Best of Sprouter: 25 high impact startup answers to remember
As of today, Sprouter is shut-down. In case you didn't know, Sprouter became a goldmine of actionable startup advice - directly from successful entrepreneurs and investors. Although the site started as a Twitter clone (more or less) the team later shifted their website structure to accommodate for live Q&A sessions from the likes of Mark Suster, Brad Feld, Aaron Patzer, and other high profile business nerds.
But last week, the Sprouter team published an announcement on their blog of the ‘shut-down'. Apparently they had run out of capital. Which, granted, you might expect with an expensive dev team and no revenue model. But that's all hindsight.
The focus of this post is on some of the best content Sprouter had to offer. Real answers from real people. Here are 25 hand picked high impact startup answers, originally posted on Sprouter, that every up and coming entrepreneur should read.
How much attention should I give my competitors?
Enough. Know their every move, but don't react to them in real time and certainly don't take their bait when they provoke you. But know what they are doing, their strengths and weaknesses, and make sure you are paying the right level of attention to destroying them over time.
Investor, Co-founder of Foundry Group and TechStars
What is your take on when startup should start talking to investors? Early to build the connection or not until they have traction and ready to raise?
The earlier the better, but make sure you are talking to the right type of investor. If you are a seed stage startup still in the concept phase, it makes no sense for you to be spending time with late stage investors.
What are you looking for in a first meeting with an entrepreneur who has an idea?
A clear view of what they are trying to do combined with real passion for what they are working on. I can usually tell in 60 seconds whether or not it's interesting to me, so I often try to do this without a meeting (e.g. via email first). If interested, then I really want to get to know the person and the product.
What are the biggest mistakes you see first time entrepreneurs make?
They try to do too much…true entrepreneurs love new ideas and tend to think they can handle it all "we will find a way to do this…we have to". Successful entrepreneurs spend a lot of time discussing what not to do and why in order to stay focussed on the handful of priorities that will lead to success…my old biz partner, Nick Paine, had a saying ‘ focus is choice'…unfortunately he had to remind me of that every day….
Co-founder of Lavalife. Dragon on Dragons' Den.
What are the greatest lessons you've learned growing a startup to a multi-million dollar empire?
No replacement for working hard ! you need to find a way to deal with the inevitable set backs along the way…if you cant, they will bury you.
Should we launch the product before we raise funds (to increase valuation) or should we raise funds at current valuation and launch later with a BANG?
Very few launches are “bangs.” If you're depending on a bang to make the company, in my opinion you don't have a good company. Companies are marathons, not sprints.
Launch as early as possible. Use the feedback to improve. Do those things honestly and quickly and show traction and funding will come naturally. If you're unable to do those things, funding isn't appropriate anyway.
Founder of Smart Bear Software, blogger
Will investors look at a web business who's technical team is outsourced?
Yes, if you have a good track record of producing code with them. There's too many horror stories to trust it otherwise, but if you have a good thing going it's just as much risk as having that one stellar developer locally.
What do you look for (in founders) when mulling an investment decision?
1 is traction. Proves almost everything you need to know.
2 is whether the team is introspective, paying attention, is willing to change. Because then you can overcome lots of other stuff.
Our company has multiple founders - any advice on how to best run a company with so many chefs in the kitchen?
Establish roles and responsibilities before you grow and get money in. Talk it out, write it down, sign it, save it. And if it's too late, you've already grown and have money, then it's harder but you still have to do it. You can't have everybody owning everything. There's a need for structural and functional expertise.
You've heard the quote about democracy being a terrible form of government, but nobody's found anything better? Well democracy is an even worse way to run a growing company, and structure, dividing roles and responsibilities, and setting definitions, is much better.
Founder of Palo Alto Software
Tim, you consistently put out relevant blog content. How do you come up with your ideas, and when do you find the time to write?
Thank you for that, it's flattering. On the good days I love writing my blog and topics come up constantly from thoughts, conversations, memories, blogs I read, tweets I see, etc. On the bad days I have to push a bit, and I rest on the shoulders of smart people I respect who are doing good work, so I do a post that brings up something worthwhile that somebody else has done recently.
As per the time to write, I have it now only because I am still fulltime at Palo Alto Software but my job is writing, not running the company. When I was running the company, I wasn't writing as much. One of the fallacies I think we all deal with is that time is elastic, and you can just write the blog in the off hours. It takes time. I have the luxury of a company that pays me to do it.
How much traction do you need to raise a seed round?
If your team is great, you could raise with no money. A great team is one that has: – prior startup success – domain experience – the skills needed to win in this new company.
In the absence of that, then having a product built and ideally in the market is very helpful.
As seed investors, we are willing to fund at the idea stage, but most companies that we meet are further ahead than that. That's your competition for funding, so probably best to build and hopefully launch a 1st product.
