Your 2018 Startup Horoscope

Aquarius (January 20 - February 18)

In 2018 you'll finally start that new company you always dreamed of. Being untrusting of others, you will start the company in stealth mode, without a co-founder and without investment or help from anyone of any sort. By mid-year, you will become bored and shut the whole thing down. When people ask you what you've been up to, you'll lie and say you've been doing volunteer work for the homeless. Your lucky number is 11.

Pisces (February 19 - March 20)

This year you will co-found a startup which will never ever have any chance of ever making any money. Ever the selfless martyr, you will forego salary so that your co-founder can earn enough to feed their family (and pay off their Tesla). In August your co-founder will quit to launch another startup which they'd secretly been working on after hours. It will be very successful. You won't get any equity and can't afford a lawyer. Your lucky number is 15.

Aries (March 21 - April 19)

2018 is the year where you finally flip the table at a board meeting. Literally. Like, coffee and pastries will go everywhere and it'll turn into a whole big thing. Fortunately, your startup is making heaps of cash and your outburst is overlooked. You will take a month of "stress leave" in Mexico before coming back with a new hair colour and penchant for 3/4-length cargo pants. Your lucky number is 1. 

Taurus (April 20 - May 20)

The startup you've been working on for 6 years will finally become "profitable". If things go really well you may even hire your first employee. You will continue to avoid talking to customers who only serve to distract you from your true vision anyway. You will be offered a full-time role at the co-working space you've been working from for 5 years but you will turn it down because you're this close to making it. Your lucky number is 24.

Gemini (May 21 - June 20)

You read a book on The Lean Startup and force everyone in the company to work from Lean Canvases. After a week you realise it's rubbish and go back to just using Trello. You will pivot from SME to Enterprise before landing on a straight consumer play. You will rebrand and then un-rebrand before finally debranding altogether. You will read Black Swan and start making decisions by flipping a coin. Your lucky number is all of them. Or none of them.

Cancer (June 21 - July 22)

In 2018 you will conclude that one of your competitors must be stealing all of your good ideas. There's no way you can prove it, but you will still spend your days scouring through all their javascript source code anyway. You will implement stack ranking so you can watch and laugh as employees sabotage each other. Someone will make a "your Mum" joke; you'll make them migrate your blog to WordPress. Your lucky number is 20.

Leo (July 23 - August 22)

You start a Medium blog so you can be seen as a "thought leader". Nobody reads or shares any of it and you barely get any "claps", so you start Instagramming burgers instead. You will attend events in Berlin, New York and Bali which you are 100% absolutely certain will result in a bunch of valuable business cards. It won't, but you will keep going to them anyway. You start a podcast about "working remote". Your lucky number is 3.

Virgo (August 23 - September 22)

This year, on the advice of doctors, you decide to reduce your working hours to 80 hours a week. Your employees are persistently tardy and so you will be forced to cancel the coffee subscription until they can all arrive on time. Your VC insists on wearing a mustard coloured shirt to Every. Single. Board. Meeting. You get your dates mixed up and are accidentally home for one of your children's birthday parties. Your lucky number is 23.

Libra (September 23 - October 22)

In 2018 you will expand your advisory board to 17 to make sure you're getting the breadth of experience and opinions you need to make day-to-day decisions. On the advice of one mentor you will begin using "ideation workshops" for every new product feature. The first attempt will end in an argument which results in your lead designer quitting the company. You will implement a strategy whereby Friday lunch is decided democratically, thus ensuring that a subset of your team will always unhappy with the choice. Your lucky number is  6.

Scorpio (October 23 - November 21)

Your biggest competitor will pull out of an acquisition deal at the last minute to instead acquire a "fast follower" out of Uzbekistan. You accuse your co-founder of screwing up the deal and let the tires down on their Corolla. Your employees will get together and buy you a really lovely birthday present because you've been such a great boss, but you will still secretly log web traffic to see who's been updating their LinkedIn profile. Your lucky number is 8.

