).

When evaluating investors - Ask other portfolio companies if these are guys that add value and help you solve your problems. The kinds of people who ask for advisor shares typically have less to offer. Start casual conversations by just engaging people.

Proactively send updates to show advisors that you are doing something to keep them interested.

Took $600K with $3M post money from Sequoia. Wanted the brand name. Also paid a premium to be in YC because the advising was worth it.

For marketplaces - You have to have enough things in inventory to have demand. They have a number of ways to attract sellers who own properties. Then they improve the quality of that inventory.

250 employees – Half is customer support. Engineering = 18 employees. 6 at beginning of the year. He was the only engineer for the first year.

Once an investor invests in you, they have a stake in your business and can make a great mentor @nathanblec by @dharmesh

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That's it for Andy's notes and observations. What insights did you pull from the sessions? Any reaction to some of the above notes?

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

23 Tweetable Insights From "The Lean Startup"

Dharmesh Shah — Wed, 14 Sep 2011 11:38:00 GMT

Across different industries, there are people that I deeply respect. This respect is based fundamentally on two attributes:

1) They are disproportionately right with their ideas (or at least, I think they're right).

2) They are exceptionally good at communicating their ideas at useful levels of abstraction.

In the marketing industry, one of my favorites is Seth Godin. When it comes to startups, one of my favorites is Eric Ries.

I had dinner with Eric in Boston when he was in town for the Business of Software conference (it's coming up again, you should go. I'm speaking again, for the 4th year in a row). During that dinner we chatted about the book Eric was working on. I sympathized with his plight. Writing a book is hard, even if you're a good writer, like Eric. I'm happy to announce that Eric's book was released today. If you're reading this blog (which you clearly are), you should read Eric's book, "The Lean Startup". Seriously.

The following are some quick quotes and insights from Eric with convenient tweetable links (so you can spread the wisdom and look really smart and clueful to your twitter followers). Enjoy.

23 Tweetable Insights From "The Lean Startup"

1) Our future prosperity depends on the quality of our collective imaginations. [tweet]

2) A startup is a human institution designed to create under conditions of extreme uncertainty. [tweet]

3) The answer to strategic plans being difficult and disorienting is *not* to rely on chaos. [tweet]

4) The goal of a #leanstartup is to move through the build-measure-learn feedback loop as quickly as possible. [tweet]

5) Lean thinking defines value as providing benefit to the customer; anything else is waste. [tweet]

6) The goal of a #leanstartup is to learn what is valuable to the customer. [tweet]

7) Leaning is the essential unit of progress for startups. [tweet]

8) Test assumptions you've made about your business, its customers and how you're serving them. [tweet]

9) Our job is to find a synthesis between our vision and what customers will accept, not just to capitulate. [tweet]

10) Just trying to make the customer happy does not produce a sustainable business model. [tweet]

11) True startup productivity is not just making more stuff, but systematically figuring out the right things to build. [tweet]

12) If you don't know what you're testing, all the results in the world will tell you nothing. [tweet]

13) Begin with a clear hypothesis that makes predictions about what is supposed to happen. [tweet]

14) The goal of every startup experiment is to discover how to build a sustainable business around the vision. [tweet]

15) It's not enough to just give it a whirl; you've got to give it a whirl with purpose and direction. [tweet]

16) Early adopters are those who crave a solution to the problem you've identified. [tweet]

17) Ask yourself: Do consumers recognize that they have the problem you are trying to solve? [tweet]

18) Build not only a product that can sell well, but a platform through which to deliver it. [tweet]

19) If we do not know who the customer is, we do not know what quality is. [tweet]

20) The three A's of metrics: actionable, accessible and auditable. [tweet]

21) Vanity metrics allow you to form false conclusions and live in your own private reality. [tweet]

22) Lethargy and bureaucracy are not the inevitable fate of companies as they achieve maturity. [tweet]

23) Be tolerant of all mistakes the first time, not don't make allow the same mistake twice. [tweet]

Did any of these strike a chord with you? What's your favorite insights?

