The ancient Greek aphorism “Know thyself” is very relevant to entrepreneurs. Most founders don’t give much thought to how their own personality type influences how well they run their startup. Remember, your reality distortion field distorts yourself too.

The good news is that for the first time since I’ve been building companies, entrepreneurs share a common framework for guiding their startups: the Lean startup. Sure, some people don’t use the right vocabulary and misunderstand Lean. But I find that Lean thinking has permeated the entrepreneurial community, so much so that some founders are following the principles without knowing the term “lean startup” at all.

The bad news is that there’s still a huge gap between the understanding of lean startups and the practice. It’s frustrating to see and I think one reason is founders don’t take into account how their own personalities influence the process. I haven’t seen anyone ask: “How is my own personality getting in the way of being lean?”

To help answer that question, I’ve created a list of the top 5 personality archetypes I come across, as well as some things to watch out for if you recognize yourself in one (or more than one) of them:

• “Smartypants”- You’re very knowledgeable and you want people to know it. You love complexity. You believe that superior intellect and knowledge will close the sale, investment etc.
  • Watch out: you’ll ignore the simple solution (which is often the best one) in favour of something more impressive. You’ll discount what customers say because they aren’t smart enough. You’ll be attracted to innovation vs execution.
• “Intelligent Architect”- Most engineers have this personality type. You like to build machines and you like it when they work as planned. You like the design phase of projects because there are no customers in the design phase…
  • Watch out: you’re going to be very uncomfortable when your startup is trying to find a business model vs building a product. You can’t architect a solution when you don’t know what the problem is yet. Pivots will drive you crazy because there’s nothing wrong with the code.
• “The Advocate”- Most sales people (and almost all entrepreneurs) are strong when it comes to selling their vision or advocating what they believe in. In a meeting, especially a brainstorm, you talk rather than listen.
  • Watch out: when you’re trying to find product-market fit, you’d better hone your shutting up skills. You can’t hear your customers’ voices when you’re still talking. You already know your own position, it’s time to listen to others.
• “The Dreamer”- I saw a pitch deck recently for a hyper-local startup. Great deck, nice screenshots, but within 5 minutes the entrepreneur admitted he probably would never use the product, nor did he think anyone else would. It’s easy to envision success IF everyone used your product. It’s harder to make it so.
  • Watch out: you get excited about building an empire but you have a blind spot when it comes to actual customers and their problems. You’ll overestimate how well your product solves their problems.
• “Mom and Pop”- One great thing about Lean startups is that founders are getting in close proximity to customers to validate their businesses. Most people start with people they know in their community. If you’re a natural hustler, you’ve probably walked down Main Street knocking on doors and signing up beta customers.
  • Watch out: You’ll hold as proof of your business the fact you signed up 10 restaurants in your neighbourhood. Instead of using (and possibly abusing) them to test your hypotheses, you’ll want to make them happy and get pulled in many directions. Be careful you don’t lose sight of the goal. You’re trying to build a scalable business, not a local consulting company.

Spend a bit of time thinking about who you are. Better yet, ask the people around you and make sure there are no sharp objects close by. There’s no value judgment here. There are no “good” or “bad” personality types. But the sooner you recognize your own personality type(s) the sooner you can get out of your own way.

nosce te ipsum

Editor’s note: This is a cross post from Flow Ventures written by Raymond Luk (LinkedIn, @rayluk). Follow him on Twitter @rayluk. This post was originally published on February 1, 2012 on Flow Ventures.

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Its winter right now, and that means for those of us in the north east its cold. We try to pretend its a good thing; that it keeps us focused. But the reality is we dont live and work here because of the snow, we live and work here because smart people love, more than anything else in the world [pg], to work with other smart people. And, make as many snow jokes as you want, but…

Pay attention to Toronto

Canada is the best country in the world to do business in [forbes], Toronto is the most multi-cultural city in the world [wikipedia] (suck-it NYC ;)), we get tax incentives for R&D [gov], and its the only city within an hour of one of the worlds foremost engineering schools [uwaterloo,coop program].

So, I say again, you should be paying attention. And if you’ve got your shit together you should be trying to figure out how to get a footprint here. Because believe it or not, we dont all want/have to be in the valley [fred].