Sagittarius (November 22 - December 21)

In 2018 you'll set up offices in 6 cities around the world in an attempt to exponentially grow your "gig economy" startup. Unfortunately, as you never learned what unit economics are, your losses also accrue exponentially. In August you will attempt to close a desperately needed down-round which will result in you having less equity than the cleaner. The cleaner will be promoted to CEO and you will realise you should've just stayed in school. Your lucky number is 21.

Capricorn (December 22 - January 19)

Against all advice to the contrary, you continue to pursue your dream of an autonomous, solar-powered food truck that drives the streets 24/7/365 and uses machine learning and facial recognition to select, create and instantly deliver food to customers before they even know they are hungry. Inexplicably, it will turn out that you were dead right on that one. Nice work! Your lucky number is 22.

(A little over half way through writing this I realised that I had inadvertently stolen this idea from Alan Jones. He mentioned this idea to me about 6 months ago and I'd apparently just forgotten where I'd gotten the inspiration! So credit for the idea goes to him.)

The unhealthy obsession with "crushing it"

I saw a tweet today that spoke volumes to me.

The quoted tweet was linking to an article about setting and achieving goals (something I love to do, and in fact, the author appears to go through the same annual reflection processed I referred to in my previous post, although in a much more intentional, structured way!). The article is great, but the tweet itself issued the challenge: "Are you ready to crush your 2018 goals?"

I hate the term "crushing it" (or Smashing it, or Killing it, or any other similar phrase).

There are two reasons I hate it. The first is simply, it suggests victory comes from destruction. It suggests that the only way to win is to tear something else down (in this case, goals, which is honestly probably fine but hold that thought) and it reflects a broader "alpha" culture which I really hate. 

To suggest winning means conquering, or destroying something is just really... unhealthy. It suggests that those that win are bigger, stronger and meaner. It says that the only victory is one which comes from pain (either yours or someone else's). It compounds the adage of "nice guys (or girls) finish last", and it's simply untrue. Victory doesn't need come from destruction. To win doesn't mean someone or something else has to lose.

You can win by solving a real problem that improves the lives of others. You can win by curing cancer. You can win by helping a nonagenarian cross the road. You can win by cleaning the office kitchen! None of these are activities which you'd say "wow, I crushed that", but they're all inherently valuable and all make our world a better place (especially cleaning the bloody kitchen).

When you crush goals, it suggests that your goal was a struggle or a challenge to be conquered. It suggests that you bested something that all the other losers couldn't. I've never heard anyone "crush" good customer support, "smash" that usability review or "destroy" creating a flexible work from home policy, yet I'd argue they're all more important than whatever goal you "crushed" this year.

Crushing is a negative force, not an additive one, and the people that use it tend to be alpha dudes. A rash generalisation I know, but it's evidence of the compounding force of bro culture. It demonstrates a culture of tearing-down rather than building-up. It suggests that we succeed through force rather than by simply creating, collaborating or caring. If you measure your success by what beasts you've slain, you're probably not contributing to the world the way you think you are.

The second reason I hate people "crushing" goals, at least in the startup world, is that it gives others a false sense of where you're really at. The fact is that most people don't spend their days "crushing it". We all have good days and bad days. We win sometimes, we lose others. If your response to "how's things?" is "we're crushing it", you've just missed out on an opportunity to share the burden, learn something or even help someone else. 

If instead of always crushing it, you expressed frustration about your development backlog, or how revenue hasn't grown as strongly as you'd like or how your investors have lost patience with you and want their investment back, you've missed an opportunity. I've always made a point of being entirely open and honest about how our business is faring (possibly to a fault), especially with investors and other founders. For one, it gives you an insight into who you're speaking with. There's a lot to be learned from their follow up question. Are they keen to help, or are they a parasite looking for someone else's success to leach off?

