A collection of notes on startup and small business operations.
I've built a few companies. During the 1999-2001 I had my first startup experiences. I joined an early stage company (Everdev) that sold app-site development services and a content management platform.
The Happy Path
- Have an Idea
- Customer Development
The Un-Happy Path
- Have Idea
- Skip Canvas
- Start building PRODUCT
- Forget Marketing
- Realise room is empty, clients are scarce, revenue is zero
- Start blaming each other or some bullshit "market forces" or "we were to early"
Prime Objective: Get to Cash Flow Positive
Get some revenue, some how some why. Revenue proves traction, any other metric you can imagine is a BULLSHIT metric for proof of traction. Think "beyond a reasonable doubt".
Start a Business
Start a Sole-Prop if you're just getting started. It's very easy and inexpensive to ramp-up from Sole-Prop, to LLC to S-CORP to C-CORP. It's difficult and expensive to unwind or to roll-back.
A tool called [Stripe Atlas]() can help.
-- @todo Can we get a Checklist? -- @todo What About a ENT "Canvas" for Fund Raising -- @todo Canvas All the Things! -- @todo ENT should have a Prepared One-Sheet + Link to Doc-Set Magic
Books / Links
SAC YouTube Channel, Some Recordings have Books "Angels" by Jason...something "Calacanis?"
Angels & Syndicates
- FFF, Heros, Angels
- DD Focus: TAM, Simple Company (simple cap-table), Good Team
- TAM: >$5B
- Proven Team: 18+ mo together? All Key Players on Cap-Table
- No Surprises!!
- Buying the Team more; INT is buying BEFORE the "Pivot"
Seed (eg: Priced)
Angels and Syndicates & Seed
- Serious Money
- DD Focus: Product/Market Fit ("PMF"), Unit Economics,
- CAC: Customer Acuisition Cost
- ASP: Average Sales Price
- ICP: Ideal Client Profile
- CLTV: Customer Life Time Value
- Stickyness: IP,
Seed and Early Stage Venture Funds
- DD Focus: Scale
- Documented & PRoven Scale Metrics
- Control of Churn, not a "leaky bucket", doing client exit interviews? Active Surveys?
=50 Clients at ASP
- Margins Good/Real
- Eye on Next Target, Customer Segment, Growth Area
- Capital Stack?
- Thesis: Bio-Pharma, FinSaaS, etc.
- Ability to write this check
- Ability to say "no" or "not yet" ** Not Yet is a big deal
- Passion for Service
Table Stakes for ENT
Must haves for getting started
- Identify Lead -- "big dogs", "whos in charge", audience research
- Organized Documents
- Legal: Articls, Cap-Table, etc, etc, keep it clean and tidy
- Pitch Deck
- Financials: P&L, Balanace Sheet, Projection
- Team Details: Current Resumes, Future Hires, Options Details
- Team is on LinkedIn, AngelList, ProSeeder, Gust, CrunchBase, PitchBook, etc, etc
Most fail, lose all your money, lose some friends, etc.
- Who Is the Client
- What does the Prospect/Customer Smell Like?
- Where are they located? Where are they spending time?
- When do they care first? When do they care in a cycle?
- Why are there problems? Why do they want/need you?
- Who Is is the Payer
- Who is the User
- Who are the Competitors
- What are the Alternatives, Accessories, Supplements
Finding other Founders
T+MMM -- Techonology, Money, Marketing and Management
Could be skills found in 2, 3 people too; early you wear multiple hats.
Look for complementary skills; don't need three managers at the start; don't need three engineers.
Test your prospects, like dating for marrage. Can do "the thing" that's in their skill-set in "T" time? eg: I'll get the landing page built in 2 hours I'll get our legal paper work in order this week I'll get some ads running on $SITE and get 1000 clicks I'll get three meetings with investor prospects.
