Startup Lessons I Learned the Hard Way
davidcancel.com
Startup Lessons I Learned the Hard Way
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Re: Startup Lessons I Learned the Hard Way
#2Fred Wilson was the first one to clue me in to the "Valley of Death" phase. He expands on it here: http://www.avc.com/a_vc/2010/05/from-hopes-and-dreams-to-the...
I also like to advise entrepreneurs to take advantage of the financing environment that is available to them during the hopes and dreams phase. It is a strange situation. Your company will be worth more to investors during the hopes and dreams phase than it will be worth while you are crossing the chasm. So you should raise enough capital at hopes and dreams valuations to get across. If you don't, a down round is waiting for you as yet another challenge while you are crossing the chasm.
Companies with no revenues but big potential are worth whatever the market will bear. But once you have revenues and are heading towards earnings, the market will be able to better assess what you are worth. Revenues and earnings multiples will enter the valuation discussions. And most of the time, revenues and earnings multiples will result in a lower number than hopes and dreams, at least for a while.
Re: Startup Lessons I Learned the Hard Way
#3It's all about getting your idea out there and testing it. If it doesn't work, then adapt, evolve, and test. Keep testing until something works and then execute like you have never executed before. Execution is key, but you have to find what works, so yes stop theorizing and just build it already.
Re: Startup Lessons I Learned the Hard Way
#4They are so paralyzed by the fear of failing that they spend every waking moment reading Techcrunch (don’t do it, please) and other blogs, reading countless books and attending startup events all in the quest to learn some “secret” they think is going to help them succeed.
Haha, true. Although I read publications because they have interesting ideas, sometimes its hard to recognize advice in perspective; ie. a VC will say something completely different from an entrepreneur. Frankly, even entrepreneurs in different industries will say things that contradict one another. The problem is when everything is rational AND the entrepreneur has credibility. And then theres the case of people blogging advice when they shouldn't, ie. startup guys giving advice about hiring and building culture before they've even left their own garage.
Sometimes you just gotta put your head down, forget all the "lessons learned" blogs and and go with your gut.
Re: Startup Lessons I Learned the Hard Way
#5[deleted]
Re: Startup Lessons I Learned the Hard Way
#6"Believe me failing sucks really bad but there are no repeatable patterns that lead to startup success."
Maybe not, but there are definitely repeatable patterns that lead to startup failure. Time familiarizing yourself with them can be time well-spent.
Re: Startup Lessons I Learned the Hard Way
#7dcancel, thanks for great post... not really optimistic, but practical and realistic thoughts.
Re: Startup Lessons I Learned the Hard Way
#8David Cancel also had some great points during his talk at Startup Bootcamp at MIT this fall.
You can watch the video here: http://www.youtube.com/startupbootcamp#p/c/A978F0F30D190EF9/...
Re: Startup Lessons I Learned the Hard Way
#9This is the one I always have to learn the hard way: "Focus all your energy on solving a critical problem. Forget your idea."
It's so true, yet such a bitch to put into practice. Cognitive biases conspire against you--especially the sunk cost fallacy, because forgetting your idea often involves throwing away finished work.
My hope is that by getting burned by this enough times, I'll sharpen my spider sense about when I'm not focusing on solving a real problem.
Re: Startup Lessons I Learned the Hard Way
#10Sorry to disagree, but saying, "Business plans are always wrong so stop obsessing about them!" is a foolish and cocksure attitude and a good way to suddenly get hit with a dreaded, "oh, I didn't think about that" moment when the fecal matter impacts the turbine as Mr. Murphy pays you a surprise visit.
Sure you may not need detailed 3 year financial projections or spreadsheets coming out your ears, but if you don't have at least a basic plan then you run the risk of having to handle issues you should have seen coming if only you had a basic plan. Writing a plan is as much for the Founder as it is for any investors and only fairly experienced businessfolk can really get away with skipping it.