The 10 Commandments of Startup Success

Tim Ferriss has a great compilation from the "Masters of Scale" podcast titled "The 10 Commandments of Startup Success with Reid Hoffman". Here are the commandments themselves (along with the audio time stamps) including some quotes and extracts from the audio that I found especially interesting (in italics).

1: Expect rejection. [09:14]

2: Hire like your life depends on it. It does. [19:26]

“A combination of Persistence and Curiosity (what you care about) is a great indicator of future success of a knowledge worker” - Eric Schmidt

“For sales, we hire Olympian and football players, because it indicates the level of discipline they have developed at an early age.” - Eric Schmidt

“Are your people self confident enough to have people stronger than them around them. You should never hire someone to work for you who you would not like to work for (in an alternate universe”)” -  Mark Zuckerberg 

3: In order to scale, you have to do things that don’t scale. [25:37]

4: Raise more money than you think you need — potentially a lot more. [36:18]

"Take the money whenever and wherever it becomes available. You never know when funding might become unavailable." -Reid Hoffman

5: Release your products early enough that they can still embarrass you. Imperfect is perfect. [44:45]

6: Decide. Decide. Decide. [1:00:16]

“The fighter pilot who has the faster OODA loop wins. The other one dies.” - Silicon Valley saying (OODA = Military origin decision cycle of Observe, Orient, Decide and Act.).

Commandment 7: Be prepared to both make and break plans. [1:03:13]

“Figure out what your systems are going to be later (when you become a larger company) and do it now” - Sheryl Sandberg. (She provides the “not so silly” example of how there was resentment among employees when Facebook - since it had become large so quickly - had to take back its practice of celebrating everyone’s birthday.)

8: Don’t tell your employees how to innovate. [1:07:21]

9: To create a winning company culture, make sure every employee owns it. [01:12:32]

Netflix compares themselves to sport teams (which is about performance) and not family (since the latter implies unconditional love).

10: Have grit and stick with your hero’s journey. [1:23:22]

11: Pay it forward. Use the momentum of your own success to move the success of others. [1:26:03]

Quick Link: Scaling a Service-based Business

Interesting episode at Smart Passive Income where Pat Flynn and Josh Shipp analyse a real life small business (a laundry service) and provide on some new approaches for scaling it.

I especially like Josh's note on Gathering Intelligence from Existing Customers by asking the following questions:

1. What is something you need ongoing support for?
   The answer will provide ideas for creating Recurring Revenue opportunities
2. What is the #1 challenge in your biz, life? (True solutions)
3. What product or service do you wish we offered? (“Here’s what I’d pay for”)
   
4. How would you describe us to someone you care about in ONE sentence? (Clear brand)

Quick Link: "Scale up five times your current size OR ELSE!"

A "war stories" filled interview (source: Entrepreneur on Fire) with Tom Ziglar, son of the well known sales book author Zig Ziglar.

Especially attention grabbing is the part where he recommends entrepreneurs to think about how they would refashion their business if someone were to demand ("by holding their family to ransom!") that he/she needs to expand revenues five times in the next year, or else!

"VC is a time bomb"

David Heinemeier Hansson, Partner, 37 Signals (Bio)

A super episode from Stanford’s Entrepreneurship Corner series. Highlights of the talk:

It's a myth that entrepreneurs need to be workaholics- In knowledge businesses, where ideas matter more, it's key to have a well rested mind to be productive in the 5-10% of your time that matters the most. Overwork introduces mistakes and, in any case, you cannot outwork a Microsoft or a Google. (Episode Minute: 22.00)

"VC is a time bomb" (Minute: 16:30)

- Unless you are building a semiconductor plant (or some other similar capital intensive businesses), accepting VC money upfront is harmful.

- It generally takes longer to build good businesses than VCs' exit time frames. Rocketship startups - which go from scratch-to-IPOs in 4-5 years - are most often the exceptions.

- While an average entrepreneur would be very happy with $1-M a year payout (especially if it goes straight into his bank), the VC business is hits driven. "For a VC, small is inconsequential". By targeting a small but very profitable business, the entrepreneur increases his odds in terms of depending on his skills (versus needing to timing the market right).

- As much as possible, invest your own money - which will ensure that you have a sense of urgency to get profitable, you will hire more carefully, etc. and focus on "profit share" in the market versus "revenue share".

- Some entrepreneurs tend to get "addicted" to VC fund raising and hence don't want to piss of "their dealer".

PR "buzz" is not for companies that are doing great
- in terms of profits, trying to increase their margins, etc. (Minute 56:00)

"Startups Don't Need to Fear Big Cos" (Minute: 40:00)

- The kind of products you develop as a large company that will throw a 30 member team at a project for 2 years with unlimited resources, is very different from a 3 member team with limited resources and need to break-even ASAP

- There's no correlation between structure and scalability. There is no need to add more people every time your revenues are up by $500-K or $5-M. In fact, the venture is scalable if you DON'T need to add people, every time your sales goes up. (Minute: 35:00)

"Do not disconnect decision makers from doers" (Minute: 51:00)

- Avoid "Manager Managers". Everyone must "do stuff". Else they will fill out eight hours each day by creating bullshit policies.

"All Planning (at a startup) is just harmful guessing" (Minute: 10:40)

"All decisions (in a startup) are temporary" - Hence taking any decision is better than not taking any (Minute:10:40)

Why its good to start up during a recession
- During a recession, customers need to desperately lower costs and will give startup companies (that offer a drastically lower cost structure) a chance (vs large, "safer" companies). (Minute: 53:00)

For Wannabe Entrepreneurs among MBA Students
- Conciseness of Communication (Unlike Professors, customers don't appreciate 20 pages)

- Work for someone else before you start your own company. You can be a good boss, if you have not lived in the shoes of an employee.

Listen to the audio from here (mp3) - 59:39 Minutes, 27.3 MB
(Use Right Click > Save As to download to your desktop)

The Video

"Scalability is easy"

Andrew Frame, CEO, Ooma (Bio)

Source: Stanford’s Entrepreneurship Corner

The Podcast (mp3) - 56 Minutes, 25 MB
(Use Right Click > Save As to download to your desktop)

Highlights of the talk (links point to corresponding video snippets):

* "Scalability is Easy - If you have a leadership team that can scale, the company can scale"

A team member with both startup experience and big company experience is the ideal, since he/she can bridge between the two.

* "It's hard to start any kind of company. So, why go after a small market?"

* As the company scales, it's important to have a shared vision to ensure alignment among employees.

* Fire (wrong hires) faster at the executive level

"Go with your gut; don't rationalize""Praise (employees) publicly; criticize
privately"

* Create a board with "CEOs who've been there before" and build personal relationships
with each of them.