What to read before starting a startup
What to read before starting a startup
Startup Founder Resources #1 | Avthar's Weekly Wisdom #28 (11/8/2020)
Hello from New York City!
Before we begin, I have a favor to ask: If you enjoy Avthar's Weekly Wisdom, can you please share a brief testimonial with me?
I'm re-designing my website and, to encourage people to subscribe, I'd like to feature quotes from readers like yourself. If you enjoy the newsletter, please reply to this email with a 2-3 sentence testimonial about why you like Avthar's Weekly Wisdom.
What’s in this week’s newsletter?
This week, I want to share the best resources which helped me as a startup founder.
It's the stuff I wish I knew about before I started and things I recommend to founders today to help maximize their chances of success.
The internet is filled with resources to help you succeed. But this is not another one of those resource lists, this is a curated list vetted by my own experience.
One of the hardest things I've ever done was launching and running my own startup fresh out of university. Some friends and I started Afari, our goal was to give people more privacy and control over their data on social media.
The journey, from pitching an idea, to raising money from investors, to launching a product and solving a problem for thousands of users, was perhaps the most growth inducing experience in my life.
Over the next weeks, I'll be sharing a curated list of resources and advice which helped me during my time as a founder, as well as things I've discovered since my startup days and I've bookmarked for future reference.
Part of my motive is to create a resource for my future self, for my next startup in ~5-7 years, so you can be sure I’ll only include the best stuff :)
The startup resources will be on the following topics:
Starting a startup ←Today's topic
Getting Product-Market-(Founder) Fit
Building a product
Managing your internal state (emotion and psychology)
Marketing and Growth
Leadership and Management
This is a tentative list, so let me know which topics you'd like to hear about the most by replying to this email and I’ll prioritize those!
This week’s topic is about starting a Startup.
Please enjoy and let me know what you liked most!
With gratitude,
Avthar
What to read before starting a startup
Here are my top 5 things to read before starting a company.
“How to Get Rich Without Getting Lucky” by Naval Ravikant
“Letter to a friend who may start a new investment platform” by Graham Duncan
“How to Get Ideas for Startups” by Paul Graham
“How to Find your Strengths” by Avthar Sewrathan
“Seek Validation from Customers, not Investors” by Michael Seibel
For each one, I talk about its key takeaway and why I wish I read it before starting my first company.
How to Get Rich Without Getting Lucky
by Naval Ravikant (@naval)
🔑 Key Takeaway: Authenticity is the key to success. Productize Yourself in order to maximize your chances of creating wealth via startups in the long run.
This is the resource I recommend to every budding founder I talk to. It's about the principles of wealth creation in the age of technology. Its author, Naval Ravikant, is a hero of mine. He's the founder of AngelList and Epinions and investor in hundred of companies, including Uber, Twitter and Postmates.
Why I wish I read this before starting:
I spent too much of my time as a founder looking outside myself for the answers to critical questions. I tried to copy other people in order to be successful, when I should've been leaning in to my authenticity, exercising my specific knowledge and trusting my intuition about the problem and product.
Like many first time founders, I thought I had to copy other people in order to be successful. I've written previouslyabout how many of us thinkwe need to be like other people in order to be successful. This is especially true in the startup world, where everyone is trying to pattern match successful founders in order to attract funding.
Listening to Naval's podcast gave me the stark realization that authenticity was the key to startup success. I learned that the goal is to Productize Myself: use leverage (code, capital, content, labor) and my specific knowledge (my natural strengths and interests, the things that look like work to other people but are play to me) to give the world what it wants but doesn't know how to get, at scale (i.e a technology-enabled product). All the while using authenticity to escape competition.
I could spend hours explaining the ups and downs of my first startup using the concepts explained in Naval's podcast, but I'll save that for other day.
While the podcast contains so much valuable knowledge that it "could be a 4 year university degree", I'd encourage focus on the following ideas:
The goal is wealth, not money or status.