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

Why Venture Capitalists Invest In Pigs, Not Chickens

Dharmesh Shah — Thu, 08 Sep 2011 17:18:00 GMT

The following is a guest post from Jeff Bussgang. Jeff is a serial entrepreneur and currently a general partner at Flybridge Capital Partners, a Boston-area early-stage venture capital firm. Jeff is also the author of “Mastering The VC Game”.

There is an old parable about the concept of commitment when it comes to breakfast. The story goes that when looking at a plate of the traditional fare of ham and eggs, it's obvious that the chicken is an interested party, but the pig is truly committed.

When I tell this story to entrepreneurs, my point is usually to contrast the approach VCs have to start-ups as compared to entrepreneurs. The VC is an interested party, but at the end of the day, if their start-ups live or die, they typically still have their job, their office and their portfolio of other investments. The entrepreneur, on the other hand, is the pig - truly committed to the outcome, with no fallback.

But lately I've been thinking about the parable of the pig and the chicken in the context of the characteristics that make a great entrepreneur - and the kind of entrepreneur that we VCs in general, and my firm Flybridge Capital in particular, like to back. In short, we like to back pigs - entrepreneurs who are truly and completely committed to the outcome of their venture, have a lot of stake, and no fallback.

How do we discern the difference between the two entrepreneurial archetypes? It's usually relatively easy, but sometimes subtle. Here are a few of the top characteristics we see in entrepreneurs who appear to be exhibiting behavior that suggests they're more like "chickens" when it comes to their start-up:

1) Prefer to wait to start their venture only after they receive funding ("We are ready to go, as soon as you give us your money." ...um, does that mean you won't start the company if I don't give you my money?).

2) Don't quit their day jobs before receiving funding. ("This has been a side project for a year, and I can't wait to focus on it full-time" ... um, if you can't wait - why are you waiting?)

3) Don't physically move themselves or their teammates to be in the same geography when starting their venture (think Eduardo Severin in the Social Network spending his summer in NYC).

4) Prefer to play a hands-off chairman role or look to quickly hire a COO/president in the early days rather than operate as the hands-on CEO/president. (I'll leave out the numerous examples to protect the innocent, but as a rule of thumb, companies with fewer than 40 employees don't typically need a COO).

5) Are unwilling to fully leverage their own personal and professional networks to drive recruiting, fundraising and business development.

On the other hand, the top five characteristics we see in "pig" entrepreneurs include:

1) Commit to the new company everything they have - even if that means moving their families, quitting their jobs, or even dropping our of their schools (as much as I don't want to condone or encourage this!).

2) Put themselves "out there" publicly and visibly with the industry, their relationships, family and friends. If the company is a failure, it will not be a quiet one.

3) Have not yet achieved a mega-success already and/or yet achieved wealth beyond the point of needing to work again. (I remember my mentor and boss at Open Market, CEO Gary Eichhorn, congratulating me when I became a first-time homeowner in the mid-1990s and observed: "I hope you got a large mortgage so that you are locked in and highly motivated to create wealth!").

4) Participate in a minimal set of outside interests and hobbies that aren't directly related to their business. Starting a company is a consuming, obsessive, 7x24 endeavor. Raising a family and remaining healthy is enough of a battle. When we see entrepreneurs with long lists of hobbies and outside interests, it's a red flag. One of my partners went so far as to look up the number of times an entrepreneur played golf one summer (which apparently is public information somehow, although I'm not a golfer so still don't know how he figured this out) as a barometer for how hard they were applying themselves to their new venture.

5) There exists a rare breed of entrepreneurs that have already had mega-success are so special and driven that they remain obviously hungry and scrappy. For these entrepreneurs, the key is to watch and see if they're still as hands on as they ever were (e.g., obsessed with the product, knee-deep in the financial model, out in front of the organization in selling). Again, these entrepreneurs are very special.

So what are you - the chicken or the pig? Investors clearly prefer one model over the other, not just in the founder, but in the entire team. As a result, as you are assembling your start-up team, be careful not to hire chickens. In the eyes of prospective investors, you may find it's even less kosher than hiring pigs.

