Halvar's Guide to Entrepreneurship
thomasdullien.github.io
thomasdullien.github.io
The idea is: you and your investor agree on (1) an amount to be invested, and (2) a valuation or cap. Maybe you shake hands. Then, after the meeting, you memorialize the deal in an email. The deal is then socially binding: reneging on a Handshake Protocol deal is a big thing, gets noted in Bookface, whatever.
There's nothing magic or even interesting about the protocol; all it does is eliminate a form of ambiguity that professional investors are facile with and founders aren't. Investors are very good at saying "yes" and meaning "no"; they want the option to invest without the commit. If you don't put it to them directly, they'll take the option! The Handshake Protocol puts it to them directly: "are you committing?"
Most of the time, you're going to get a "no" answer to that, which is exactly what you want: clarity, so you can make decisions.
It works in all sorts of places too! Like negotiating a job offer or a raise or promotion or time-off. It also works outside of the workplace such as following up with social acquaintances ("hey let's play tennis sometime").
It excels at identifying the party unwilling to commit. And in my experience the sooner you figure that out the better.
Even more important: stop using personas, start using actual people. I've experienced many startups make unforced errors by conflating people into personas. A better way is to tag people with attributes, such as specific interests, explicit concerns, tasks to be done, usage goals, learning preferences, and the like.
When you switch from personas to actual people, it opens up many more product experiments-- many of which are surprising and may even feel counter-intuitive to founders. Increase your startup chances of success by carefully connecting with your actual users.
Personas are useful for developing a general character that you can refer to. But you still have to be able to say "Alice Robertson, who is a demand-gen marketer at $CUSTOMER, is a prime example of this persona and someone we should talk to during product research." If you can't speak to an actual human and validate your ideas, then you are at risk of creating a fake persona who sounds just plausible enough to convince you to make wrong decisions.
- They think they're higher than me (you cannot collab like that)
- They want it their way, despite there being multiple ways to Rome, and will cut off the conversation with orders, not arguments
- They pretend to be technical and are only making the bureaucratic back-and-forth worse. You can definitely tell when someone knows what they're talking about
Sadly a lot of companies will reward these type of people by putting them in the high seats.
In addition to technical there could be other reasons to prefer a solution. Some of those reasons can't be stated - for various reasons, like privacy or intuitiveness.
There are some reasons people like that are rewarded, and not all of those reasons are bad.
I don't know about your experiences, but insisting on this point can be a death sentence. I've spent most of my career as "technical lead", carefully building an approach that works for what my team does based on an underlying theory that is very difficult to verbalize. I've found through experience that when I feel like the project is aligned with this theory, the project goes very well, and when it's not, it doesn't. I've considered thousands of small tradeoffs over 15+ years of developing these ideas.
At this point in my career, I've found that trying to explain the rationale behind my decisions is a losing game. It's a careful balance of a thousand factors that I'm constantly weighing and adjusting. If people share my goals and are interested in learning, great! I'll make some time to talk through parts of the theory with them. But it's not always during project time -- sometimes you just have to trust me.
Yes, you thought of six different ways to do it -- I probably also thought of those ways. I'd love to live in a world where we can have a quick conversation about them and then all agree on the path forward, but that's not how it works. In reality, whoever I'm talking to goes into "argument mode", focuses on irrelevant details, argues about the names of things instead of their substance, takes things personally, feels ownership of whichever idea they came up with first, etc. They say they just want to learn, then they expect me to transmit 15+ years of thinking into their brains in a short conversation, while they argue with me on every little point.
There are a thousand ways to do anything, which means it's critically important to reject most ideas immediately. That often means hurt feelings. It's just better to have the person with the vision making the decision. If you don't want to go with my vision, my theory, that's fine: go with someone else's. One other person's vision, and then don't argue with that person either.
Of course there is room for discussion, feedback, learning, and debate, but this may be better done "off cycle".
Seems like a particularly risky trap for bootstrapped companies desperate for revenue. At the same time the best companies I see out there are relentlessly customer focused.