You can’t earn non-linearly when you’re renting out your time
Leverage: Labor, Capital (Old leverage), Product and Media (New leverage)
Accountability: to get leverage and to earn equity
Even if you're not a founder right now, I highly recommend taking 3-4 hours over the next week to listen to this, so that you start to internalize the core principles (specific knowledge, leverage etc) and begin to identify your own specific knowledge. In the words of the podcast's co-producer, Nivi: "Everyone on the planet should hear this podcast, whether they want to build a 1-person cashflow business or they want want to build a multi-billion dollar company with a team."
➡️ Podcast
➡️ Transcript
➡️ Tweetstorm
Letter to friend who may start a new investment platform
By Graham Duncan (@GrahamDuncanNYC)
🔑 Key takeaway: Play to your strengths. Protect your internal terrain. Align your significant other. Understand how this venture fits into your long term vision for a happy life.
While Duncan’s letter was originally intended for someone founding an investment firm, the principles he highlights apply to all fields.
My favorite questions from the seven are:
(6) What are you compulsive about? Is it possible to put that at the center of the company?
(4) How will you protect the climate within your skull?
Why I wish I read this before starting:
As a first time founder, I often got caught up in doing things I had read or heard that founders (or CEOs) should do, rather than focus my role on things I most enjoyed and activities to which I was most naturally suited. I was also unprepared for the ego attachment that came with being a startup founder and how the chaos of my company would affect my internal state.
Duncan's letter helped reinforce the idea that there's no mould of a successful founder: you should construct your role (and the secret of your company) around the things you’re compulsive about and outsource the things you’re not good at but you feel you should do. Ultimately, being true to yourself and playing to your strengths gives your company the biggest shot at success.
“Many high achievers are compulsively exploring the world in search of something — some for truth, some for power, others for beauty —
and I think it’s a disservice to yourself and your future partners to not orient your platform around the piece of investing that you really love. Embrace your funk.”
"...Some investors are compulsive about trading, but feel it necessary to play the role of macro thinker or portfolio manager or manager of people, when they really just want to sit in front of the screen and try to make money."
- Graham Duncan
Moreover, I appreciated how Duncan goes deep into the mental side of being a founder. There's too much written about tactics and tools and not enough about the emotional and mental side of starting something new. I experienced the ego attachment that comes with being a business owner and saw it cloud my judgement on several occasions.
Duncan's concept of "keeping a quiet ego" would've helped me avoid such moments. Duncan describes a "quiet ego" as a blank state of mind where we don’t feel the need to make predictions based on false confidence that comes from constructing an identity we feel the need to live up to.
I encourage all founders to write down their answers to Duncan's seven questions early in their journey and revisit it regularly. It's one of the first things I'll do when starting my next company.
➡️ My Summary and Key Takeaways: 7 Questions to ask before you start a company
How to get ideas for startups
By Paul Graham (@paulg)
🔑 Key takeaway: Make something you want. Building for yourself will maximize your chances of a becoming a breakout startup and will make everything else easier.
Paul Graham has a number of great essays about how to generate good startup ideas. They can all be boiled down to one sentence: Make something you want. He explains the reasoning below:
The reason most founders are surprised by the difficulty of fundraising is that they're learning something about themselves, not something about fundraising. They know fundraising is hard for startups that don't seem appealing to investors. They just didn't realize they had one.
How to be appealing to investors? Actually be a good investment.
How to be a good investment? Grow revenue fast.
How to grow revenue fast? Make something people want.
How to make something people want? Make something you want.
-Paul Graham from Twitter
Why I wish I read this before starting:
To avoid being a solution in search of a problem. To be more be more empathetic and obsessed about the user.
At Afari, we struggled to find an audience that wanted what we were building. We had a great idea for a social media platform which gave people more privacy and ownership over their data. But we couldn't point to specific people who needed want we were building. We made the classic mistake of being a solution in search of a problem.
The easiest way to avoid this problem is to make something you want. By building for yourself, you'll have a clear understanding of the target audience (your values, habits and what you find appealing), the problem you solve for them (a problem you know well from life experience) and whether your product actually solves the problem (because you'll be using it) better than alternatives (which you've probably tried).
