10 entrepreneurship principles I learned over the past 5 years
This article acts as a shorthand for the main entrepreneurship principles I follow. Here is a quick overview of what I’ve done over the past 5 years:
Founded a startup, pivoted twice over the course of 5 years. Hired and fired dozens of people. Had a co-founder who ended up stealing money from me. Attracted clients like Universal Pictures, SAP, and Mindvalley. Raised $400k yet kept 97% of the equity by leveraging loans and grants.
Co-founded and advised another startup, raised pre-seed investment for it.
Co-founded and invested in an event business, which attracted top scientists in the field.
Been offered to take over a profitable SME and a startup, evaluated both acquisition opportunities. Rejected one, the other fell through.
Enrolled in a Ph.D. program.
Whether I was successful or not is hard to judge, but I sure as hell learned a lot. Let me share with you all the 10 core entrepreneurship principles I learned.
The number one lesson I learned is that people (including myself) often get the wrong impression of entrepreneurship. We often think it is about raising money from investors, hiring a lot of people, who then build a great product, which you finally sell to a customer.
We got it backward. The number one thing you should do is sell. Why? Because your riskiest assumption is that people will buy your product. You likely will be able to build whatever app you want to build. It is relatively easy to hire people. It is possible to fool investors. You can’t fool the customers.
Once you see some demand, you can build an MVP (Minimal Viable Product). If you get more people on board, you can consider bringing a friend on board. Back to building. Back to selling. One more hire. And then, if you are lucky, you might find out that you are sitting on a goldmine and you need to raise investment.
Start by validating your riskiest assumption. You can read more about how I came to this conclusion (after burning €200k) in my most popular article to date here.
It is more important to work on the right things than to be productive and fast in execution. As poker players know, which table you choose to play at is everything.
So, how should you choose what to work on? Sam Altman, an ex-President of Y Combinator, says that the most scarce resource for startups is talent and talented people want to work on meaningful, huge, inspiring problems. Chamath Palihapitiya, billionaire investor adds that these kinds of problems also bring superior financial returns.
To get you started, I previously wrote about two such huge problems: education and aging, and also described the future of the subset of the education market I am going after, the coaching market.
Many people procrastinate excessively. Get started now. As mentioned in point #1, you need to validate if someone will buy what you want to build first.
Here is a small secret: your launch doesn’t have to be perfect. You want to tap into an underserved market that will be satisfied even with very little. Even a landing page with the promise that doesn’t actually provide any value (yet) will attract potential buyers if the idea has potential. I wrote more on this here.
The startup community glorifies investment. Yet, I came to see it as a necessary evil. So before you take on investment, think if it is necessary.
Two options that worked great for us: government grants and loans. Government grants might be more common in Europe than in the US, but the bottom line is that it’s worth doing the research. I went into more detail elsewhere.
The second option is loans. While startups rarely think about working with banks, what worked great for us is getting a long-term loan with collateral from angel investors. For them, it meant that they don’t have to spend any money if things go well, for us it meant lower dilution.
As mentioned in the intro, I have worked with a co-founder who ended up stealing money from me. Here is one huge lesson (from my mom) that I got out of it: lending money to friends is a very cheap way to find out if they are worth being friends with.
If they end up never giving it back, you have your answer. I paid a price for inviting that person into my life, but I paid a lot less than I could have paid a few years down the road. Don’t stop lending money to friends.
You can read the full story here.
The second part of this lesson is surrounding yourself with a community of like-minded people. There are many alternatives from finding connections on Twitter to, like in my case, services like LaunchClub that allow me to exchange ideas and advice with fellow SaaS founders.
I always thought that while other people optimize their life for happiness as the end goal, I just want to build something epic and ambitious. I was getting anxious every time my plan wasn’t progressing.
I thought that if I stop worrying, and accept reality as it is, it would mean that I would be pursuing my goals with lesser passion and ferocity.
What I learned is very counterintuitive. I shouldn’t allow myself to worry not because happiness is the end goal, but because it is simply counterproductive. It might sound weird, but being default happy removed obstacles from my path, allowed me to face reality, and move towards my goals faster.
If you want to dig more into this topic, I wrote an article with an example of how I stayed sane while going on a crazy rollercoaster from selling a startup to buying a startup to pivoting.
If you want to achieve your goals, you need to be methodical, says Chamath Palihapitiya. What does that mean? It means tackling your problems one by one, step by step.
You have a problem X? Great, try solution A. Didn’t work? Try B. Nope? Try C. It is very simple. Yet often, especially with complex problems, we tend to go back to solutions that don’t work and try A again even though the environment didn’t change. Quite often we simply forget we already tried A, or don’t want to face the truth because it is emotionally challenging.
I described my method for being methodical in another article:
I have a document where I write down everything that seems most important to me: current strategy, tactics, values, goals, projects, strengths, questions, etc. Not just for my startup, but for my life in general. This allows me to consciously revisit this file from time to time and edit it whenever I find a way to improve my thinking.
The startup community preaches the mantra of focus. Side-hustles are temporary and mean that you are either not serious about the project or didn’t yet get the money you need to transition.
You see, as a founder, your most important job is not to lay bricks, it is to organize the building of the house, to lay out the strategy. Therefore, the question becomes, whether focus or breadth is more valuable to perfect your strategy.
I would argue that working on several projects can help you deal with the fear of failure, give you more energy, sharpen your priorities, and improve your creativity and strategic thinking.
Working on several projects provides you with a plan B, it gives you several sources of inspiration, pushes you to focus on the most important tasks for each project, and allows your range of experiences to be wider thus improving creativity and strategic thinking. You can read more about it here.
Selling projects allowed me to experience how harmful the volatility of sales can be for a company. At least in our business, a subscription business model was superior in every way. It both allows for predictable revenues and is more investor-friendly. I regret we didn’t evaluate the possibility of a switch earlier. I described our journey from a “clever consulting framework” firm to fully automating business coaching here.
You need a good balance of different people who complement each other. Generalists and obsessive experts, optimists and pessimists, conscientious people and visionaries. I would also argue that you would ideally have high self-awareness across the board.
I went into more detail on this lesson with the example of my team in this article.
Many of the lessons I shared above I realized through the conversations I had on LaunchClub. It is a platform that connects SaaS startup founders in weekly 1-on-1 video calls to share advice. They either provide you a perfect match based on your requirements or none at all. I helped to build this exclusive community as a member and an advisor, check it out!