60. Top Insights From 25 Years as a Founder, Angel, and Advisor

I have learned a lot of things about business and the entrepreneurial experience over the last twenty-five years. During that time, I was a founder, CEO, Chief Scientist, angel investor, and startup advisor. I recently gave a live talk at the Founder Institute, where I talked about my most significant insights about the startup world, business, and life.

The attendees loved it, so I immediately started working on a version for Feel the Boot.

So, here they are in no particular order:

Validate early and often

It is critical to validate all of your assumptions.

Never just go with your gut, test, test, and test again. I have often been absolutely sure about how a marketing campaign would work or customers would accept a new product, only to be proven entirely wrong.

When I designed the first application version of Anonymizer, my company's internet privacy service, I thought I would be a perfect model for our users. Like me, they were passionate about protecting their privacy on the internet.

So we did that.

We created a powerful application with all kinds of detailed controls. You could pick exactly what information got shared with which websites under what conditions.

It was a disaster. Users hated it.

None of them used any of the features. As it turns out, I was not even a good model for myself. I didn't use those features either. When we finally started talking to customers, we discovered they wanted the simplest possible interface. They wanted to be private or not, that's it.

So we built a new application where almost the only user control was an on/off switch.

That product was a big hit.

I realized that you can't navel-gaze your way truth. You need to get out there and get actual data to be confident in the decisions you're making. And do it early, so you avoid having to redo everything later. The mistake I made cost us a tremendous amount of time and money to rebuild the entire application from scratch.

Additionally, validation is essential to investors who want to know you have tested all your assumptions about your solution, customers, and market.

You can't overcommunicate

It is effectively impossible to overcommunicate.

I always thought I was talking to my team enough and that everyone understood what we were doing, our strategy, and our tactics going forward. However, I constantly found people with radical misconceptions or misunderstandings, so apparently, I was wrong.

And, I have literally never heard anyone complain that they are receiving too much information about the company from the founder.

When people are trying to fill in the gaps in their understanding of the situation, those gaps don't fill with kittens, puppies, and unicorns. They fill with dragons and demons. People always draw negative conclusions when they're trying to guess what's going on.

The more you communicate, the more you can ensure that everyone on your team is pulling in the same direction. When an employee needs to make a decision, they're making it

in the full context of everything that's going. Ideally, they will make the same kind of

decision that you would.

Everything a founder says is amplified

Everything you say to your employees gets amplified a thousand times.

When you think you're speaking quietly, your team hears it like you're shouting through a megaphone. This concept had to be explained to me by one of my partners.

This problem does not apply to your co-founders but will appear as soon as you start having employees. Our culture puts founders in an almost godlike position. Your every utterance comes through like a thundering pronouncement from the heavens.

I came to realize that this was causing significant problems.

I would drop in on a meeting and share some half-baked concept, and everyone would nod in agreement. I knew full well this was not a great or fully formed idea, but they would not push back.

It takes great effort to reduce the perceived intensity of your communications to a human level.

Be incredibly gentile when giving corrections or any negative feedback. Present your ideas as tentative hypotheses. Wait to talk last in meetings to allow others to express ideas before knowing your position.

Networking is not schmoozing

Networking is not the thing that happens in mixers where you've got a glass of wine, maybe some hors d'oeuvres, and you're passing out business cards. You might manage some real networking there, but most of it happens out in the world, and those uncomfortable events give "networking" a bad name.

I hated the idea of networking until I realized that it is just making connections. Networking is literally building a network.

When you are out in the world, tell everyone you meet about your startup and what you need right now. Ask for help, either something they can do themselves or introductions to others that might assist you. Don't just network with likely prospects; talk to everyone.

I even network with my dental hygienist during the breaks in my teeth cleanings. You never know whose aunt is an angel investor or cousin is a contract CFO.

At the same time, ask what you can do for them. Generosity breeds reciprocity, and even if they can't help you now, they might be able to do so later, and they will remember what you did for them. This has to be a genuine offer to help, not a transactional trick.

I had an enlightening experience when I was out wine tasting. My wife is a novelist, and we were talking about that with the tasting-room manager. We mentioned that we were looking for a literary agent. It turns out that their close friend was an agent, and she was able to introduce us. That extremely valuable connection came from constant low key and no pressure networking. 

Get over your aversion to selling

Early on, I was very uncomfortable with the whole idea of selling.

I came from a technical background that looked down on salespeople. Pop culture, movies, and other media reinforce the idea that selling is a smarmy, used car salesman type activity.

I wanted to distance myself from that, which really set me back.

It took me a long time to overcome my aversion and embrace the need to be selling.

I finally realized that selling was my core responsibility as CEO, especially as the company grew, and I didn't need to be hands-on anymore.

As a founder, you're constantly selling. You're selling your team on your vision for the company and why they want to be part of that success.

You're trying to sell potential investors on the company's value and its potential to grow exponentially and dominate its industry.

You're obviously trying to sell customers on the value of your products and solutions.

You're selling the media on why they should write articles about how amazing your company is.

Selling is always about bringing others to accept the vision and beliefs you want them to.

You must embrace that role as seller-in-chief.

Talk about benefits, not features

People don't want to hear about features; they want to learn about benefits.

Particularly as technical founders, many of us have an instinct to talk about our technology, share what tech stack we use, and explain all the little nifty details and capabilities that we've built into our product.

But other people generally don't care.

Your customers care about how this helps them do something new, accomplish more, or do it faster and cheaper.