All that being said, I still get this question a lot

There is a (very reasonable) expectation that YC companies make every effort to relocate to silicon valley as part of the program. And the fact that we have most of our operations in Toronto raises some eyebrows. My answer is really simple: The talent is here and it wants to be here. Sometimes I even go as far as talking about how much further our investment takes us when we spend it here instead of in the US, but at its root its a talent thing.

Toronto isn’t the only place in the world

Its true. I still spend a tremendous amount of time in the valley. And we have customers all over the world. Simply put there is no perfect place for everything. But if youre building a product business, or looking for talent, you could do much, much worse! Toronto is great for talent, and its a great place to live. Oh… and Im sure its not supposed to matter but like my good friend dave [blog] would say, “look at the scenery”.

But, its also a terrible place to raise money. Like I said, nowhere is perfect.

About Me

Upverter is my 3rd startup. I dropped out of highschool, and then university, both times to run startups. I’ve worked in Ottawa, Waterloo, Stuttgart, Bangalore, and Mountain View. I have never lived in Toronto before, so its a first for me, but we’re here because its where our team wanted to be. We are currently 7/7 kick-ass, and 6/7 Uwaterloo engineers who would just rather be here at home in Canada, than down in the valley. Oh, and if you’re smart, we’re hiring.

Editor’s note: This is a cross post from Zak Homuth (LinkedIn, @zakhomuth, Github). Follow him on Twitter @zakhomuth. This post was originally published on February 1, 2012. And like many startups, Upverter is hiring.

Ok, it makes me laugh every time I read GrowLab. The only way it could be better is when someone describes the GrowLab companies as “GrowOps”. They really did a great job in creating a corporate name that has a set of nuanced meanings (well maybe it’s not so nuanced).

Our friends from GrowLab are heading out on tour to find their next cohort. They are coming to:

• Toronto - February 13, 2012 Register
• Waterloo – February 14, 2012 Register
• Montreal – February 15, 2012 Register
• Edmonton – February 22, 2012 Register
• Calgary – February 23, 2012 Register

Sounds like an interesting night with Daniel Debow (LinkedIn, @ddebow), Debbie Landa (LinkedIn, @deblanda) and Jason Bailey (LinkedIn, @YVRJason) talking about startups, entrepreneurship, building companies in Canada, getting connected in the Valley, GrowConf, incubators and other fun things. The panel conversation is:

Are you an Entrepreneur or a Wantrepreneur?

What makes you different from other entrepreneurs trying to build start-ups? You are competing with thousands of entrepreneurs for the same resources, talent, and capital. How are you going to make sure that you attract the best people and funding? Is it about who you know or is it about how great your product is or the reach you have in the community?

In Toronto that I get to host the above conversation, it means that I’m going to have to represent for the “Wantrepreneur” side. Because there is too much awesomeness with Daniel, Jason and Debbie representing the “Entrepreneur” side. It should be a fun event and a great time for entrepreneurs to get or stay connected with each other. This is a great group to provide deep insight into the experience of building companies in Canada and selling them to Silicon Valley powerhouses.

Given the tour includes stops in Bucharest and Budapest, I can guarantee that someone will mention Summify (congrats guys).Also excited that Debbie and Jason will be joining us on Feb 16 for Founders & Funders.

Rob Lewis and TechVibes is reporting that ExtremeU (you can read our past coverage 2009, 2010, 2011) has launched a new Toronto based incubator that leverages their experience over the past 3 years. Mark Evans provides additional details that includes “$7-million in funding from Extreme Venture Partners, OMERS Ventures, Rho Canada Ventures, BlackBerry Partners Fund and BDC.”

Extreme Startups includes a who’s who of  the Toronto startup scene as mentors:

• David Ossip
• Daniel Debow
• Anand Agarwala
• Michael McDermentt
• Ameet Shah
• Albert Lai
• Leila Boujnane
• Ali Asaria
• Noah Godfrey
• Ray Reddy
• Rick Segal
• Salim Teja
• Derek Seto
• Nick Koudas

Congrats to Andy Yang, Sunil Sharma and Amar Varma in getting this thing launched. Plus how can this not be awesome with Andy Yang as Harold and Sunil Sharma as Kumar in Extreme Startupping.

David Crow and others (Huffington Post, TechCrunch) have suggested we’re experiencing an incubator bubble?