Startup events can be a great way to find new people outside your existing network. Eg: Startup Weekend - Real or Virtual
The Founders are all in for a long journey together, must have good alignment. Do you want to build the same size / type of busienss (eg: SMB vs VC Backed)? Do you have the same exit stratgey? Do you envision the same type of growth (steady vs hyper) Can you make the same time commitments
Use an Equity Calculator
- Ask HN: Where to meet non-technical cofounders? | Hacker News
- I Don't Want to Be a Founder | Hacker News
Practice these, really, practice -- and time your practice. Don't want to just read off a transcript, needs to feel dynamic.
Be Ready for REMOTE PITCH -- RECORD IT; Practice TESTING the Meeting Software & your Remote Access Setup.
Make sure you're skipping the UMs and stuff. If you have a CTA make sure you land it (at the end).
NOTE: Be aware of Private vs Public Solicitation Reg D 506(x) So don't ask about specific money, or round or amount to raise if it's possible it could be considered Public.
Market Size, Growth of any Metric (Audience, Followers, Prospects, Clients, Wait-Lists, etc)
Expertise / Solution
$COMPANY_NAME does $X for $Y We have a TAM of $X and current $REVENUE We are looking for $ASK
More of the same but, longer still
The CTA for this one should be UNIQUE from the CTA in 1m, 3m
More of the same but, longer still
The CTA for this one should be UNIQUE from the CTA in 1m, 3m, 5m
Pitch - 1 Minutes
No Slides, cover Team and Traction The Good Talking Points -- what's going right, where it's going.
Traction: Any Revenue? Path to Revenue?
Using this to get to the NEXT step. Don't try to get the FULL detail.
$COMPANY is a $THING_TYPE that helps $CLIENT_TYPE. Our $CLIENT_TYPE is a huge $MARKET_SIZE. Our $MAGIC helps with $PAIN.
Maybe like 30 seconds per bullet point.
- Company Introduction
- Team Slide (core, maybe advisors, etc)
- TAM, SAM, SOM - Who is the Client, Competitors
- Details about the Problem
- Prospects, Customers, Revenue, Funding
- Contact Information, ASK, Social Networks, Email, Phone, etc
Be prepared for details about your Team
Need to Be Clear about points -- don't go to far into the weeds on the technicial details.
Good to cover the Channels that are how folks landing at your business Be sure to cover GTM (Go To Market) process/strategey
Should at least touch on some information about Competition
There is room to talk about some KPIs but keep them simple. If you mention money, or money raised or contributed be prepared to talk about those details. When talking about finances be brief, if you're pre-revenue there isn't much to say.
Should still stay focused on points, and give enough pause for inventors brains to absorb, riff and comeback.
Charts are not such a good idea, expecially detailed one -- three huge bars is MAYBE acceptable.
Contact information is critical, The CTA for this one should be UNIQUE from the CTA in 1m
How to build a SEgement.
Self Filter out the Folks who are clearly NOT interested. Don't waste time with them, save them in a "CRM" and maybe come back to them.
- How I learned to charge my customers | Hacker News
- Having 170 competitors in not an obstacle | Hacker News
Client says it looks great and wants the Product; but is waffling. Doesn't Commit Hard ($CASH) Maybe Routes you to Tier-2 Clients (really $TIER - 1) - This person is FAN not a CLIENT
ASK ABOUT BUDGET EARLY AND OFTEN -- What does a Purchase Look Like? What are the Metrics for Success
AARRR Metrics for Pirates
Acquisition, Activation, Retention, Referral, Revenue!
Original Here: https://www.slideshare.net/dmc500hats/startup-metrics-for-pirates-long-version
Some folks think that 10 calls a week is good Some folks think that 100 calls a day is good (with like 5 connects)
The Event Plan:
I know X about Y (eg: X=everyone asks this, Y=Puppy Care) (eg: X=biggest complains are...; Y=cannabis compliance)
Great, now prove it.
