Motives and the team behind a startup

On our second lecture in the startup class we talked about the motives behind forming a startup. The best reason (and only proper reason) for starting a startup is the hunger to change the future. You need to have a vision of a different future and a burning desire to make that vision reality. This is what startups are for. Many of us had also other thoughts about motives for startup such as "wanting to be your own boss". According to Bala this is really not how startups work. Sure on the paper it sounds good but the reality is that instead of becoming your own boss you become a slave for everyone you work with. Dreams about making your own schedule by creating a startup are not grounded in reality since once a startup is founded it will devour all the time you have.

Other topic we covered in class was the team behind the startup. What makes a good team? What kind of people are needed? How to choose a co-founder or an investor? Here are some key points for the above questions:

The startup team should have one person for each of the following tasks:

• One person who is expert in the customers problem
• One person who knows the technical side of things
• One operator who takes care of everything else

 

Choosing your co-founders is like choosing the person you are going to marry. Startups can be very demanding, stressful and painful. They really put a strain on a relationship. And of course when there's money involved conflicts can get really messy (as can divorces). This is why you shouldn't choose a co-founder who you've just met. You really want to know that person before jumping into a startup with him or her.

The same goes for choosing an investor. Grabbing money whenever it is first offered is a very common mistake according to Bala. You can and you should be picky about your investor since they have much power over your startup. There is also a conflict of interests between startup founder and an investor. The founder usually thinks well into the future of the company, whereas an investor is often looking to get his or her money back as soon as possible. Therefore it is vital to discuss the plan through with the investor before accepting his money. When is the investor planning to get his money back from the investment?

We also went through some issues regarding the recruitment of employees to a startup. One of the most common mistakes that startup founders do is that they hire people too soon. This will kill the business very fast if scaling up doesn't happen as was planned. We also got a few tips on how to hire people. The best tip in my opinion being "always hire people smarter than you". As a person who is hiring you also need to sell the vision you have about the company to the future employees. That way you can get the best people on the planet to work with you. If they share your vision they will be evangelized and they will work vigorously.

This is all for now. Next post comes next week!

First post! Yay!

In this blog I'll be writing about lectures of class "How to start a startup". For more information about the ideas behind the course please see: http://startupiceland.com/2015/04/01/you-are-not-a-lottery-ticket/

So what did I learn from the first lecture?

I learned some of the dos and don'ts about starting a startup. My favorite point about the class was the idea about timing of a startup: "The best time to startup is now because yesterday has already passed and tomorrow it is too late". It's better to just get started and not to worry about details too much. I learned that some of the general reasons why startups fail. These reasons include premature scaling and the lack of engagement with customers. 

We also went over some basic definitions e.g. what is a startup & entrepreneurship. In the class we also had time to go through the 4 important things about starting a startup. These are:

• Idea (the difficult thing is turning idea into reality, also timing is an art in itself)
• Product (a great idea leads to a great product)
• Team
• Excecution

We also covered some key metrics for a startup. These are the amount total registrations, active users, activity levels, cohort retention, revenue and net promoter score (which tells our effective is the marketing).

In the first lecture we of course also talked about general stuff related to the course, timetables, assignments and such. In the course we will be starting our own startup with our own group of 5 people. We need to come up with an idea and try to sell this idea to strangers. We'll divide roles for each team member and we'll start by creating a web page for our startup. Before all of this we need to come up with a great idea for the startup of course.

We also had a skype chat with the author Sean Wise of our course book "Startup Opportunities: Know when to quit your day job". We got to ask questions from him. This was a really interesting chat and he had a lot of good points. He for example talked about entrepreneurship and family life. He also made good points about the future of startups and idea generation. We went over few different ways to create ideas. One was the purple cow game where a group is tasked to monetize on the world's only purple cow. This can for example be done by charging fees for people coming to see the cow or maybe by making a tv-show of the cow. The possibilities are endless. The point of the game is to strengthen the idea generation of the participants. In a way the game forces the participants to think outside of the box. 

All in all the lecture was a very positive experience and I look forward to the next ones.

That's all for today.