Incubators are built for the young. Students exiting school are already living the ramen lifestyle. That means they’re cheap, they have no kids, no meaningful obligations and there’s a good chance they’ll work close to 24/7. It sounds dreamy, if you’re an investor.

I’m old. I have kids. I’m not moving to Boulder or California for 12 weeks. I don’t play games in the office or do busy work. Why aren’t there incubators for me? I look at the incubators like 500Startups, YCombinator and TechStars and that is what I want. I just can’t participate. I can’t do the work and change my family life the way they’ve structured it.

What I need from a incubator is…

To Pay My Own Way

While new graduates come cheap, grownups are capable of paying their own way. I’d rather work with someone who has some skin in the game over so-called low-cost labour. I’m willing to make an investment in a startup as a career choice.

While most incubators offer low, bordering on zero, salaries that barely cover living expenses for someone living on the ramen diet. This doesn’t work for me. I need to be able plan for my family and my kids. What I need is something closer to an executive MBA program or a sabbatical. Continuing education programs are interesting because current employers and banks will let you borrow against your assets to get started. It requires larger savings or a working spouse to be able to fund my family during the initial startup experience. I’m willing to buy in to make this happen.

Hunger, Drive

Many new graduates will compare working in a startup with a plain old job. This startup thing is cool and all but it’s a ton of work and my buddy working at AcmeTech is already done work for the day and playing XBox online. Building a business offers you freedom. Freedom from what? Corporate politics, busy work, crappy work, basically the standard boredom of the 9 to 5. How can you value that if you’ve never had a shitty boss?

I work for more than myself. My family and their future is what drives me forward everyday. I work hard when I’m working. When I’m not, I’m with my family and friends, I’m taking my kids to hockey, piano etc. What I’m not doing is placating my boss with more busy work.

I want to build a successful business for me.

Access to Mentors

Tell me if you’ve seen this. You’re sitting around a table discussing your projects and companies. Someone leaves the table early. One of the people remaining at the table proceeds to lay out in detail why that guys venture is going to fail. Why didn’t you tell him that when he was here?

The solution is for the guy who left early to get a cheque from the remaining person. As soon as she writes that cheque, she’ll sit that guy down and tear him apart and he’ll be better for it. Startups can drown themselves in mentors and advisors. I want to be at the table everyday with people truly invested in my project. Failure for no reason is not an option.

Learning The Right Skills

If you have a job today in technology and aspire to be an entrepreneur, typically the first step is to quityour crappy day job. You don’t have a team and project for your new business so you start consulting to pay the bills. You’ll be a great consultant, you’ll learn how to sell your hours, how to find clients, how to deliver services well. Skills that have almost nothing to do with taking a product to market. Once you head down this path, the likely destination is lamenting over some pints how “I was going to do product back when I left my job”.

Startupify Me

Startupify certainly wasn’t conceived as an incubator for grown ups, however, it does fill a lot of these gaps. While it likely constitutes a pay cut, we pay you to work on startup projects learning new technologies and the startup game. We partner you with established businesses who have a proven track record of creating sustainable businesses that deliver value to their customers. Everyone at the table has skin in the game. We go into our client companies, find and develop opportunities to build differentiated software to grow the stand alone value of their business.

If you have work experience as software developer and are ready to join the entrepreneurial revolution, we should talk.

 Some rights reserved by Maximus_W

I was having coffee with a founder the other day and we started talking about his hiring plans. Since he’s a non-technical founder (which Ben Yoskovitz claims is a dead-end to begin with) he had several top coders in mind, all of whom were earning big bucks with larger companies.

“I’m paying them a little bit of money but they’ll join full time once I can raise money,” said the founder. It’s something I hear a lot, especially from non-techie founders.

I went back to review some blog posts on Lean hiring, and I came across Eric’s post “Lean Hiring Tips” and Mark MacLeod’s “Fat Hiring for Lean Startups“. Both are worth your time. But I think they’re also written for startups that are already up and running and need to expand. I’m interested in very early stage hiring, e.g. when you’re one person looking for a co-founder or you’re two people looking for your core team.

Companies always take on the characteristics of their founders and in the rush to scale, I find many startups don’t stop to consider how they’re establishing the DNA of their company. The first few hires are the most important ones you’ll make.