Collect 100 new target type $P Observe $P for presentation about $TOPIC Record the response, comparitive to $X to record how accurate your prection of $X is It's turning your feeling (soft-$QUAL) into $QUANT
Event Plan opens $TOPIC to get observations of $P against $X theory in the context of $Y Count things, some things, as measure.
Total Available Market, SAM, SOM
Identifiy these things, look at who they are and slice, slice slice into narrow segment.
Get into small SOM to for customer developement.
Don't to early Survey while you are doing Client/Customer Discovery! You need to connect with these early adopters at a differnt level. A Survey is for quantifying theoritical values to measure: (left v right v top v bottom)
Early we are trying to measure which feeling, which direction is the strongest and also evaluate WHY. Why is not a question that gets answered with survey.
- See AppFog/PHPFog Early Survey Example
- We've been running a bootstrapped startup for 1 year. Our top takeaways | Hacker News
- Raise Less Money | Hacker News
504 Investment Exception
Private Equity Rollup
Prices is $4k - $12k; rolls all smaller investors into an LLC as one line-item on the cap-table.
Bauban.io - Smart Private Equity
WeFunder - Lighter Capital -
Borrow Money; Then Get Revenue and Grow Revenue and pay back to buy back out the debt or equity vehicle they've used.
SAFE vs Convertable Note
Rule 1202 Qualified Small Business Stock 0% Captial Gains if held 5YR
Bunch of different options for how to get money from Investors. Reg506B, Reg504, RegCF, etc
Must have a falsifiable hypothesis
That is, make a it a test like:
By doing A we will get Q things in T time.
A is a specifici activity, narrowly scoped Q is a quantifieable metric, not just "more" clients but something like "50" or "100" T is a specific time frame
Staff / Employees
Keep everone on 1099 for AS LONG AS POSSIBLE.
This allows you to easily hire/fire folks in nearly any location.
If you hire folks on W2 type wages, you'll have to deal with loads of bullshit introduced by the various state governments. In each state you hire you'll have to make sure your payroll provider can handle it. You may need to add a registered agent (eg: Oregon) You'll hve to register with the SOS and/or the DOR and/or the DOL. Many cases require waiting days for paper-mail with registration numbers, these delays cost you a) time and b) cash. Some cases (CT) you have to wait for the first letter, to then use that ID for the next department, which also waits 10 days. So, now you've added 20+ days of waiting and at least two hours of paperwork for a W2 Employee. It's just not worth it.
Each one requires more and more paperwork you just don't have time for. Each one requires learing some one-off byzantine system. Each one requires recording and tracking some bullshit registration numbers. Each one obligates you to additional monthly, quarterly and/or yearly paperwork. Each one exposes you to risk that if any of those things are not done you'll have penalties. Each one could expose you to nexus in said State which may then also require you to pay some business taxes in said State.
It's such a waste of time and cash.
Groups & Meetups
A list of different groups and meetups
(Pitch Checklist by Category) [https://docs.google.com/document/d/12FBNFPq0V8jd-7qNXjpowpCMS71_jL4MMDt3OzCfvCE/edit]
- Top Reasons Why Startups Fail
- Lean Discovery Customer Problem Fit
Books / Links
Books and essays and presentations and other fancy things to educate and enlighten.
- THE ART OF MONEY GETTING or GOLDEN RULES FOR MAKING MONEY by P.T. Barnum
- The Four Steps to the Epiphany by Steve Blank
- Running Lean by Ash Maurya
- Lean Customer Development by Cindy Alvarez
- Scaling Lean
- How to validate your startup idea quickly | Hacker News
- Bootstrap finance and the cost of other people's money [pdf] | Hacker News
- Research Says Solo Founders Perform Better | Hacker News
- Heuristics to Generate Startup Ideas (2019) | Hacker News
- Venture Deals by Brad Feld
- Traction by Gabriel Weinberg
- Trajectory by Dave Parker
- Toyota Production System: Beyond large-scale production
- The Principles of Product Development Flow by Donald G. Reinertsen
- Principles for great product managers | Hacker News
- Angel Investing by David S. Rose