Making something you want is perhaps the easiest way to start a breakout startup, because your problems are not unique to you. There will be other people like who who experience the same problem and later you can add features to expand into different types of people who experience related problems to your original one.
I believe there are 4 indicators of early stage startup success:
Shipping cadence
Feedback loop length
How often you talk to users
How often you use your own product
Making something you want means that you'll be using your own product to test its efficacy, this helps you talk to users all the time (since you are the user), giving you short feedback loops, leading to rapid improvements and high shipping cadence for new versions of the product. It's a virtuous cycle for startup success!
Here's a list of Paul Graham's essays related to startup ideas which I've read and recommend:
➡️ Frighteningly ambitious startup ideas
Paul Graham also has a wonderful blog filled with essays on stuff related to startups and life, which you might find useful too.
How to Find Your Strengths
by Avthar Sewrathan (@avthars)
🔑 Key takeaway: Find your strengths and double down on them. That’s how you become a great founder.
I've included an essay of my own in this list because I believe that founders win by doing work in their zone of genius. The problem is that most founders, especially young or first time founders, haven't recognized their areas of strength or aren't able to articulate them. I wrote this piece as a reminder to myself, as well as a compilation of advice I've given to others on recognizing their strengths to inform the work they pursue.
Why I wish I read this before starting:
To help distinguish my desired strengths from my actual strengths. To recognize my natural strengths and interests earlier. To avoid doing work I wasn't suited to and focus more on activities where I could uniquely create value.
I wish my whole team went through the reflection questions and Reflected Best Self exercise outlined in the essay before starting the company. That would've helped us identify what our strengths seemed to be, and help us design our roles around them for maximum impact, giving the company the best chance of success.
Instead, we didn't taken on clearly defined roles, and all tried to do a bit of everything. In hindsight this was a mistake, but it came about from both a lack of self-awareness and a desire for everyone to feel included in "important work". If I had to re-do it, I would have each person focusing on their areas of strength, and also help them understand why their work was important and how it contributed to the success of the company. I'd then hire (or contract out work to) people who's strengths complemented our own.
Seek validation from customers, not investors
By Michael Seibel (@mwseibel)
🔑 Key takeaway: Only listen to the market (your users/ customers). No one else matters.
Why I wish I read this before starting:
I fell into the trap of seeking validation from potential investors that our idea was good, rather than focus on the people who truly mattered: the user.
I was fortunate to have access to many angel investors and venture capitalists and so mistook their advice and enthusiasm for the product and team as signs that the market wanted what we were building.
Here's Seibel's thread in plaintext for easy copying:
A lot of startups ask me for feedback on their startup idea. Most of the time I am not an expert in their field nor a potential user.
I believe founders do this because they think that investors are the gatekeepers of the startup world and they want me to "like their idea" and accept them into YC.
In reality customers are the gatekeepers of the startup world. If your product can get customers and retain customers, investors (including YC) will happily to give you money.
So if you want investment, don't ask for product feedback - share your numbers and ask for money. If you want product feedback, try cold emailing potential users and founders who have tried and failed to solve a similar problem in the past.
With short and carefully written emails to these two groups (users / former founders), you'll be surprised how many amazing product insights you can get for free.
Another hack is to email early employees at startups in your space who have failed. They often have as many insights as the founders and can be easier to get in touch with.
Honorable Mentions
Those are my top 5 (and what I was able to write up this week). Here are my other recommended resources to read before starting a company:
Idea Generation by Sam Altman: "It turns out that good founders have lots of ideas about everything, so if you want to be a founder and can’t get an idea for a company, you should probably work on getting good at idea generation first."
How to find a Technical Cofounder by Michael Seibel: This is a common question I get and Michael Seibel articulates the best answer I've come across in just 4 minutes.
How to Split Equity with your Cofounders by Michael Seibel:"Keep in mind the long term interests of company and use equity to maximize the motivation of your team"
That's all on Starting a Startup.
Join me for Part 2 of this series next week, which will be on Getting Product-Market (Founder) Fit.
And share it with friends if you found it useful!