• Hire for an experimental mindset – Look for people who enjoy encountering problems, designing ways to solve them, and finding proof of success or failure. Skill at building, whether it’s software or a marketing plan or a sales funnel, is irrelevant at this point. You need people who will volunteer to scrap their plans, not fight you when you want to change course.

How? Join a hackathon, Lean Machine or just create your own (laptop + Starbucks = hackathon). Give your (potential) team a crazy challenge and see who exhibits the right behaviours.

• Hire generalists – A lot of people will disagree with this advice. If you can find the best Python developer in the country go for it. But only if she’s also willing to cold call customers, crank out some Web site copy and help you whiteboard the business model. Your #1 focus is to find a business model that works. The latent technical talent on your bench won’t help you unless you graduate from this first phase

How? Again, hackathons are great practical tests. No matter what their skillset, look for passion about your business model and solving customer problems.

• Prioritize UX over development – This is easier said than done since there’s a shortage of UX talent. But it’s better to have a kick-ass UX person and a mediocre developer than the other way around. UX will help you find your business model and most (good) UX people already have an experimental mindset and generalist attitude

How? Actively seek out UX people, not just developers. You may need to work at a distance if you can’t find local talent. Consider working with less experienced people if they can prove themselves through testing.

• Get skin in the game – Leaving a six figure job to join your startup for a paycut is not skin in the game, or not enough in my books. Hire those people later when you’ve found your business model, have money in the bank, and need to scale. Skin in the game means working full time, just like you are. It means putting their reputation on the line, raising Ramen funding from friends/family/spouses and saying “I’m going to see this through until we fail.”

How? Stop feeling like you’re a poor startup that can’t afford to pay top salaries. Those aren’t the droids you’re looking for. Think of finding your co-founders like raising your first round. You need to get them excited to invest in your business.

I know this advice seems to apply better to “Web” startups than general technology startups, which is a common criticism of Lean startups in general. But I think it applies more broadly. If you hire for the right attitude, you not only solve the critical product-market fit problem, but you set the DNA of your business right from the start. I guess I haven’t seen too many examples of startups failing because they lacked a specific technical skill. They probably think they failed because of it though.

In the end, I guess “hiring” is the wrong word to begin with. You’re looking for people to co-found a business with you. You aren’t buying their skills, you’re asking them to invest in helping you shape the course of your business from the very beginning. Maybe not all of them (including yourself) will be able to scale up with the business. That’s a problem for another day.

Editor’s note: This is a cross post from Flow Ventures written by Raymond Luk (LinkedIn, @rayluk). Follow him on Twitter @rayluk. This post was originally published in January 12, 2012 on Flow Ventures.

The Founders and Funders dinners are a series of invitation-only dinners that are held across Canada several times a year. They are a sort of summit on the state of each community and we do our best to make sure that the best startups possible have a chance to meet the most respected and active investors who are doing deals in those cities. There is always a mix of locals and people who come in for the event as a way to get connected.

We believe that if you cannot sit down and have dinner with someone, then you probably shouldn’t invest in or take investment from them. This is a great chance to apply a social filter to the dealflow in any one place.

What is it?: An invitation-only 3 course dinner. Cocktails before, cocktails after….

Who is coming?: The top investment-ready startups and active investors in Canada.

Where is it?: Downtown Toronto

When?: February 16th, 2012 at 6:30pm

How much is it?: Tickets range from $125 (startups) to $500 (service providers)

We are now accepting requests for invitations and the first round of invitations will go out this week.

To apply please use this form >>

We have also decided to include a brief fireside chat with Daniel Debow at this dinner. We rarely do this sort of thing at a Founders and Funders but 2011 was such a great year we thought it would be fun to look back on the ups and downs of Rypple through the years and how they got to their eventual exit, some of which was written about in Forbes this week.

Daniel and Rypple have also been a big part of the Canadian startup community and he has also been an active angel investor recently.

We are excited to hear what he has to say about how we can help build more great Canadian companies and how to build awareness in Silicon Valley when your HQ is back here in Canada.

We hope you will join us as we kick off another great year for the Toronto and Canadian startup community.

We will be announcing Founders and Funders dinners in other cities soon as well.

Technical Co-Founders need to find their voice.

