Do More Faster: TechStars Lessons to Accelerate Your Startup - Brad Feld
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Do More Faster: TechStars Lessons to Accelerate Your Startup - Brad Feld
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Brief Summary: This book contains information related to starting a new business. The book focuses on Brad Feld's company TechStars and contains sections about idea and vision, fundraising, legal and structure, and work/life balance.

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Other Books by This Author:
Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalists

Similar Books by Other Authors:
Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses

Notes and Excerpts from Book:
TechStars is a mentorship-driven speed accelerator that has helped numerous fledgling companies attract over $25 million in Venture capital and Angel investments. Why has TechStars generated so many disruptive and innovative companies? It’s the mentorship. We recruited more than 100 of the best internet entrepreneurs on the planet to become mentors in the program.

There are seven themes:
  1. Idea and vision
  2. People
  3. Working effectively
  4. Product
  5. Fundraising
  6. Legal structure
  7. Work and life balance

Once a year, in each city, we bring together about 10 internet startups with about 50 top internet entrepreneurs for a three-month intensive program. Six hundred companies apply every year for one of the ten spots. TechStars has funded 40 companies in Boulder, 20 in Boston, and 10 in Seattle.

We focus on two things, mentorship and community. Each mentor who participates is asked to focus on a single company or at most two if he has a great deal of free time. We carefully avoid the sort of "fly-by" mentorship where someone successful or famous stops by to observe with shallow feedback on each company. This is the magic of TechStars. Several amazing mentors pair with each company, pushing them to be the best that they can be. Most people think that the corporate startup is a single amazing world-changing idea. It turns out that this idea is almost always completely wrong. Many of the companies that have gone through the program are now working on something very different from their original idea. A surprising number of them are unrecognizable from the description of their business on the original application. Startups are about testing, retesting and quickly pivoting based upon feedback and data. Only through hundreds of small and sometimes large adjustments does the seemingly overnight success emerge.

Your Idea is Worthless
I’ve had hundreds of would-be entrepreneurs contact me with great news - they have a great idea. Entrepreneurs who behave this way overvalue ideas and undervalue execution. If you have a growing idea you fail to assume that a few very smart people are working on the same thing. I don’t invest in ideas. I control my down side by investing in good people who learn from mistakes and have other fundable ideas. One can steal ideas, but no one can steal execution or passion. Have you tried selling an idea lately? Almost anyone can come up with a great idea, but only a skilled entrepreneur can execute it. Skilled means flexible and action-oriented. Focus and most people balk, and delay exposing it to the real world. About 40% of the companies who go through TechStars describe themselves as substantially different after the three-month program ends. We love the founders but hated the idea. The willingness to change an idea is based on finding the strong entrepreneur not a weak one. Startup founders chose an insanely difficult path, so passion is a prerequisite.

Look for the pain. The more I deal with engineering problems, the less I want to be engaged with users or any other non-technical problem. I strongly believe that my time is best spent on solving really difficult technical problems instead of dealing with those pesky customers.

We set out to share ideas early and often with as many smart people as we could find. Many entrepreneurs are hesitant to share too much about what they are doing. They hold back some of their thoughts even when talking to people who could be incredibly helpful to them. David Cohen once told us that you can steal ideas but you can’t steal execution. We concentrated on becoming execution machines.

I like Apple because they are not afraid of getting a basic idea out into the world and iterating on it. I remember my first iPhone. It was like a StarTrek tricorder that constantly dropped calls on AT&T’s network, had a headphone adapter that didn’t fit any of the hundreds of dollars worth of headphones I owned, ran no applications, had no copy and paste ability, and was slow as molasses. A beautiful thing about Apple is how quickly they make their own products obsolete.

Usage is like oxygen for ideas. You can never fully anticipate how an audience is going to react to something you’ve created until it’s out there. That means every moment you are working on something without it being in the public arena, it’s actually dying deprived of the oxygen of the real world. By shipping early and often you have the unique competitive advantage of getting useful feedback on your product. In a rapid iteration environment the most important thing isn’t necessarily how perfect code is when you send it out, but how quickly you can revert. This keeps the cost of a mistake really low, under a minute of brokenness.

Forget the kitchen sink, I have seen everything included that killed many a startup. This is a disease. A startup fails when it sets out to have more features than the competition does. Most people use a particular service because it does one thing really, really well. We ask them to focus on their passion and to pick the smallest meaningful problem that they could solve better than anyone in the world has ever done before. Focus on the smallest possible problem you could solve that would potentially be useful. Focusing on a small problem has so many advantages. With much less work, you can be the best at what you do. If you get to be number one in your category but your category is too small, then you can broaden your scope, and you can do so with leverage. If you are the best in the world and think of "X," then it’s much easier to get X + Y. You’ll have credibility from your customers who already love you for what you do so well.