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

3 Quick Entrepreneurial Sales Lessons

Dharmesh Shah — Tue, 06 Sep 2011 16:11:00 GMT

The following is a guest post by Daniel Tenner. Daniel is the founder of several companies including GrantTree. He blogs about startups and founders at Swombat.com. You can also find him on twitter.

3 Quick Entrepreneurial Sales Lessons

"Every no gets you closer to a yes."

Permeating the human science (or art) of sales is this fundamental idea: sales fail all the time.

One of the hardest things for me to get used to, as a geek/artist/writer in business, is the constant disappointment of sales. The harsh reality, however, is that many leads will not turn into clients, no matter how exciting they might seem at first. And yet each lead must be given attention, enthusiasm, dedication, and so on, if it is to have any chance at all of turning into a sale.

Some people are very good at working on 50 new deals a week knowing that 45 will fall through. They deeply, personally understand that every no gets you closer to a yes, and yet don't let it distract them from pursuing every answer with tenacity, ferocity even. We call them salespeople, and many people look down on them, but those people often make the difference between a business and yet another failed startup.

Competent salespeople, particularly those with an entrepreneurial attitude and the ability to work things out as they go along, are rare and precious. Treasure them.

"It's not over until the fat lady sings."

However, even if you're not a salesperson, you will have to pursue and close deals. Deals, like sales, fail all the time. Never ever make critical decisions that depend on a deal happening (be it a grant application, an investment, a merger, or even just a new customer), until the money is in the bank. Even happily signed contracts are no guarantee that the money will actually change hands some day. The only thing you know for sure when you hold a signed contract in your hands is that the other person knows how to use a pen.

As an extreme example, one potential GrantTree customer we were talking to, at one point, asked us, "so, if you're going to write this application for us, can I take on some loans right now on the basis of this grant?" That is almost exactly the wrong attitude when dealing with any kind of deal that's not certain, and as we've already established, no deal is ever certain until the money is in your bank account.

Never base future expenses or commitments on money that's not in the bank yet, even if it's owed to you, even if you have an apparently ironclad contract. Any number of things can happen between now and then that can change that certitude into a painful (hopefully not fatal) disappointment.

"A bird in the hand is worth two in the bush."

Another truism of sales, which emerges from the high failure rate of any deliberate sales endeavour, is that customers that you already have on your books are worth much more than potential leads.

This is actually something many (though not all) salespeople fail at, because of the natural focus of sales around getting more leads and converting them. However, as a business owner, you can't afford to make that mistake. It's very tempting, when chasing a $100k deal, to look down on the 4 or 5 $10k deals you already have as a comparative waste of your time. And maybe, when you regularly close $100k+ deals, you should start turning away customers that are just too small for you. But until then, treat every customer as well as if there were no more leads coming for the next year.

If you treat customers well and they like you and are happy with your services and products, they will provide the best kind of leads: "hot", word-of-mouth leads. They will also provide you with testimonials, client success stories, and other sales materials that you can use to get more leads and more sales. Your customers can be your best salespeople, but only if you treat them right.

Conversely, if you treat your customers badly, word will spread about that too, and leads will mysteriously become ever harder to close. So, treat them well.

"Go forth and multiply" ... your revenues.

What do you think? Do you have any entrepreneurial sales lessons of your own?

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

How To Pick The Right Idea For Your Startup

Dharmesh Shah — Mon, 29 Aug 2011 16:31:00 GMT

The following is a guest post by Kapil Kale, co-founder of GiftRocket, a Y Combinator-backed gift card company. Kapil usually blogs here.

As a current startup founder, one of the most common questions I get is how to come up with a good startup idea. I most often get this question from non-technical or semi-technical founders who would probably regard themselves as outsiders to Silicon Valley.

Picking which idea to work on is the most important decision a founding team can make. Execution is important, but is too amorphous a concept to be called a decision by itself.

Team is important too. But while investors can choose between different founding teams based on their experience and such, the team is a constant once the founders establish it. And the lone founder who is still recruiting a team can't really change him or herself, but does have control over what idea he or she pitches to potential recruits.

I'll do two things in this post. I'll lay out some criteria for what makes a good startup idea. Then, I'll describe some ways that people can successfully come up with ideas that satisfy those critera.