Partner, Real Ventures
What's typically the point at which you would tell an entrepreneur to quit their job and focus on the product full-time, even if it means raising funds?
Sooner the better. If you are working on something that is fundable, then you won't be alone. So the sooner you're full time, the better.
As a non technical founder, is it more feasible to learn to code or to find a technical cofounder?
It's taken me 12 years of near constant coding to get to a place where I feel I know what I'm doing more than half of the time. I'm guessing you can find a technical cofounder in less time.
Former lead architect at Digg, founder of SimpleGeo.
What advice do you have for someone who is headed to the valley to make their first pitch?
The easiest way to answer this is to simply say, “Do the exact opposite of what your parents would tell you to do.” Don't wear a suit. Don't worry about in-depth business plans. Don't worry about not swearing.
As far as the meetings go you'll need a pitch deck and enthusiasm for your product. Make sure you've thought of all of the possible angles someone might take to say no and have counters for them. That being said, these investor meetings are a lot like first dates in that you'll know almost immediately if the investor is interested in you, your product, and your market.
More mundane pieces of advice include renting a car as you'll be running all over the peninsula where there's not great public transportation or taxis, rent a hotel near your first meeting, and spend the day relaxing the day before.
What's the best piece of advice you have for a new entrepreneur?
There are only two truths in the land of startups:
1) Startups are hard. Really, really hard.
2) Nobody actually knows anything (See my other answer about when to take advice for more on this one.)
Though I could add a third:
3) VCs will always pay for meals. They have to. So make sure to order something expensive — but not the most expensive thing. That's just tacky.
How can we build a sense of community around our business?
Be honest and open about your successes as well as struggles. And communicate consistently without the flowery marketing lingo we're all sick of hearing. But most of all, create a product or service your users can love.
Founder and CEO of the Cheezburger network.
Ben, it seems like everything you touch has turned to viral gold.
Can you share a couple of principles on what something needs to go viral?
We actually disregard virality. I know that sounds completely the opposite of what people know about us, but we focus on CONSISTENCY. We try to be a place people can come to everyday to have their 5 minutes of happiness. If we get virality out of that, great, that's a bonus. But our job is being consistently good, not occasionally great.
How do you differentiate founders vs employees during the beginning of a start up?
It's easy if people put in dough. Develop a preferred share structure which anyone who puts dough in gets some of and then a common program for everyone based on current commitment. If there is no dough there is still sweat equity and time in the trenches. If everyone started at the same time and everyone is contributing the same and there is no dough, then there shouldn't be any material differentiation.
How can you prevent another company from acquiring your startup?
I don't want to sell my company.
That's cute but truthfully, don't say that out loud to anyone. No one will give money or take equity instead of money from a company without the desire to ever have a liquidity event. It's good to feel passionate about your company but you should also be thinking about how to make it a wild market success, not just with customers but also the enterprise value of the thing you are building. If you get a billion dollars, take it and go build something else you are passionate about. I'm sure this won't be the only idea you ever have.
Over the past year I've come to realize that I should be starting my own business. I've got a couple ideas I've been talking about with my cofounders, but none quite stuck so far. Any tips when it comes to ideation and just getting started ?
Don't wait for perfection for 2 reasons. It's a state that doesn't exist in the real world. A perfectly conceived plan will last about an hour before the market screws it up. Get in the game and iterate quickly based on where you see opportunity in a specific general market. Good luck. Fortes fortuna adiuvat.
What advice do you have for someone just getting started with their idea?
Very broad question, so let's just say they should expect to engage seriously with their community, and stay engaged. At times, it won't be easy.
Founder of Craigslist
What objections did you face when you were turned down the first 50 times when raising?
Just what you would expect: No one will ever trust a startup with their financial information; You don't have a background in personal finance. All over-comeable.
Founder of Mint.com
If you had no co-founders, how did you build your initial team? Were they paid equity or salary?
I paid my first engineers 1.5-2% equity, and a salary of $3000 / mo from my own savings.
How big was your team when you started Mint?
I started Mint alone. I worked in my apartment 14 hours a day, 7 days a week for 6-7 months before bringing on two other engineers.
We were about 8 people when we launched a year later.
Top 5 tips for pitching VCs?
1. Need a great team 2. Need to solve a problem 3. Need a big market opportunity 4. Need to show how you can differentiate from what else is out there 5. Need to show over time that you do what you'll say you're going to do. Exceed expectations. Show progress in the business. People invest in momentum.
Partner, GRP Partners
What kind of "change-the-world" ideas are you looking to invest in? Any problems in particular?
I'm looking for entrepreneurs to tell me how they want to change the world. Not the reverse. That's a recipe for disaster.
So long Sprouter
Goodluck in the future to each of the individuals who took part in building Sprouter! It was a great site while it lasted.
P.S. - although today is the day it is supposed to 'shut down' - of this writing - Sprouter is still online with all of it's content available.