But, more importantly, it gives the other person an opportunity to share their troubles as well. Instead of standing around patting each other on the back for being awesome, you could be helping each other solve real problems. That struggle you're having, they may have solved already. The problem you thought you were the only one experiencing, they may share. Most importantly, if we're all honest with each other, we make it easier for those around us to keep going. Knowing that nobody has all the answers makes us want to continue searching for them ourselves.

I have no time for a culture of "crushing it". I have no time for bro's that need someone to lose for them to be able to win. Success, to me, means leaving people, things, or places in a better state then when you found them. You can't "crush" that. 

An Idle Mind is the Devil's Workshop

My wife commented to me yesterday that I always seem glum at Christmas. At first, I thought, huh, really? But then I realised it's probably true. Come Christmas every year I get the shits on. Why though? Christmas doesn't hold any particular meaning for me (other than getting some time with family) so it's not the Yuletide spirit. I'm not generally the brooding type, so it's unlike me to be like this...especially at Christmas. So what gives?

Well, as a startup founder, I'm generally pretty busy most of the time (although I admit this year I haven't been as busy as others). I rarely take time off work, and when I do, we're straight on a plane and off travelling someplace. So the Summer break is the one time of the year where I find myself with nowhere to be and nothing much to do. An idle mind is the Devil's workshop.

It's at the end of the year that I tend to take stock of what I have and haven't achieved in the previous year. I'm generally disappointed. I look back and look at all the things we said we'd achieve this year, and ask myself why we didn't achieve them? Did I not work hard enough? Did I make bad decisions? What could I have done better? Often the answer is that we did everything right, and yet things still didn't work out. Sometimes we do everything wrong, but we still have a good outcome! Go figure!

This year has honestly been a clusterfuck of monumental proportions. Yet, at the end of it, I think we're still in a better place than we were 12 months ago (there'll be a blog post on that soon). Related: the book 'Antifragile' is a terrible read (but I highly recommend it).

So what did I do this year? Well, the clusterfuck started because last year I finished up at BugHerd (a business I spent 6 years building), so this year was all about finding out "what's next?"

  • I started 2017 making a game with two exceptionally talented friends (a writer and an artist). I quickly found that I suck at making games. It was great fun learning new stuff, but it wasn't really making use of the skills I already did have.
  • So I poured myself into being a Startmate mentor/partner for the Sydney 2017 batch. I loved doing it, but unfortunately, volunteer gigs don't pay the rent! 
  • During this time I'd been working with 500 Startups helping them set up shop here in Melbourne. I had hoped that I'd be the one to lead the Melbourne program, but sadly for me, that honour went to Rachel Neumann (and well deserved). Of course, in the end, I was glad I missed out.  
  • I then took some early steps into starting a small angel fund with a good friend. I spent about 6 weeks researching, listening, talking, learning before coming to the conclusion that I am not (and probably never will be) a suitable candidate for a GP role. I hate raising money, I hate making deals and I hate paperwork. There's no way I'd do it for a living! 
  • Somewhere in there, I had another (failed) attempt at writing a book.
  • Startmate Melbourne came along, and so I jumped back in head first and once again discovered, whilst fun, it won't pay the rent. I guess I should've paid more attention the first time! 
  • Around this time we completed the investor buyback of BugHerd from our investors, and shortly thereafter I came back to being CEO again (yes, I said there'll be a blog post). It was a nightmare 18 months but was a relief to get it done (with many thanks to Tom Pisel).
  • In September I was supposed to mentor another accelerator program.. but by that stage, I was so totally burnt out from anything to do with startups/community/money/investors and just couldn't do it (sorry Scott). 
  • Oh...and in amongst that, we built a house, rented a house, sold a house, moved house twice, got kids started at a new school all while my wife and I were both mostly working/consulting full time.

So whilst it's tempting to sit back and think I didn't achieve anything this year, I did learn a bunch. I learned I'm not going to earn a living making games or being a novelist, I'm definitely not going to raise a fund and despite my best efforts, I'm not going to work for (and certainly not run) an accelerator. 

