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Tips for startups from a venture capitalist

I thought this article was terrific. It’s written by Paul Graham, a VC/programmer/essayist and offers practical advice for people putting together a new site. Even if you’re not going for VC money, the tips are still just as salient. I’ve put together a synopsis of some of them below.

1. Get the first version out early. Being first is very important, and it gives you a chance to show a working product. You need to get an initial version out in the market, so figure out which features you can go with up front, and work hard to iron the bugs out and add enhancements later.

2. Keep pumping out features. Since you’ve released a first version, you need to make it better. Paul says you need to keep pumping out features as long as you are considered a startup. He also says that the best features are those that are created based on what users want. If you’re the rare exception– a company that actually listens– you’ll generate fanatical loyalty. You won’t need to advertise, because your users will do it for you.

I love this:

If your product seems finished, there are two possible explanations: (a) it is finished, or (b) you lack imagination. Experience suggests (b) is a thousand times more likely.

3. Make users happy. Great advice.

When you’re running a startup you feel like a little bit of debris blown about by powerful winds. The most powerful wind is users. They can either catch you and loft you up into the sky, as they did with Google, or leave you flat on the pavement, as they do with most startups. Users are a fickle wind, but more powerful than any other. If they take you up, no competitor can keep you down.

As a little piece of debris, the rational thing for you to do is not to lie flat, but to curl yourself into a shape the wind will catch.

4. Fear the right things. I remember my startup, and Paul is dead on on this one. He says that the main fear shouldn’t be your competitors or the little things that plague most startups — the real concern should be that someone else as nimble as you is out there creating the same thing as you, only they’ve thought of a better angle, have a better implementation or more money or contacts. He also outlines the biggest threat to your fledgling enterprise: you. There are a lot of ways to do it, but the three main ones are internal disputes, inertia, and ignoring users. Each is, by itself, enough to kill you.

He rightly points out that most startups take a turn from their original idea based on what they glean from their users. If companies stuck to their initial plans, Microsoft would be selling programming languages, and Apple would be selling printed circuit boards. In both cases their customers told them what their business should be– and they were smart enough to listen.

5. Commitment is a self-fulfilling prophecy. Running a business is extraordinarily hard work. Running a startup magnifies that difficulty. Running a startup is like walking on your hands: it’s possible, but it requires extraordinary effort. If an ordinary employee were asked to do the things a startup founder has to, he’d be very indignant. Imagine if you were hired at some big company, and in addition to writing software ten times faster than you’d ever had to before, they expected you to answer support calls, administer the servers, design the web site, cold-call customers, find the company office space, and go out and get everyone lunch.

Paul says that determination is the most important asset for a startup founder.

6. There is always room. Paul says there is always room for new stuff, regardless of what people say. I think this goes to the fact that people are always willing to tell you how difficult it is going to be for you to be successful because they’re doing it for your own good. These people don’t have the courage, drive or vision to start their own company, have absolutely no idea how difficult it is, and will always point to the successful entrepreneur and mention how lucky they are.

7. Don’t get your hopes up. Most startups fail — that’s a fact. What Paul means here is that you need to temper your optimism, and make sure you have backup plans for everything you do. Concentrate on building your user base, customer base, advertising base or whatever you’re working on, and the success will come.

Great article.

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