Best & Worst Decisions Starting Companies

markfletcher writes "Today I launched a new site, Startupping, dedicated to helping Internet entrepreneurs. For the launch I asked several successful entrepreneurs about lessons they learned starting and running Internet companies. The first set of replies includes responses from Paul Graham, John Battelle, Chris Pirillo, Ross Mayfield, and Dick Costolo."

Comments

What are the rates for a slashvertisement?

[Harmonious Botch]

I wanna buy space too.

Re:What are the rates for a slashvertisement?

[Anonymous Coward]

Ah, but the NonSense always belongs to /.

Re:What are the rates for a slashvertisement?

[tooyoung]

What are the rates for a slashvertisement?

Luckily for you, today I launched a new site http://www.slashvertisement.com/, dedicated to helping Internet entrepreneurs obtain stories on slashdot. My first interview is with Mark Fletcher.

Other Startup Sites

[janneH]

A bit off topic maybe, but anyone know of good sites for more general startup help - that includes non-internet companies? A place to discuss contract terms, get recommendations for legal help, advice on whether to go LLC or C-corp - or one of the million other questions that come up.

Customers!

[seanadams.com]

The number one thing that people screw up is to start a business around an idea because it's interesting to work on, it can get funded, it's been done successfully before, the sector is hot, exit valuations are good, etc.

The ONLY successful ideas I have ever seen start with a _customer_. The first thing you say when somebody asks you what your idea is should be to describe who will buy it and why. Not what it is. I can't tell you how many entrepreneurs I've heard touting their latest venture with a pitch such as: "Think of it as a cross between grid computing and a web of trust, and it uses these applets that run on your back-end server... etc etc". This drivel often comes from seemingly smart people who have had impressive successes in the past. But who the fsck is the customer?

What is really astonishing is that it's the worst of these ideas, which happen to have just the right buzzwords du jour, which get funded by VCs. And it just gets more out of control from there. Even today, 7 years after the dot bomb, I know of several companies which have grown to 100+ employees and are on their fifth round of venture money without a profit in sight.

If your customer is not the #1 thing on your mind at all times, don't even bother! ...trite, I know.

(BTW dot coms DID have customers - it's just that the customer was not the guy buying you non-existent product, but rather the "bigger fool" who would buy your company. They eventually failed for the EXACT same reason - people kept starting companies even after they could no longer identify that customer.)

Re:Customers!

[c0d3h4x0r]

The first thing you say when somebody asks you what your idea is should be to describe who will buy it and why.

Note the phrase "who will buy it", because it's important.

A business can make a perfect product that people love because it overwhelmingly satisfies their needs, but if those people aren't willing to pay for it (or pay *enough* for it that the business can make some profit), then it doesn't matter and the business is screwed. Therefore it is not always in a business's best interest to bend over backward to please consumers at the expense of other factors. A product's quality will reach a "good enough" point, beyond which additional improvement just increases costs without making people willing to pay more for it.

You see great examples everywhere of major businesses consistently making this mistake. Look at Apple -- great PCs with strong user satisfaction, great image relative to Microsoft -- yet very few people are willing to pay the price Apple needs to ask to turn a profit per unit, so in the end it's not a very smart business strategy. Steve Jobs keeps making the stupid mistake of maximizing product quality over all else, when a smart business person understands that product quality is just one of many factors that must be balanced to maximize profits.

I'm about to launch a site too

[Anonymous Coward]

My partner and I are about to launch a new site, how much for a link from the front page?

We can guarantee:

• Bias against Microsoft.
• Bias for Linux.
• Sensational headlines.
• A willingness to bend the truth in order to write those headlines.

aPaddedCell.com for a sneak preview, see we've even got an Internet Explorer hate piece on the front page!

And i-bullshit too!

[EmbeddedJanitor]

There is nothing really magic about internet start ups vs any other start ups. Ultimately all businesses share some common traits. If you don't have a solid business plan, then you only have a dream. This is the same if you're in i-business, selling hardware or if you're a hooker.

To have a business, you need to understand cash flow (current & projected), customers, your product and how the hell you're going to get the product in front of the customer.

