7 Things I Say To Founders

I have recently been giving very similar advice to all startups I meet with so I decided to write a post going through the most common things. I will add and subtract to this as times go on.

Here are 7 things I say to startups every day.

1. Do it the Analog Way

Paul Graham has an awesome post that is called “Do things that don’t scale,” however my advice isn’t on every piece of the startup, it’s focused on the beginning of the product. So many founders jump into a startup and build, because they are builders. They build a solution to a problem that they think they might understand, because they might be a potential customer. More often than not, startups over-build. They focus so hard on the technology that they don’t see the forest, they just see the trees.

All technology does is save us time. So there is always an analog version of what you are attempting to build. So many founders have never done the analog version of what they are attempting to automate, that it makes it difficult to actually build the technology and understand what NEEDS to be there, and what is a waste.

Which is why it’s also incredibly important to focus on talking to customers, and doing the analog way!

Who is your customer? Think about it. Think about the answer to that question. I’ve found that so many founders keep building and they really don’t isolate who their exact customer is, and they just keep building a product to boil the ocean.

  • A great way to figure out who your customer is, is to clearly explain what problem your product solves, rather than saying what the product does.

In Sci-Fi Tech, sometimes founders believe that because they are using Crypto, or Virtual Reality, means that their company somehow navigates around the “problem solving” solutions, and this is so incredibly wrong. New technology saves us time, so think about where that technology is saving humans time, and which humans it solves a problem for. It’s incredibly important to always think “problem first.”

2. Take a breath.

A lot of the founders are running around pulling levers and twisting knobs. A good question: "Is the cannon pointed in the correct direction?"

Running fast in the wrong direction, is still in the wrong direction.

I've been trying to take more time to actually just think. It's useful, it doesn't look like you are doing anything at your desk when you just think, but it's incredibly helpful. Taking a breath allows you to try to imagine the perspective of your customers. It may give you distance from the day to day operations enough to see what the true problem is, rather than solving the problem reflexively.

This is not to say that there isn’t a time to just “TRY THINGS,” at the beginning of your first startup, you don't really know anything yet, so there are going to be times you need to be running around pulling lever and twisting knobs. And you shouldn't be afraid to just launch things and learn.

In general, I’m finding that so many founders aren’t willing to just take a second, because there is “To much to do.” When thinking clearly could solve a 6 month mistake.

3. Investors are not customers

Who cares what investors think? They don't know your market, unless they are a customer. Don't change strategy for investors. Listen to what they say, as you would any advice. But don't let it be more weighted than others.

It's really important to note that investors are not customers. The way to build a sustainable business is to listen to customers. NOT to listen to investors.

Venture Capital has become analogous with “Blitzscaling” and the High Growth Startup mentality. These concepts allow startups to believe that VCs will subsidize expense for growth, blending the investors and customer concept.

Often, the concept of “Blitzscaling” is like injecting your biceps and abs with steroids, when all you needed was to do some cardio.

Investors like companies that make money. Figure out who the customer is, so you can explain why it makes money! Figure out how much they are willing to pay, so that your business can make money! Learn how to explain the value add of your product, so that you can market your product, and explain how the business will MAKE MONEY!!!!

VCs aren’t subsidizing anything. That mentality is broken in my opinion.

4. Charge more.

Startups naturally under-value what they are building. I have found, they naturally under value it by about 4x. Which means that you can charge 4 times the amount and maintain most of customers.

Startups are always worried about losing customers, but if the customer is not paying, they are not a customer… they are wasting your time. You are working for them for free. It sounds capitalistic and harsh to say that, but we live in a beautiful capitalistic society, where this maintains truth. This does not mean “BURN BRIDGES!”, but to have your product be fairly compensated for.

Loyalty of customers is worth a lot too, so if you want to leave some on the “free” or “Cheap” customer program, go for it. Just know that that shouldn’t be a standard, those are people “grandfathered in” rather than customers.

So if you have customers, more likely than not, you could double your revenue just by charging 2-4x the money. There are a lot of things that go into this topic also:

  • narrowing focus on who the customer is

  • focusing on the ones who pays is generally a good rule cut off those who do not pay.

5. Focus your efforts in one direction. Do not try and boil the ocean.

So many startups think they are building a solution for everyone, but building a company is just about solving a problem for one group of people at a time. Facebook started on universities, Veeva Systems focuses on life sciences, Discord focuses on gaming.

Figure out the levers that truly show that the company is adding value to a subset of people. That's all investors are trying to figure out.

In software products, we use “Engagement” as a metric because that shows that people keep coming back! If you have a lot of customers coming in, and no one is coming back, that’s not a very helpful product.

Ex. "My company solves the problem of candy melting for chocolate companies" - this would mean that you have to target all the chocolate companies, but you need to let the tic tac relationship go, because even though they are a candy, they don’t matter for solving the melting problem.

  • How can you narrow your market from “EVERYONE” to one specific target market?

  • What is the metric that actually shows that your customers are receiving value from your solution?

Investors are not experts in any specific field, we attempt to find ways to measure engagement in our own ways. Most people focus on "How fast is it growing," but if its growing fast and the engagement is low, that's not solving a core problem. I want to know that the customer base you are targeting is obsessed.

6. Go talk to people.

Talk to your mom, talk to the random people on the street explain the problem you are solving. They ask good questions, and if they can’t explain what it is you do, then you aren’t clear enough! Once your Mom, Brother, Dad, Non-technical friend, can explain it, you have a clear pitch.

So many people, sit in their office typing, and they don't actually talk to real people in the real world.

  • Crypto businesses aren't going to be Billion dollar companies unless they solve a real world problem. It's not a crypto specific problem.

  • VR businesses aren't going to be Billion dollar businesses unless they solve a real world problem. It's not a VR specific problem

Explain the problem you are trying to solve. Explain who your exact customer is. Explain why you are best fit to solve that problem for people.

7. What is progress to you?

Think about it right now? What are you trying to accomplish in the next 6 months? Do you have a metric you can track for success? Is it the correct metric?

I ask this question in every meeting I have, and very few give great answers. It’s hard to know what progress is if you have not narrowed down who your customer is. You have to know what the process is to sell a customer to estimate the time frame.

This doesn’t need to be customer growth, sometimes it’s regulatory approval, sometimes it’s R&D, sometimes it’s “Reducing churn by 50%”


Feel free to ask questions on this post. There are pieces I feel can be way more detailed, and pieces I believe need less. I would love to figure out where I spend time editing this list.