When I first went through YC in 2011, there were two women in our class of 120+ founders. The numbers are better today. And with all the resources available, there's no better time to start a company.
I'm a three-time YC founder and sold my last startup to Microsoft. I'm now the founder at Pulley where we help founders manage their cap table. I'm excited to partner with Elpha and share some of the startup lessons I learned the hard way so you don't have to.
This is a three-part series that covers the lessons from each part of the startup journey:
- Idea: Everything from picking an idea to getting into the founder mindset so you can be on your a-game
- Fundraising: The good and the bad of taking venture funding. TLDR - there is no free money and you'll need to meet high growth expectations to raise your next round.
- Hiring: Hiring makes or breaks your company. We'll discuss the tactics on how to hire well.
You've heard there's a roller coaster of highs and lows. But what's not as obvious is that these highs and lows happen in hours and not weeks. Managing your psyche as a founder is one of the hardest parts of the founder's job.
What do I wish I knew before starting my company?
Nobody tells this to new founders who are starting out, and I wish someone had told me. Anyone who becomes a founder has this vision of what they want their product to be. But at the beginning, there is a gap between what's in your head and what's built. This gap will be the source of your frustrations for years to come. There's no shortcut for getting over this gap other than showing up and working on your product every day. Ira Glass talks about "the gap" for creatives, and it is one that also applies to founders. Just know that the gap is normal and keep going.
How do I get over imposter syndrome?
Be the best version of yourself. Don't try to be someone else because you'll be a worse version of them. For your startup, don't try to follow Apple's marketing plan if you don't have their brand. When you're hiring engineers, don't try to mimic Google's hiring approach if you don't have the budget. Learn from what other founders and companies have done and then make it your own.
What should I be focusing on now?
You should focus on the highest priority task that no one else can do. Delegate everything else. Hiring will always be a recurring, high-priority task with a high ROI. People vastly underestimate how hard it is to hire and retain great people. You will be spending half of your time recruiting. You can at most increase your individual inefficiency by 20%. Hiring a good person gives you 2x the throughput overnight.
How do I manage my emotions during the startup rollercoaster?
Find your person. You can pay for a coach or therapist from your company. Any resource that helps you perform even 10% better is a good investment. If a therapist is out of budget, find a friend. Having a good support system is essential to keeping your sanity.
Finding an idea
Following your passions is bad advice. You're starting a company and not a hobby. Working on a problem you love isn't enough because you need traction to hire good people and fundraise. Validate the business case and not just your passion.
How do I find an idea?
There's no shortcut. PG has a great essay on how to turn problems into ideas http://paulgraham.com/startupideas.html.
How do I know if there is a big enough market?
The size of the market today is not the top priority. What matters is the growth rate. Find a space that you are excited about in a market that will grow. A rising tide lifts all boats. It's far easier to swim with the current in a growing market than trying to create a business in a market that is shrinking every year. Ex: if you built anything in social in 2007, you would have done well. Bebo sold to AOL for $1b. The upside is Facebook, and the downside is a valuable skillset from working in an emerging market. Most great ideas are not obvious at the time. Obviously, large markets are filled with incumbents with large budgets, and hard for startups to win. It is a good sign if not everyone believes your market is huge as long as you can convince yourself this business will grow.
How do I validate my idea with users?
Read the Mom Test to understand how to talk to users. Asking your friends "would you use my product" does not give useful answers. Asking potential customers "what did you do the last time you had this problem" will help you understand what people do now.
How do I know if I'm the right founder for the idea?
Asking this question would have saved me so much time. Founder / Company fit is as important as Product / Market fit. Most of the time you spend as a founder is not on the "fun parts", but on the grind.
If you're running an e-commerce business, you need to know your numbers and be strong on metrics to acquire customers profitably. If you're starting a social product, you need to be comfortable asking people to try your product pre-rocket ship. If you are selling to businesses, you need to be good enough at demoing your product and asking for the check. Talk to founders who are in the same market on what they spend their time on day-to-day (failed founders who've tried your exact idea are a great resource).