But I also learned that 2 years after I was forced to fire a bunch of people they're still happy to hang out with me (even if I have to bribe them with Star Wars tickets). I learned that whilst I'm a bit rusty, I can still actually code. I also learned that there are people out there who want to work with me, follow me and invest in me. I learned that you can either create the world you want to live in or invest in someone else's; and that the latter doesn't excite me all that much. I learned that just because you can, doesn't mean you should and as a result, I learned to say no.

I re-learned that what we do is really fucking hard and that I shouldn't be so down on myself for not "smashing it" (and nor should you be if you're also not smashing it). I re-learned that our "shitty little web app" was actually pretty successful (providing you're not a VC trying to raise another fund). I re-learned that what's good for a VC is not always what's good for a founder (and vice versa), and that, as a result, many startups should just never ever take money from a VC. 

Here I am at the end of 2017, mostly back where I was at the end of 2016. A little bit older, but a lot wiser (and a whole lot greyer). I sold a biz, started a biz, bought back a biz and at the end of it all, learned a whole lot about myself. That's not such a bad outcome.

So why does all this make me grumpy at Christmas? Whilst I'm certainly grateful for what I have, and what I've achieved, I'm never satisfied. Every year I look back and think, "ok, what's next". I wonder what I can double down on next year. What didn't I do, that I should be doing? What did I do that I shouldn't be? What can I do better? The answer is, of course, a lot.

Your first startup should be someone else's

You’re about to start your first startup. You have an idea, you have the talent (whether yours or someone else’s) and you’re poised to take over the world. The only thing that stands between you and success is that you have absolutely no idea what you're doing! GO!

Let’s be honest, I don’t think any of us would start a company if we already knew what the journey would be like. To do what we do requires a healthy dose of naivety . You have to be either brave or foolish (or both) to think you can succeed where so many others have failed. Being ignorant of the odds of failure can be a blessing, but without some sniff of reality it can become quite the curse.

The one common thread among aspiring founders is their absolute belief in their vision. They believe it’s unique, they believe no one else could possibly do it, and they believe it has massive market potential. More often than not, they’re wrong on all counts. But often that dedication to solve a problem without fear of failure is what makes it possible to succeed. By not stopping at the intermediate point of impossibility they eventually find a way to attain the highly improbable. It’s that drive that makes working with startups so exciting.

But whilst throwing caution to the wind can often be beneficial, even an ounce of experience goes a long way when the tough times come, and they will come.

The most obvious solution is to surround yourself with experience. Advisors, mentors and investors are all great sources of learning. People that have “been there, done that” can step in to help solve problems for which you’ve been unable to find a solution. As helpful as they can be, the bottom line is that all of the responsibility still comes back to you. It’s up to you to make the decisions.

Whether it be hiring, firing, budgeting, planning, pitching or selling… the decisions are yours to make. All the advice in the world won’t stop you from ever making a bad call, especially when you consider no one has all the information that you, as founder, has.

The only thing that can help you in these situations is your own experience and your own gut feel for the situation. The more experience you’ve had, the better equipped you’ll be to make the right call. This is where I believe the best way to help yourself is to help someone else first.

First time founders, I beg you, please go and work for someone else before you start your own business! Too many wannabe entrepreneurs have this crazed notion that the only way to work in a startup is to start your own. Unless you're solving a problem that is so important to you that it keeps you up every night, you may well be better off working for someone else. Think about it, do you really need to own the business to enjoy your work?

Go get some experience, contribute to something important, be part of something bigger than yourself! Maybe you'll meet some folks that can help you in a future venture, maybe you'll get some equity in a growing business, maybe you'll even take part in an exit! The worst case scenario is that you'll learn a lot (even if it's how not to do things!) In time you'll find something to be passionate about, and only when you've found something you must solve should you strike out on your own.

There's a whole heap that can go wrong in a startup, and the only way to really know about it is to have gone through it. It's true that you'll never learn as much as you'll learn at a startup, but it doesn't mean you have to be the owner to learn it. 