Find out one thing they love. You know you are onto something when the community starts investing any money to make sure it stays alive. As long as I listen to my customers, I never need to have another original idea. Go get customers, than listen. You are stupid; listen to your users. It’s simply impossible to learn unless people are using your products. You miss 100% of the shots you don’t take, you only truly fail if you stop trying; so fail fast, learn quickly and start again.

The three most important things in entrepreneurship are people, people, people. “If each of us hires people who are bigger than we are, we shall become a company of giants.” - David Ogilvy. This is why you want to hire people who are better than you. You can learn from those who are better, those who know more or have done it before. Everyday people have skills that you don’t have or will challenge you to develop, expand and enhance your own set of skills. Great teams of people move much faster than teams of weak people as great people feed off of each other. Knowledge grows exponentially. Better people are easier to manage and are more self-directed.

I like to tell other founders that you have to be so stuck on your idea that you literally can’t even quit. There are going to be a thousand times in the process that you are going to want to quit so if you are going to quit it’s smart to do it sooner rather than later. If you can quit quickly, you certainly should. If you can’t quit no matter how hard you try, then you have a chance to succeed. Programmer types and business types I know run in separate circles. I can’t believe that the guys I work with can consider a quote all afternoon, and they can’t believe that I can have back-to-back phone calls for a week straight having what often seems like the very same conversation.

Startup, seek friends. Your goal is not to sell stuff, it's to make friends. You are trying to find as many people as possible who want to be friends with your company, who care about what you are doing, and who want to help you. Long before you have anything to sell, you have made a bunch of new friends all of whom are ready and eager to help you succeed. Focus on making friends first, then remember to treat them that way. Nine of out ten businesses fail, or the 10% of businesses that do succeed have got a good gut feeling that solid mentorship is part of the secret thought.

What is part of a great start-up culture?
  1. No politics
  2. It’s not a job, it’s a mission
  3. Intolerance for mediocrity
  4. Watching pennies
  5. Equity driven
  6. Purpose alignment
  7. Good communication even in bad times
  8. Strong leadership
  9. Mutual respect
  10. Customer zest
  11. High energy level
  12. Fund
  13. Integrity

As one goes through life, you wind up hanging out with family, lovers and business acquaintances. You also have a spectrum of things you do to live, and things you live to do. The very luckiest among us get to hang out with the people who we really like and do the things we really love. Most people live on a spectrum where they do things they don’t like and spend time with people they are not thrilled with in order to subsidize their preferred pursuit. Most of the mentors will tell you they are in it for the fun. They simply love helping energetic entrepreneurs who may assume something good will come out of it some day. We think most of them will tell you that something good already has.

Many of the most successful people I know are very deliberate about randomness. Brad Feld has regularly random dates where he’ll meet anyone to talk about anything for 15 minutes. Now guess how I met Brad Feld? It was one of his random days and on that random day, guess what we talked about? TechStars. I have never met Brad and I've never been a fan, but I have been a fan and member of his blog. I had no expectation that Brad would actually take an interest in TechStars. During this 10-minute meeting, Brad expressed his interest in investing.

Efficiency of execution is so important to startups that we have deliberately designed processes to detect it as part of the TechStars application process. We look for concise interesting mails instead of endless phone calls. Quick videos that show the basics of what they are doing over those who waste time on production value. The ability to get stuff done and focus on results. If there is one comparative advantage that most startups have, it is that they can do more faster. Assume that you are wrong.

Change--I have counseled innumerable entrepreneurs to change their focus to revenue, and many companies that refused this advice get themselves into trouble by running out of time. The approach of personal sales is fundamentally non-scalable. Every sale requires handholding and personal attention from the founders themselves. This process cannot be delegated because it is impossible to explain to a normal person what is involved in making the sale. The founders have a lethal combination of insight about what potential customers want and in-depth knowledge about what their current product can really deliver.

First of all, they are not selling the product by hand. Instead each potential customer has to go through a self-serve process of signing up and paying money. This is validated learning about customers. How profitable is it on a per customer basis? What is the total available market? What is the return on investment on acquiring new customers? How do existing customers respond to a product over time? Validated learning about customers locates progress firmly in the heads of people inside the company and not in any artifacts the company produces.

Inspecific e-mail is a sure fire way to get your mentors and customers to lose interest in you. Use e-mail as a branding opportunity. Use the subject line, keep the e-mail to three sentences, ask only one question in the last sentence, and spell-check. The chief internet network serves over ten million page views every day. Luckily for me I have no idea how many servers it takes to do that. The reason is because we use WordPress free to host our content, we also use YouTube free to host our videos, we show information on the company using Google apps free, and every day I jump on Skype to talk free and video conference free with people around the world. We use dozens of open source applications free to run our business. Our philosophy is to outsource everything that we’re not great at to a preferable leader.