How do you draw the line between “design partner” and becoming someone’s consultant.
The point is: For anything you build, you can find 1 customer. It's only when there's multiple customers that like the product and want to improve it where you move from "consulting" or "custom development" to "product".
Apple famously ignored users on lots of fronts: can't manually add RAM, mouse has 1 button, etc. They didn't serve one type of user specifically so they could appeal to a larger market. You can't serve everyone.
[0] https://www.inc.com/magazine/201606/jason-fried/saying-no-to...
We'd be much better off with people thinking and acting in line with this!
How true is it you’ll need to persist under extreme duress unable to pay yourself a salary? Relevant for us with kids / families where we provide the family’s income.
Investors who imply you shouldn't take a salary are no bueno.
Like equivalent to what your developer salary would be? Less? More because you’re a CEO now?
I basically have minimum $ amount I would accept for “developer job I absolutely love” that I know sustains my family comfortably without much extra fun or savings. Is that a good bar?
And if there are liquidity pressures a few years into the process, and you have traction at Series B or C - don't hesitate to think about a small secondary.
I started off making significantly less than I did as a dev (~30-50k + I had spent months with 0 salary before raising), within ~2 years I was making a bit more and I capped out around there.
There was a longstanding "ramen profitable" ethos on HN, but part of that is rooted in a much older set of YC deal terms and lower expectations for seed rounds. But YC is now one of the principal components of all tech startup funding, the standard terms are much better, syndicated seed rounds have gotten pretty big; I think you're expected not to be silly about comp, but I don't think people are looking for you to signal commitment or virtue or asceticism with your comp package.
If you can't pay yourself a real comp package, something is probably wrong with your business.
The problem is in my opinion a little bit different: these good people would love to make the team in which they are working better, but are actually actively kept down by work colleagues and bosses. Thus, the organization does not profit from these good people, because is has no use for their greatness. Instead, this approach introduces a lot of (political) infights into the teams, where often the good people are treated as the evil troublemakers at the end.
If you don't have that, the rest also doesn't matter. Unless you're obsessed with money, in which case, you are very confused and should not be guiding anybody to anything.
Guides regarding minutiae from lottery ticket winners are tiresome. I think anyone over 30 has learned what these 'guides' amount to from looking at Paul Graham.
Like the example with the doctors and how to find actually good ones, you can add this essay to the list of enterpreneurship tips you can compare and decide for yourself what is useful and what isn't.
I hope my newfound way of life is not oversimpifying it to the extreme.
Nope, don't do that. If you receive a credible term sheet at a meaningfully higher valuation, you'll have to rerun your 409A, even if you don't take the investment.
- If you are bootstrapped, you can build dual use technology. - All of this is predicated on the idea that building software is hard, you need 8 years to build a product that people like. Maybe this is all going away in the AI world in a couple of years.
So I guess spot and avoid sweet talking charlatans (this applies to all business relationships though).
Also - I use the term "coach" broadly here. Many people react very poorly to the term "therapist", and "coach" is a much broader term encompassing both therapy or just people that have significant experience in a field. Or just an older relative or acquaintance that is willing to provide regular advice/feedback.
There's definitely charlatanism, particularly when people advertise themselves as "business coach" or "startup coach".
Great people are racehorses, not donkeys. And racehorses tend be skittish. But they win races for you.
The ones in beach head markets seem to succeed more often on average (anecdotal)
Is that something you factor into your playbook? Or do you simply not find it relevant to judge whether to enter a certain space?
Assuming that you're not a commodity product, it all kinda nets out in the end. If you have a competitive market, you have proof that people want your product at a good price, else no one would be in the market. If you execute better than all of your competitors, then you can theoretically take every last penny of that market.
I don't think the competitive pressure changes the decision whether there's revenue to be made in a certain space, though it may change the personal decision if the operating tactics required in a competitive market are personally fun for you the human being.
That said: A good market will become crowded quickly in either way.