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Customers won't give you money unless you ask

Sounds obvious, but you'd be surprised how many startups are scared to ask for money or even if they do, they're scared they're asking for too much (although the latter is a topic for another day).

There are a few reasons why you might not ask for money, and whilst there are plenty of times when this is appropriate, you really need to ask yourself if it's the best choice for you.

The freemium model seems to have become the default option for startups these days, for both B2C and B2B. The thought process goes that you can get many more people using your product for free than you could by charging. So if you give it away for free, you'll grow your audience faster and learn more in a shorter period. Valid in theory, but it’s not without its problems.

There are times when freemium makes perfect sense, so I don't want to poo-poo the entire concept. For example, Freemium works really well when your user IS the product. This is the case for things like gmail, Facebook and even our own FiveSecondTest (where our free users give feedback on designs for paid users). Alternatively, if your app is super sticky (one which people won't stop using once they start), then you can leverage your low churn rate with the knowledge that inevitability users will reach some milestone which will trigger payment (e.g. dropbox, evernote). There a few other examples of good freemium models, but these are the main two.

If you’re not in either of those categories, then there are a few well known dangers with giving away your product for free. First, you may be collecting a lot of data, having a lot of conversations and learning a lot about your users, but you may well be learning about the wrong users. If you satisfy the needs of your free users, you may well be making a product that is only great for those free users. You always need to be sure you're pleasing the people who're going to pay you, not those that wont. 

Secondly, there is the classic "if we just convert 1% of our free users". For many businesses this is a fool's errand. Unless you're running an extremely sticky app, it's really hard to get people off their free plan onto a paid plan. Your free plan needs to be good enough to gain traction, but not so good that you prevent people from wanting to upgrade. You're stuck with a constant battle to balance these needs and it can be a messy challenge. 

Possibly the most dangerous thing about freemium (particularly for B2B) is that "free" comes with a perception of "cheap". It makes it just that little bit harder to prove value when you're clearly willing to give so much of your app away for free. What you find is that many users will go to great lengths to defer upgrading, often users that would've paid you up front had you asked them.

We struggled with all three of these issues in the early days of BugHerd, but we also found some things we didn’t expect. 

The first is that many users simply tried to "make do" with one user account and found workarounds to share the account. They’d use comments, or tags to assign tasks, or often just not assign tasks at all. It meant they were not only not getting full use of the app , but they were having to include “hacks” into their normal workflow just to avoid the monthly spend. Not ideal. 

The second, much larger problem, was that usage on free accounts was, on average, well below usage on paid accounts. Installation rates were lower, users were less likely to create tasks and they were far less likely to invite other users. 

The weird thing was, we found that this same behavior was consistent both before and after the unrestricted trial period! Even though a user had access to all the features, unlimited users and guests and all the support services, they still acted as if they were already on the free plan. Just knowing that “free” was an option was enough to cause a change in user behavior.

To confirm this, we conducted a simple A/B test where 50% of users we're not shown that a free plan was available at registration. With no change in the product, trial period or the pricing, we saw an immediate increase in usage across all key metrics. Engagement more than doubled. Furthermore, this resulted in a doubling in conversions to paid plans. Yes, double.

The perception of value is one of the biggest challenges facing any startup. When you have clear value, you have a clear growth opportunity. That can all be undone when give it away for free! Users will evaluate your product cognizant of the price even when they're not already paying. More often than not, if you tell someone up front that your app has no value, they’ll believe you! 

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Exits and Assholes (why shutting down your startup makes you a turd)

Hey there guy who just sold his startup to BigCorporate™! I hear you're shutting down the product that made you rich? Cool news, bro.

On behalf of all your loyal customers...Fuck you.

Fuck you and your shitty startup.

You stand there with your Cheshire grin, arms around your freshly minted friends. You sold out your customers and you're proud of that? You thank your fans for supporting you, and in the next breath you tell them you're no longer supporting them.

You sir, are an asshole.