Getting help - finding the right advisors
You're sprinting a marathon as a founder. To get there, you'll need an all-star team of mentors helping you. No advice is better than bad advice. Let's talk about how to build a great team of people you can lean on.
Who should I seek mentorship from?
A strong advising team includes three types of people: the cheerleader, the strategist, and the domain expert:
Cheerleader - The cheerleader is the person who always has your back. Their motivation is what you turn to get over your hump. This can be a friend, former manager, etc. The most important criterion for the cheerleader is dependability.
Strategist - The strategist is the person who understands the challenges of running a company. Go to them for questions like "how do I run payroll" or "how do I fire someone". Find someone who's 2 - 3 steps ahead of you in their company journey. Don't look for a founder who's at the IPO stage if you're just getting started because the lessons you'll need may be too far removed for them to be helpful.
Domain expert - This is the person who understands your industry. Having them in your corner helps lend credibility to your startup. Getting the right advisors will take work. Hustle like Will Bricker, a principal at Hustlefund. Read this thread on how he got a role in venture by doing the work before getting hired.
How do I approach someone to be a mentor?
In school, teachers are paid to help you. They are vested in your success. After you graduate, unfortunately, no one cares as much. The great thing about Silicon Valley is that people often take calls from strangers because they could be the founder of the next Google or Facebook. To maximize your chance of getting help, read this great thread by a repeat founder on how to ask for help.
How do I get good advice?
One of the best pieces of advice I've received is from Matt MacInnis, the COO at Rippling. Before you ask for advice, ask the person if they have experience giving you advice on this topic. Most people won't say "I don't know anything about topic X". Ask this question to qualify the response so you know the confidence interval of the response.
What if I disagree with my mentors, investors, advisors, etc?
If you get the same piece of advice from three people you trust, execute on the advice. If you get different advice from everyone, there isn't a right answer. You'll need to figure it out. The decisions I regret are when I didn't trust myself and went with the popular choice. You're thinking about your business 24/7 and will know more than anyone else. Great businesses are not built by consensus. If you're the CEO, you'll need to make the tough calls.
Having the wrong co-founders is the number one reason why startups break up and fail. What should you look for in a co-founder?
Should I find a co-founder?
Solo founders can be successful. Before looking for a co-founder, ask yourself whether you need one. An ideal founding team has the skillset to build and sell the product. For SaaS companies, you often see the combination of an engineer and a business co-founder who understands the domain. For social products, you often see designer & engineer combos. Being a solo founder can still work, but you will need to convince investors that you have a successful track record and/ or that you can grow a team by recruiting others.
How should I split equity with my co-founder?
It's not the numbers that matter in the split. What matters is that all co-founders believe the split is fair. Practically, if all founders started at the same time, split the equity equally. If you've made significant traction and have de-risked the business, you could justify less equity for a newly joining cofounder. Remember that traction does not equal time. You could have worked on your idea for a year and yielded 0 revenue and no prototype. If you need to revamp the company, the equal split could still make sense.
How do I find a co-founder?
The ideal co-founder sits at the intersection of smart, available, and has the right skillsets. Finding someone who fits all three is really hard.
For my first startup, I met my first cofounder in college. For Pulley, I'm a solo founder. Being a solo founder for your second company is much easier. Ask yourself who is the smartest person you know and reach out to them. Work your network to find a cofounder. Ask your friends to introduce you to people with shared interests. Go to meetups and connect with others. Be creative and tweet to see if there's anyone in your network who's exploring (this is how the founder of Uber found their first CEO). Editor's note: Check out Elpha's resource on How to Find a Cofounder.
If you can't find anyone who's a good fit, consider working at a startup to build out your network. Your co-founder is just one of many hires you'll need to make. A good place to work is a growing startup at the 200 people range. The company is growing quickly and attracts people who want to sign up for a challenge. The risk profile of people working at Microsoft or Google may not align with the startup lifestyle.
The hardest part of starting a company is starting at all. I hope some of these learnings will help you get over that hurdle and start building!
The next article is on fundraising. Ask all the questions you're too afraid to ask on raising your first round in the comments below.