Re:And i-bullshit too!

[oliderid]

What truly matters for a start-up is the team behind the business plan.
I can easily hire a good consultant to write the business plan (and I did it once). I will add a nice SWAT chapter, a competition review (based on a Jupiter analysis), 3 years projection (with 3 different projections: pessismitic, break-en, optimistic) and so on...You know that they expect a break even on the first year and a 120% ROI on the second year? Well simply change your Excel sheet.

Investors (at least experienced ones) know that the reality will be different from your business plan. It will just help you to structure your ideas and nothing more.

So what they are truly looking for is a team. Personnalities, experiences, motivation, etc..
And of course the idea.

If you want to be a CEO...You have to prove your leadership and your ability to convince the right people to join your boat, (or at least be ready to join in once there are some money). Otherwise you will remain a brilliant isolated inventor/engineer/salesman...

IMHO 70% for the team, 30% for the idea/product/service/whatever.

This was my biggest mistake. And my biggest success was to recognize it :-)

Olivier

Re:And i-bullshit too!

[the_womble]

In the case of Startupping, the wiki has been written byy someone who does not know what a business plan is - it gives a list of potential revenue streams as business plans. I assume he has written stuff that he knows FA about, in the hope that someone competent will come along and write some sense.

The rest of the wiki is equally useless.

The forums are not exactly active.

The blog aggregators might be useful.

The Startupping blog itself consists of the one article linked to. That post itself has nothing earthshaking. Old advice like "do something you love", "hire good people", "stick to core competencies" and "don't be afraid to take risks".

Why exactly would anyone want to visit this site?

Worst idea ever

[antifoidulus]

thinking that people would pay for a site totally devoted to Cowboy Neal porn....WHAT WAS I THINKING? I'M RUINED!

Worst Decision

[sane?]

Coming up with a domain name that can be read as "Star Tupping"

Tales from the pen of the latest boyband member, maybe?

Observation

[necro351]

Notice that almost all of the posts highlighted the "best decision" as hiring the right people, or finding co-founders that stuck with them. From what I've seen in the past, picking the right people is vital, its one of those things that is expected of you, and so we almost take it for granted, but if you don't do it right, you will mess the whole thing up.

1st bad decision - domain name

[The Dark]

startupping.com sounds like celebrities having fun with sheep (http://www.thefreedictionary.com/Tupping)

Re:1st bad decision - domain name

[thatJoshGuy]

When ExpertSexChange.com can become successful, I don't think StarTupping really has to be worried about some little known definition of 'tupping'...

My 9 step plan for success

[Aqua OS X]

1) Synergize
2) Think Outside The Box
3) Harness The Internet
4) Get A Boat
5) Ask yourself, "is this good for the company?"
6) Attend Donald Trump Wealth Seminars
7) Have a Can-Do Upwardly Mobile Attitude
8) Actualize Your Dreams
9) Have Wealthy Parents

Re:Product quality.

[JavaRob]

I don't buy Macs because of their superior quality. I buy them becasue Apple computers tend to be comparatively well designed (at least the laptops are), the Apple desktop environment has better ergonomics than Windows (in my opinion, your milage may vary), personally I value the fact that OS.X is Unix based and Apple hardware tends to age better than many (but by no means all) PC computer brands, there are PC brands that do just as well as Apple. ...i.e., you do buy Macs because of their superior quality.

Founders at work

[Neme$y$]

For a in-depth look at some of the secrets for a succesful start-up, Founders at Work: Stories of Startups' Early Days might serve as an interesting read.

It features interviews with Steve Wozniak (Apple), Caterina Fake (Flickr), Mitch Kapor (Lotus), Max Levchin (PayPal), and Sabeer Bhatia (Hotmail).

I haven't purchased the book myself, but I'm getting one as soon as I can to help me with my own startup initiatives.

Quote: All the best things that I did at Apple came from (a) not having money and (b) not having done it before, ever. Every single thing that we came out with that was really great, I'd never once done that thing in my life. --Steve Wozniak, founder of Apple, page 36