I’ve been in the fray of building a startup for over a year now and normally I don’t think to write publicly. I usually feel like I am already too busy communicating with the team, programming, and planning. In that year I’ve come to the realization that there are not many resources out there for technical co-founders.

We are constantly wrestling with make-or-break decisions: What should you be doing at each stage in your company? How do your responsibilities change as the team grows from the founders to the first hires? What about at a team of 10? Of 50? Of 100?

I can’t help with 50 or 100 yet, but I can help you get from the idea to a founding team, to a team of 10, and I will continue to blog at each stage of growth as I learn what I need to do next.

This is my second time growing a team to this size and I know for certain that we’ve created more value this time.

Why are CEOs toilet scrubbers?
Jevon is more qualified to answer that than me, but in the early stages a CEO needs to keep the fridge stocked and the bathroom clean (a job description Jevon reluctantly accepts as true). They create a cool office environment. They are the Janitor, Caterer, Secretary, Executive Assistant, and more. A startup CEO handles PR, HR, product management, recruiting, marketing, investor relations, accounting, and anything else that needs to be done to keep the gears of a startup moving smoothly.

There are plenty of resources out there for early stage Business Co-Founders. Everyone loves and appreciates CEOs already. They are by default, the face of the company.

I’m starting to blog so we can all learn more about the responsibilities of startup CTOs.

Why are CTOs so awesome?
Technical Co-Founders are building the product. We’re pulling late nights so that demos run smoothly the next day. We’re building what will be bought and sold. Investors are attracted to our efforts. Customers find value in what we build. We are the VP Engineering, Project Manager, Product Manager, QA Engineer, DevOps, UX Designer, UI Designer, DB Engineer, Recruiter, etc. We’re responsible for performance, security, stability, front-end, back-end, training, technology roadmaps, patent filings, and more.

How do CTOs create assets?

1. We solve difficult problems with new technology to fulfill a big vision.
2. We attract engineers who are better than us to accelerate the roadmap to that vision.
3. We secure the intellectual property and data of our applications and users.

The end result is an asset of true value – An elegant and novel solution developed by a team who have grown to be absolute experts in the problem domain.

Yin and Yang
The truth is I can’t talk about what our technical team does at GoInstant without constantly being reminded of what Jevon, Dave and Ben do. One side is just not effective without the other.

It’s important to emphasize that none of the assets matter if you never find your customers, investors, partners and potential acquirers. You might build a beautiful technology, but without a product focus and real customers, technology rarely wins. Business Co-Founders, do your thing.

Value
There needs to be substance behind popularity or you’ll wash up quickly. You create value by packaging up and presenting the collection of assets in a meaningful way.

If you want to build a valuable company you need people to care about what you’re doing. You need customers who value your vision, but ultimately there needs to be something impressive under the hood.

There are many startups that are solving incredible technical challenges but without a compelling go to market, they get lost in time. If you’re in this position the best advice I can give you is to find an awesome Business Co-Founder. “Build it and they will come” does not apply.

There are also many startups with popularity and flair but no substance. At the end of the day, if you don’t have a big vision and a technology to back it up you’re going to come off as a poser. Find an awesome Technical Co-Founder. Be an awesome Technical Co-Founder.

 Some rights reserved by Raymond Larose

This is probably one of the most common phrases you hear from venture capitalists. It has become the de facto phrase from an investor that really isn’t interested in your startup, but wants to let you down easy. I make a conscious effort to avoid taking this backdoor, but I know that I have been guilty of it as well.

Recently, I was digging into a company and providing the entrepreneur with some feedback. After sharing a few thoughts I used the traction excuse – in this case it was legit. We liked the space, the entrepreneur and what he had accomplished so far. However, he didn’t have enough traction for it to be attractive as an investment yet. He quickly emailed me back with the question – “What do you mean by traction, specifically?”

Then it hit me – I have never actually been asked that! I think that investors are so used to using the term that they never put any quantifiable information behind it. I thought that it would be a good exercise to provide a quick overview of what traction looks like. Note that what follows is completely a generalization and their are many other factors that come into play in an investment decision. Also, traction looks very different depending on the type of company you are building and the market you are targeting. I will tackle three common ones in this post and try to estimate some figures that would be required for a Series A investment.