Four Guidelines for Picking the Right Idea

1) Your idea needs to do at least one of three things:

Make something difficult easy: For example, AirBnB made finding an apartment rental easy. In fact, almost all businesses derived from Craigslist follow this criteria-- they make exchanging things between people very easy. My startup, GiftRocket, makes it easy to buy a gift for someone anywhere in the country. Even social tools like Facebook and LinkedIn make staying in touch with people easy, though that is a bit more abstract. Just to test the ubiquity of this quality, I checked the companies in YC's W11 batch and 83% fell into this category.

Make something expensive cheap: Hard technology companies like Apple make the most advanced technology available to a consumer in an affordable package. Deal sites like Groupon do this far more directly. People care about money, and if you're offering them something for a discount, there's a clear value proposition. I did a quick count, and 14% of YCW11 companies matched this quality.

Make something that entertains: Music, gaming, video, and media companies entertain. Zynga solves problems of loneliness and boredom. 23% of YCW11 companies checked this box.

These are all a more specific way to say that your idea needs to fulfill an existing need, and more generally should be something people want.

2) Pick something with a big market pain.

Market size isn't always a great indicator of potential for success. The better question is how happy are you making your users? If you make a few users exceptionally happy, that might be far better than making a lot of users marginally happy. That means that the market for your product may be small, but if you're creating thousands of dollars of value for those users by solving a major problem for them, they'll seek you out. User acquisition and marketing problems just go away.

3) Commerce ideas are very different from social ideas.

Social software (e.g. foursquare, Instagram, Twitter) follows a different path than ecommerce. These companies have userbases that are valuable because of their engagement, and are ultimately monetizable for their data. Foursquare sells their data to local merchants. The key metrics for companies like these are user growth, virality, and engagement.

Compare this with ideas that have a clear business model from the start. For example, Hipmunk and SeatGeek make money on affiliate for flights / hotels and ticketing sites. The key metrics for these businesses are revenue, and eventually margin.

There are big impacts for how you get users to your product depending on which one of these your idea is. Social software usually has to rely on word of mouth and virality. On the other hand, commerce businesses have more concrete customer lifetime values and can buy customers and traffic using ads.

4) Pick something where you can empathize with your users.

Ideally, you would be building something for yourself. However, a lot of founders are able to build something that they don't regularly need-- it just requires that they are good at getting and acting on user feedback. So for example, if you were building some software you needed at your old job, you still might need to build it with the interests of the procurement officer or IT manager in mind.

How to come up with good startup ideas

1. Keep a log of things that you use that "suck" throughout the day.

Life is full of inconveniences, and the neurotic complainers actually have a huge advantage in this department. Every time I get in the cab line when I get to the airport, I always think "there's got to be a better way." Out pops an idea like Uber, or some sort of ride sharing service that helps me split cabs with people nearby.

2. Look through your business and personal credit card statements.

If you're already spending money somewhere, is there a way to cheapen the amount that you're spending? Or do you feel like you're not getting your money's worth on something you bought? Spend statements are a great way to see where there are big markets waiting for disruption.

3. If you work for a company, think about some of the biggest issues that you face.

I was a former management consultant, and version control for documents and powerpoint files was a massive problem for us. I would stay up late at night writing a deck, and find out the next day someone else was working on that same section. Other times, I'd realize that I was using an older version of a deck, working on slides that had been deleted in later revs. There should be solutions to those problems out there, but what exists isn't still sucks. I'm convinced every company out there still has multitudes of these problems, and if you've ever worked for one you've probably encountered them.

In Conclusion

Given even the most experienced investors miss out on ideas that end up being very successful, the only real way to know whether something will be successful or not is to launch it and see what happens. There's no shortage of ideas. Every YC demo day, including the one that just happened, there are always 4-5 companies where everyone wonders "why didn't I think of that?"

But before dedicating your life to a startup idea-- it's certainly worth having a good brainstorming period of a couple weeks, or even months, where you familiarize yourself with the spaces out there and commit to working on something.
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Have you been through the startup idea selection process? Have any of your own tips or experiences to share?

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.