I hope you and your team rot in corporate hell while you wait out your three year vesting sentence. I hope your lives are filled with meetings, reports, KPIs and more meetings. Oh and I hope they force you to install PowerPoint; you're gonna need it. And I really, really hope they make you take the "fuck it, ship it" sticker off because it's against their corporate policy. Not the swearing, the shipping.

Enjoy the company polo shirt, asshat.

But hey, don't get me wrong. Not all exiting founders are jerks like you. There are plenty of exits that are intended to grow the business, not shut it down. Selling to BigCorporate™ can mean a product will be better supported, or reach a wider audience or become a key member of a larger product family. The guys and girls that see acquisition as a means to grow their business and customer base are awesome. They're on to something so good that the acquirer wants to bring it in and put their logo on it, not shut it down. 

And here's the thing about you: BigCorporate™ don't want your customers, they don't want your brand, they don't want revenue, they don't want your business at all...they just want your team and maybe some portion of your IP.  Bottom line is, they're shutting you down because you failed to grow a business they want to keep.

Failing is ok. It happens to everyone. But as a business founder, it's never ok to fail your customers. Your customers made your startup what it is, and you turned your back on them. They took a risk to use your app, they put up with the bugs, they gave you feedback, they got bombarded with life cycle emails, they referred their friends, they tweeted how awesome you are... And you repaid them by simply switching them off.

Startup founders that create products with a view to exit rather than generating real revenue are not only doing their customers a disservice, they're doing themselves a disservice. Unless the big vision you pitched investors was "to get bought", then you failed. You got off the ride early because it got too hard, you got it wrong or because you lost faith in your vision. Instead you're now working that corporate desk job you swore you'd never work. You missed the opportunity to do something real.

But hey, congrats on the exit, bro. I'm sure your investor's wallets think of your exit as a success, but the rest of us see it for what it really is - a business failure.

P.S. The fact that this blog is posthaven is not without its irony.

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The dangers of eating dogfood

At BugHerd, we build a project management tool for web projects. BugHerd is, itself, a web project. 

Yes, we use BugHerd to manage BugHerd.

This is what they call eating your own dog food. The idea is that by using your own product you can better appreciate the value it offers, its failings and its successes. You know when things aren't working, or when there are performance issues; you know what features you should add, and which should get removed; you know where you need to fix up the UI and where to add some more starbursts.

But if you look carefully, there's a warning on the can. Eating dog food can be harmful to humans.

It's wonderful to inspired by a problem you have, to scratch your own itch or work in a domain you know well. But the fact is, you'll never be your own customer. You may use your product in a way that is similar to your customers, but that's where the similarity ends. 

You never pay for your product, you never have to get "onboarded", you never have to find the documentation, or learn how to use your API. You never have to contact support, work out why your credit card didn't work, decide whether to pay for a year in advance or just pay monthly. You never have to try and sell it to your boss or to your colleagues and you never have to learn about new features when they're released or understand why your favourite feature was removed.

The bottom line is, when you use your own product, you have a myopic view of your business. You have all the inside information, and none of the risk. You actually share very little with your customers beyond using some small slice of functionality. Most importantly, unless your customer market is "a startup building a product exactly like you" then your customer is not even in the same market as you. Your messaging, instructions, landing page, advertising is based on your own self perception, rather than the perception of your customers.

One of the first questions we asked ourselves at BugHerd was "would we pay for this?".... and as a cash strapped startup we said no. But that's ok, because we're not our own customer. If we'd just built what we needed, we'd be building a bug tracker for web startups, instead of our project management tool for digital agencies. It may broadly be the same thing, but the differences are often greater than the similarities.

The first mistake every startup makes is not talking to their customers and therefore not understanding their needs. It makes it so much harder to "get out of the building" when you can just ask yourself all the questions. But given all the differences between you and your customer, you're really missing out on the bigger picture. This isn't just a functional problem, it's a usability problem, a documentation problem and, most importantly, a learning problem. Dog fooding makes you lazy, and makes you less likely to understand your customer.

It's great to prove value to yourself, but at the end of the day, you're not the who's paying for it.

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