They care about the things they care about, not what you care about.

Whether in a sales email or a fundraising pitch, it's all about benefits instead of features. Tell them that your new jet will allow them to travel from New York to London in thirty minutes, not that it can travel 7000mph.

Your customers don't care if your solution works because you have a warehouse of genetically engineered hamsters as long as those hamsters are producing some useful output that the customer desires.

For pitch-decks, this features over benefits problem manifests most often in the competition slide. Look at your pitch deck and make sure that you're talking about why your product provides more benefits to your customers more than your competitor's products.

Understand the person across the table

It's vital to take the time to understand the person across the table from you.

What do they care about?

What do they need?

What do they fear?

What problems are they likely to encounter?

How will this benefit them?

You need to get way down into their head and the details of their business.

When I first became an angel investor, I immediately realized why I'd struggled to raise money for so long. Once I was sitting on the investor side of the table, it was immediately clear to me what I cared about, and I realized that I hadn't been addressing those when I was trying to raise money.

When I'd go into a VC, I would talk about the things on my agenda, and they would nod along politely, but we didn't get the check because my presentation didn't tell them the things they needed to know to make an investment decision.

Fortunately, everything worked out ok in the end, but it would have gone much better if I'd realized earlier to talk in terms of the other person's mental state.

Style and aesthetics matter

This reality was a huge frustration to me, particularly because of my scientific background.

I wanted to believe that the logic of my argument and the superiority of my product would always carry the day and convince people of the correctness of whatever proposition I was trying to argue.

Unfortunately, the universe just doesn't work that way.

Outer superficialities carry a tremendous amount of weight. How you look, how you sound, how you stand, how you speak, the tone of your voice, the graphics on your slide deck, the layout of your web page, the fonts you use, the choice of colors, and the images, all have outsized impacts. Many studies show that more of a person's impressions come from those softer factors than from the actual content. The effect is often subconscious.

If something feels shoddy or poorly put together, that casts a pall over everything to do with you and your company.

It gives everything a poop-colored aura.

Whereas, if everything is nice, tight, attractive, delivered professionally, and all the details look good, that puts a golden glow around everything. Your product might even be perceived as far as superior to how it actually is.

You don't scale, and delegation sucks

You (and your co-founders) are doing everything at the beginning of a startup, but as you grow, more people join the company because you can't scale on your own.

You can't become more and more productive, eventually doing 1000 times as much as you were when you first started. Instead, you need to bring in thousands of new people.

The problem comes when you realize the people you hire don't do their tasks as well as you did. You have an intimate understanding of the business and your products that no new hire can match.

So that new person you bring someone in will do a worse job than you, and that will drive you insane. At least if you're anything like me.

And if you want them to improve, you will have to stop what you're doing and train them.

Not only are they doing worse, but now you're not even doing the other jobs that you have until they come them up to speed.

However, if you don't do that, then the company can't grow because you don't scale,

It's like the saw sharpening. If you're trying to saw down a bunch of trees, it feels inefficient to stop working to sharpen that saw, but taking that step allows you to cut down a lot more trees in the same time.

My core experience of being a founding CEO was this process of taking off hats and delegating responsibility to other people.

You start with all the hats and all the responsibility, and the limitation to scaling is how fast you can give away those hats. If you're hiring the right people, even though it's painful in the early days, they will quickly be better at the job than you were, partly because you're hiring people who are better than you are at those

things, and partly because they're able to focus on that one thing while you were constantly task switching.

Soon you will be delegating meta responsibilities. You start off delegating specific tasks, but later you are delegating management and decision-making authority.

That brings entirely new kinds of pain and frustration. But do it anyway because, again, you have to. Embrace it.

Startups are a marathon

Running a startup is a multi-year process, and there may not be

a big prize at the end.

It is common to work five to ten years before reaching an exit. My company took thirteen, and that's not an exceptionally long time. Make sure that that's an enjoyable and survivable experience.

A lot of people in startups are just killing themselves for that end of the rainbow exit. They think that if they work 100 hour weeks for five years, they'll eventually have this huge reward and buy their own island.

Realistically there's about a 10% chance of achieving a stellar exit, which means there's a 90% chance that you won't.

If you're not enjoying and learning the whole time, this can be a pretty poor outcome for you.

Make sure that the journey is good the entire way. Part of that is maintaining mental and physical health.

Take care of yourself. For me, that meant setting some firm boundaries.

I wanted to have dinner with my family almost every night. Unless I was traveling, or there was a critical meeting, I would be home for dinner.

I also made sure that I got a good night's sleep every night. Some people seem ok with just a few hours, but I don't function well without 7+ hours. Getting that rest made sure that I was going to be effective the next day and thinking clearly.

On the physical (and mental) side, make sure that you're getting good exercise.

I worked out in the morning on an elliptical machine at my house, and I took up kung fu. I went to the kung fu studio several nights a week to yell, hit things, break boards, kick pads, and sweat a lot.

I also had to focus so intently on the activity that all the stress and worry about the business got pushed aside.

It was a cathartic activity that helped keep me sane so that when I went into the office, I could give off a positive attitude. If work stress is getting you down, that will infect everyone else.

Your bad attitude will poison the entire organization.

Whereas, if you're taking care of yourself, you're positive, feeling good, and enjoying the whole process. That also radiates through the entire organization.

Make sure you enjoy the journey so that you can feel good about any eventual outcome.