Hey there,
Happy New Year! Dragos here, from Project Arrow, where we mentor founders about how to build from 0 to 1 and get their startups investable in the process.
Back to building yet? The start of a year is always a period of reflection, strategy and revising the fundamentals - the “who we are” and “why we’re building our company” kind of thing.
I thought it’d be fitting to share a few principles I go by and which I have noticed many successful startup founders always refer to whenever they want some clarity.
Know who you are
Understanding (and accepting) who you are and what you are not is the foundation for everything you do in your life, not only with your startup. There’s many approaches to building a company from scratch - define your way of operating based on your own world view and strategy, personal values, what type of people you like to work with, what kind of customers are exciting to talk to, and what drives real returns for all your efforts.
You likely started your own company because you didn’t like how others were running their own so now it’s the perfect context to create your own game plan and define your operating blueprint. Create purpose, know who you are, what you stand for and what drives you, this is the North Star to get you going every morning.
A product is not a business - a product *and* paying customers are.
Especially in the beginning, you tend to spend more time on building the product rather than on building a business around it. It’s normal, there’s no business without a product, right? Not exactly, a product is just one side of the equation - there’s also no business without customers so an important part of your time should be allocated to finding and talking to customers. What do they think about your product? What problems do you solve for them? How much money are they willing to pay for it?
Product and customers are all that matters in a startup - ship product and get paid for it. Yes, the business side may be outside your comfort zone, particularly for tech founders, but this is the only way to validate all your startup work. Customers will tell if your product has value. Not outsiders. Not investors. Not gurus or social media kibitz.
Building a business is a capitalist exercise.
Keep track and anticipate your expenses and financing needs, and be in control of them. You don’t need a detailed spreadsheet, but it’d help plan in advance how much money you spend monthly and how you will produce this money. It’s an exercise to keep you real about business building on day-to-day basis.
Related to that - define and understand your unit economics. How much it costs you to produce one unit and how much you get for it in the market. How much is fixed costs and how much is variable.
Don’t play defense, play offense.
Don’t be afraid of competition, or about people stealing your ideas. There will always be losers copying other people’s work, that means it’s valuable. But caring about them is just a distraction - instead, focus on your game and on the road ahead. Build, execute and create value for your customers. That’s how you win in the long run.
On a larger point, don’t over-think about what can go wrong. You only control what you can control. While understanding risks is important, you’re better off to focus on what you can improve and how to advance. Also, don’t be afraid to make mistakes - you will do tons of them! Acknowledge them, learn from them, move on and never repeat.
Listen to others but think for yourself.
Nowadays, media is full of content with tips and tricks about how to build a startup. The writing is generic and done for clicks and attention, don’t take it at par value. Whatever you read, use your brain to understand if it makes sense to you, and don’t be lazy though you’ll be tempted to.
You also may have noticed a big number of investors inundating the social media with all sorts of advice meant to prove what they’re competent at business. Again, don’t be impressed and don’t buy into it, it’s just staged marketing - remember, key test for authenticity and value is how someone acts in live back and forth discussions where framed speeches don’t work. Investors are active in social media to sell an image, what they write is not who they are, they even hire people to create the content for them.
Same way of thinking applies when you get advice and suggestions about your business from other people. Listen to them respectfully and process everything through your own system of reference, don’t take anything for granted just because “X said so”.
Build relationships
Building relationships with people in your industry will give you perspective and position you on the outside world - fellow founders, peers, customers, suppliers, vendors, investors, journalists. Besides the industry intel gathering, any connection from the ecosystem may lead to further opportunities for your startup. However, beware this can also turn into a distraction - set up your expectations going into these meetings.
Related to that, don’t waste time on large events, conferences and meetups for building these relationships. You’re better off spending your time and energy in smaller, more intimate groups with a specific focus.
Don’t obsess about raising VC money
Working with VCs is just a mean to an end, and not necessarily a path to your own success. Don’t get fooled by the media narratives claiming that a successful startup means raising venture money - au contraire, most of the successful companies out there have never raised VC capital.
The VC funding is just another way of financing your business, besides options such as revenue, bank loans, government grants and whatnot. Venture capital is not the optimal or superior funding option for the vast majority of companies and most of the investors will not really understand or be interested in what you’re doing, as they’re looking for a very specific type of entrepreneur, business and market opportunity.
Find people who want to see you win
Building a startup is a lonely job and most of the time nobody understands what you do or simply don’t care. When you feel like an imposter, remember you’re not alone, many startup founders feel this way, it is a sign that you’re growing and expanding what’s possible.
Getting like-minded people in your corner, who can help you win, is incredibly valuable, both mentally and intellectually - they’re usually experienced and knowledgeable mentors whom you can reach out to for advice. Leverage their expertise and experience to help you make better decisions, level up and build close and long-term relationships with them, aligning them to your own objectives.
It’s an investment you won’t regret and a reason for which we’re running Project Arrow - startup founders get mentorship and progress guidance that can ultimately save a lot of time, efforts and money. Talking for an hour with somebody competent who gets you can be an incredible confidence boost and helping founders out is what we do at Project Arrow every week.
Swipe this advice list and go beyond what they mean - it doesn't matter if you're still at the beginning of building a startup project or you already started your fundraising process. We’ll dig through them, with more examples and practical stuff, in the future office hours sessions and workshops in the months to come. We’ll let you know in due time, so keep an eye on your email.
In the meantime, hit reply with your own principles and/or questions.
Until next week,
Dragos
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For someone who's been on the brink of signing up one thing that is not clear is how practical some of the advise and guidance will be. Can I get an exhaustive list of tools that hundreds of startups use to get off the ground?
Collaboration, Legal, Finances, Taxes, Payroll & Expenses, Marketing & CRM...Templates, templates and more templates.
Where to start if we don't know what we don't know?
It's not clear from program description that this is standard info vs. upon request.