Here is a partial listing of free products we use. Balsamiq for screen prototyping, DimDim for web meetings, Evernote for organizing tidbits of information, Gist for keeping on top of your contacts, Snapperbugs for chatting with customers who visit your website, GoToMeeting for audio conferencing and phone and SMS services, and wikispaces for hosting a great forum for your community.

To match up to keeping and growing momentum in your startup is knowing what to celebrate. Feature creep, the sound of those words should scare you to death. You don’t need to build a function and features to make your startup successful, trust me I know. Most technical founders have the skills to quickly build a ton of features but many of these features don’t matter and detract from the product.

Focus on ease of use. Your site and your new features have to be very easily used and graphically appealing. Build one thing well, listen to some but not all of your users. User feedback is good, but don’t listen to all of it. You have to be willing to say no to your users. Herb Kelleher, the founder of Southwest Airlines, says, “We have a strategic plan, it’s called doing things.” Bill Parcells, the NFL football coach said, “Blame nobody, expect nothing, do something, do stuff.” Mark Twain said, “We regret the things we don’t do more then the things we do.”

"Do or do not, there is no try." - Yoda. If you don’t have a preference for entrepreneurship, you have no business creating a company in the first place. You don’t really try to start a company, you either do it or you don’t. Do or do not, there is no try. The number one startup killer at TechStars is making a product for which there is no interested market. One-third of those startups are attempting to build a product that they want or that no one wants instead of what the market wants. The best entrepreneurs we know are obsessed with their product. Startups are like music bands without fans who don’t have much. It is through rapid testing that you can figure this out. You are basically writing experiments, and for these particular experiments you need to have subjects. You need users, especially the kind who want to experiment alongside you, because they believe in your vision. Our daily beta users helped us realize that there were a variety of professionals out there who relied on personal relationships for their business and very few of them were actually in sales. If you aren’t releasing your crappy bug-laden product, you are too late.

Obsess over metrics. Engineering is generally not the most important thing. You probably engineered too much already, and there are probably features that you should remove from your product. What is really hard is simplifying your products and building a great user experience. It is important to start by building a culture of feedback and measured analytics.

Here are the five key metrics:
  1. Acquisition. How are users coming to your site through various channels?
  2. Activation. Are users happy with their first experience?
  3. Retention. Are users coming back?
  4. Referral. Are users telling others?
  5. Revenue. Are users spending money or allowing you to monetize in some way? This is called start-up matrix for pirates.

It is so easy to be distracted by a new market, a new potential customer or new competitor. Instead, by having a clear goal you can regularly determine if you have achieved a definitive leadership position. Fail fast, the biggest mistake start-ups make when dealing with the big company is to be blinded by whatever shiny brass ring they are pursuing and to fail to consider opportunity cost associated with not exploring alternatives. There is one thing that the hundreds of founders I meet each year have in common, and that is not believing their plan is wrong. The plan is always wrong. Founders who contribute to a new idea given what they learn will survive their plan being wrong. All those who believe that all signs point to trouble are wrong are not going to survive.

So how do you pivot? Always be ready, listen to your customers, they will tell what they want. And when the time comes, put it clearly and decisively. In every TechStars class to date there has been at least one company that bootstrapped its way to success. The most satisfying form of early financing is revenue. We create the People, products and market is most important. I look for products that when use is over you either have users or you don’t.

I am looking for the following characteristics in entrepreneurs - passion, determination, dedication, tenacity, raw intelligence, agility and resourcefulness, clarity and focus, empathy, natural leadership, working smart rather than working hard, team dynamics. The traits I favor most are determination, agility, clarity and working smart. The perfect combo is a smart ass team with a kick ass product in a big ass market - the threes rule. When you want advice ask for money, when you want money, ask for advice. Show don’t tell. Specifically, I don’t want to hear you describe what you are going to do, I want to see it. If you haven’t built it yet, show me an example.

The way an entrepreneur makes a connection when there is no pre-existing relationship is to generate immediate interest with the product. You should focus on the customer pain you address before you discuss the tremendous solution you are bringing to the market. Describing the pain is usually quite natural but many people forget to finish the job. You have really to make me feel it. You do this by twisting the knife slowly, deliberately and repeatedly.

Companies going through TechStars have historically had preliminary evaluations after the program in the one to four million range. The best were asked for 20 to 33% of the company. They want the entrepreneur to retain a big chunk of the company to stay motivated, and the company is going to need to raise more money and dilute.

TechStars has taken our open source approach. We have publicly shared our model seed-funding documents, our results and our philosophy to help start-ups. See [[\results|\results]] and \stock. What about the rest of the world? I think that the TechStars mentorship-driven model can have an enormous impact around the world as well. I have done some consulting on the model in places like Canada, Denmark, England, Japan, and Singapore. So all who have asked, for now I can only say that this is about to become more interesting.

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