Dharmesh Shah

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Startup Tips for the Early, Early Days

By Dharmesh Shah on March 13, 2008

My favorite stage of a startup is the early, early days. This is when things are the most chaotic, resources are limited and the team is small enough to fit into a single car.

I've been thinking about the early days of the startups I've been involved in and put together some quick (and practical) tips on these early days.

Tips For Startups:  The Early, Early Days

1.  You don't need office space:  Plenty of startups do just fine working out of a basement or spare bedroom.

2.  Don't Bargain Shop For Small Things:  Resist the temptation to find the best deal on cheap things (like computers).  It may be personally satisfying to save $50 on a printer, but you're wasting valuable time.

3.  Think Of A Good Name:  Spend at least a few hours thinking about a name for your business.  Read a couple of practical articles on the topic.  Talk to other people to test your names.  Most entrepreneurs spend too little time (as in almost none) on a company name.  A good name won't make your startup successful, and a bad one won't make it fail, but some simple guidelines help.  And, a name is hard to change later.

Reference 1 (Guy Kawasaki): The Name Game 

Reference 2 (Dharmesh Shah):  The Startup Name Game

Note:  Unsurprisingly, Guy's article is better, but I wrote mine first (did not copy his "Name Game" title).

4.  No Fancy Titles: Don't waste time coming up with fancy titles for the founders.  Simply use "founder" for your title and get back to real work. 

5.  Forget Business Plans:  Instead of laboring over your business plan, labor over your business.  If you do work intensely on your business plan, assume that you are the only person that will ever read it.  Even your mom and your spouse won't read it.  Potential investors will definitely not read it.

6.  Avoid Pontificators:  Early team members all need to do something.  Don't recruit pontificators.  Beware the pure "idea people".  You want "get things done" people.  There will always be more ideas in your startup than there are people to execute them. 

7.  Venture Funding Is Hard:  Raising venture funding is actually harder than bootstrapping -- especially if it's your first startup.  Try and figure out a way to get going without funding.  Take the hundreds of hours you'll save and go help customers solve problems.

8.  Allocate Most Time To Customer Value:  Act as if someone is paying you $1,000/hour for every hour you spend making life measurably better for your customers -- and $10/hour for everything else.  In the long-run, the ratio will be about right. 

9.  Part-Time Is Sub-Optimal (but OK):  Many people will tell you that you are unlikely to succeed with a startup if you're working on it just nights and weekends.  They're probably right.  But, better nights and weekends than waiting forever to get things kicked off.

10.  Get Started!  I have yet to meet someone that took the leap, quit their job, started a company and regretted their decision (regardless of outcome).  Most people that have great jobs over-estimate the risk of leaving them.  Great people can almost always find another job if things go really, really poorly with their startup.

What are your thoughts?  Any tips for those early, early days of a startup?

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Business Lessons From Blue Man: The Why To Guide

By Dharmesh Shah on March 12, 2008

I recently came across an article by my friend Allison Shapira about Blue Man Group as a business. The article is based on a reading Allison did as part of her "Strategic Communications" course and looks at the business of Blue Man Group.

Here's the part that struck a chord with me:

"How did Blue Man Group manage to maintain their vision, even with 38 performers around the country? They wrote a “Why To” manual.  Not a “How To” manual, which tells you how do things, but a “Why To” manual, which tells you why to do things - it explains the vision..."

At my startup, we talk a lot about the "why to" part of the business (partly, because we're all pretty analytical and like to have debates on just about everything).  We don't call them "Why To" discussions, but probably should.

Here are some examples:

Why To Charge Monthly Subscriptions (instead of yearly contracts):  Because it breeds the right company culture. With monthly subscriptions, we have to earn our customer's business every month.  There are no "drive-by sales".  Also, the data is worth more to us than the cash right now.  We want to learn as much as we can (and right now, the lessons are cheaper).  If we charged yearly, it'd defer a lot of this learning until the customer had to decide whether to renew.

Why To Not Sell To Anyone Willing To Pay:  Because the product is not going to be equally beneficial to everyone.  Our happiness (and our profits) is going to be based on how happy our customers are in the future.  If you know a customer is unlikely to be happy in the future, don't sell them.  Make them sell you and convince you otherwise.

 Why To Resist Hiring For Resumes:  Just about the entire team at HubSpot wasn't hired for their resume.  We solve for intelligence, passion and integrity.  Why?  Because someone with 14 years of experience at a Fortune 500 company managing a $100MM budget may not know much about our customers and our market.  We'd rather bring people on that are smart and will jump in and figure things out.

How about you?  What kinds of "Why To" concepts are floating around in your startup?  Does your team often ask the "why" question?

Topics: strategy
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