In consumer internet or mobile startups that does not have a transactional revenue model attached to it traction is all about the audience. The bar for what traction looks like in these companies has been significantly raised from 5-7 years ago when everyone was starting social networking and digital media companies. To be compelling to a VC you will need to show early signs of growth, 30%-50%+ month-over-month (MoM), and start to build an active user base of 100K+. Some VCs I have talked to say not to get your hopes up for a Series A investment unless you are around the 1,000,000 mark.

Lets take a look at one of the hottest companies in this space that just recently closed a round of financing, Pinterest. Don’t focus so much on the incredible growth they have recently experienced, but rather notice that they had it even when their user base was small.

A SaaS company will not experience the same kind of growth as a consumer internet company. It is, however, generally able to produce revenues from day one. The definition of traction for these companies looks more at the signs (or specifically, data) that the company is moving to a scalable and profitable model. In simple terms, the separation between the cost of customer acquisition (CCA) and the lifetime value of a customer (LTV) is shrinking and repeatable. This combined with a growth of 10%-30% MoM shows signs of traction.

An e-commerce company takes a longer time to show signs of traction that is attractive to investors. This stems from the fact that it requires a considerable scale to make an e-commerce company profitable in light of low margins and expensive infrastructure. The same key performance indicators (KPIs) apply – CCA and LTV. However, unlike SaaS companies there are going to be considerable capital and fixed costs in an e-commerce company to consider. In general, growth rates of 10%-30% MoM and a 12-month run rate of over $1 million are signs that the company has traction.

I want to re-iterate that this is a generalization and their are many other factors that come into play in an investment decision. However, I wanted to try and provide some quantitative numbers for context.

Another question that I know will come up is in relation to what kind of traction is required for seed/angel investments. That is a whole other post, but I will share a great comment from my colleague Karam. While a Series A is all about traction, seed investment is all about momentum. This momentum can take a lot of forms – traffic, sales, product development, recruitment of a team or even investors who have already stepped up to the plate.

Don’t wait until you have hit these metrics to reach out to investors either. In every case, an investment starts with a relationship that has to be built and investors want to see lines not dots. If you are moving in the right the direction and building traction make sure you reach out!

Editor’s note: This is a guest post by Kevin Swan (LinkedIn, @kevin_swan). Kevin has cut his chops doing product management at Nexopia.com before becoming it’s CEO. He moved to the dark side with Cardinal Venture Partners and is now a Principal at iNovia Capital.   Thankfully he is an MBA dropout and that’s why we like him. Follow him on Twitter @kevin_swan or OnceABeekeeper.com. This post was originally published on January 12, 2012 on OnceABeekeeper.com.

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This may be a question of semantics but here’s a question for you: When does a startup stop being a startup? At what point does a startup become a small company or a plain and simple company?

It’s an interesting question because it’s easy – and probably lazy – to describe less established high-tech companies as startups. As well, the word “startup” is lot sexier and appealing than “small business”.

So how should a startup be defined? Does it have to do with the evolution and life-cycle of its product? Is it the number of employees? Is it linked to revenue? Does it have to do with how long a company has been around? Can a startup have 10s of thousands of customers even if none of them actually pay for a service?

For example, is Freshbooks a startup despite the fact it has been around for several years, it has 80 employees and sales of about $10-million give or take a few million dollars? It’s sometimes called a startup but it’s more accurate to call it a small company.

For the sake of argument, here are some possible criteria for startups:

1. Less than 20 employees. Once you get more  than this number of employees, a company starts to have “departments”
2. A product still in development (pre-launch) or in market as a beta for less than six months.
3. No sales or sales of less than $1-million, which means it’s a mini-business as opposed to a small business.
4. It’s less than a year old, although there are companies that do go from zero to sixty in less than 364 days.
5. No customers or only a handful of customers, who may or may not be significant clients dollars-wise.
6. It has raised more than $5-million in venture capital. With this kind of cash, a company can support having a large team.

For more thoughts, check out this Q&A on Quora, as well as a recent blog post on Business Insider.

Editor’s note: This is a cross post from Mark Evans Tech written by Mark Evans of ME Consulting. Follow him on Twitter @markevans or MarkEvansTech.com. This post was originally published in January 11, 2012 on MarkEvansTech.com.