Newsletter 81: 28 timeless principles for building a successful startup
I have been working at tech startups for the past seven years. In that period, I met many great leaders. People who are among the best in marketing, ops, business development, growth, and product. Additionally, I am a member of some of the world’s most renowned tech communities. Organizations like Reforge, OnDeck, and Demand Curve. Communities where the best talent gathers to network and exchange value. Those interactions have resulted in many learnings across the board. While it’s hard to summarize all insights, I will attempt to do it anyway.
I hope you enjoy this essay as I am listing my most impactful leadership, recruitment, product, and execution learnings.
Leadership
Intelligence and autonomy go hand in hand - the more competent people you hire, the less you have to interfere. Take your time recruiting. Do your best to attract great people, and then get out of their way, in that order. There is nothing more frustrating than being micro-managed when you are clearly well qualified. Unfortunately, many first-time leaders fail to see that. There are better ways to influence behavior. Be thoughtful about how you lead A players.
Management VS leadership - I once heard a definition that stuck with me. Management is all about coordinating the chaos around you. About making sure the trains run on time. In contrast, leadership is about instilling inspiration and meaning in your organization.
Learn to prioritize - contrary to common beliefs hiring more people won’t make you go faster. Smaller teams and fewer resources force you to prioritize. Hiring more people spreads attention thin. People start working on non-essential bottlenecks. That reduces the overall speed of the business.
Become a T-shaped person - a person who is both a generalist (highly skilled at a broad set of valuable things - the top of the T) and also an expert (among the best in their field within a narrow discipline - the vertical leg of the T). Shaping yourself like a "T" would guarantee you success in early-stage startups.
Lead with integrity and commitment - people who have strong personal integrity and commitment do well. That means being motivated by things outside of your own narrow interests. Avoid behavior that diminishes trust and credibility. By commitment, I am referring to taking pride in your work. Completing everything you have started or agreed on. Do that again and again, and you will inspire the people around you.
Find out what you are great at - ask your peers, supervisors, and friends what your superpower is. For example, ask them, “what comes easy to me, but it’s hard for other people?”. The more people you ask, the more clarity you will get.
Opinions are earned - Do not have opinions if you do not know the other side’s arguments better than they do. If you cannot state the opposition’s perspective clearly, you do not have the right to an opinion.
Nothing is “not my job” - do whatever it takes to help the business succeeds. If the activity pushes the company in the right direction, get it done. Ignore your seniority or job description. You will be rewarded with trust and accountability. As your trust in the organization compounds, you will stumble on valuable opportunities.
Study the principal-agent problem - a principal is a founder—the owner. In contrast, the agent works for the founder—an employee. The founder’s incentives are different than the ones employees get. The business's success is aligned quite well with the success of the founder. In turn, the founder wants what is best for the company. At the same time, any employee cares about what will look good to the principal. What will make the most friends at the office? For sales employees that could be, what will make them the most money even if it’s not good for the business. The whole concept of the principal-agent problem is about aligning incentives. Agents will always find ways to hack the system if your incentives are not well designed.
Manage up - contrary to common belief, great leaders do not want to micromanage you. Great leaders want YOU to manage them. To successfully manage up, you have to:
Offer solutions, not problems
Overcommunicate and keep your boss in the loop
Never make complaints; instead, make requests
You have more control of that relationship than you think. Manage it well. Your supervisor will know that you are capable, understand you are worth investing in, and get out of the way so you can do great work.
Recruitment and letting people go
Hire slow, fire fast - rushing into hiring when you are not convinced you have found the right person is one of the most common mistakes I have made. It’s better to leave a position open than compromise on culture fit, values, and quality.
Curiosity is underrated - pay attention to the curiosity level of people you want to hire. Does she invest a lot of her time studying and learning from best practices? If the candidate does invest time in learning, where does she go to find great content? Having a high bar of what you consider to be a great resource is underrated. The more specific the candidate is, the better.
Talent density is fundamental - Your first ten people are the most critical hires you will ever make. They will replicate themselves and set the quality bar for any new employee you will ever hire.
What to look for when recruiting?
Bias to action
High integrity
Energy
Curiosity
High learning velocity
Low ego
Grit
Clear communication
Red flags:
The candidate avoids talking about past failures.
The candidate exaggerates answers.
The candidate takes credit for the work and inflates claims of accomplishment not commensurated with role/title/team size of past roles.
The candidate speaks poorly of past supervisors.
The candidate cannot explain job moves.
The candidate is more interested in compensation and title than in the job itself and the company.
For managerial hires — the candidate has never had to hire or fire anybody.
No upward career progression at a single firm.
Job-hopping.
Fire fast but do it right - In 9 out of 10 cases where I thought someone was not a great fit for a role, I was proven right. I did not want to act on such gut feelings for a long time. It somehow felt that it was my responsibility to make it work. After all, firing people is one of the hardest things you will ever do as a leader. Luckily, over time I learned appropriate ways to let people go. Approaches that result in a win-win situation for both parties. If the person is trying hard and failing, help them find a better place to succeed. Activate your network and make introductions. It’s important to let people go in a compassionate and supportive way. It was your mistake to hire that person. Learn your lesson, show compassion, and help them find a better fit role.
Product & Design
Details matter - hold yourself accountable to keep a high bar, no matter what you are working on. Every deck, mockup, landing page, poster, email, meeting agenda, etc., causes a ripple effect across the company. Aim to produce great work, and you will set the bar for the entire company. Sweating the small stuff compounds. Set a good example of what’s acceptable.
Less is more - it’s easy to make a busy product, it’s hard to simplify. That’s especially true in Asia. While people across Asia have a high tolerance for busy UI, I still believe that simple products always win long-term. Remove friction whenever possible. Complexity masks a deep understanding of user needs.
Early VS late product teams - you want entrepreneurs and generalists early on. People who have a lot of energy, optimism, and bias to action. Until you discover product-market-fit, it’s all about speed of execution and iteration. Then, later as the product matures, you can change that. At that point, assign the entrepreneurs to new initiatives where product-market-fit is missing. Then, hire specialists to take over established products.
What makes a product leader great? - Successful product leaders do great work at prioritization. They bring coherence to the company. Being good in a product requires you to say often no. But to ensure the no lands well, you have to listen attentively to other teams. Demonstrate a high degree of empathy with users. In my experience, active listening and clear communication help you to prioritize.
Intuition drives testing. Data drives decision-making - it’s hard to make decisions in a room full of opinionated executives. Other leaders will always push for their agenda. That’s natural. To filter out the noise from the real insights test and make decisions based on data.
Think from first principles - Start with questions like 1) What are we absolutely sure is true? 2) What has been proven to be true? Then, dig deep until you have uncovered undeniable truths. First-principles thinking is not sustainable if applied in every situation. It requires a lot of mental energy and research. Yet, if applied when working on big problems, it can be the difference between training horses to run faster or building a car.
Time to value - Always think of how quickly the user of your product would receive value for the first time. Also known as the "aha moment." How many clicks does it take before a product delivers a “wow” moment for your users? I have found that thinking about "the time to value" helps you build better digital experiences. In turn, that results in products that balance the tradeoffs between what you need to get out of a user vs. what the user needs to receive to stay engaged.
Execution
Fast is as slow as we go - if a decision is not permanent, move as fast as you can. On the other hand, take your time if a decision is permanent. That’s why VCs take their time in making decisions. Because they make just a handful of investments annually. But as a business owner, you need to make hundreds of decisions daily. The faster you move, the better. Making a decision is not easy, but in my experience, a wrong decision is better than no decision. That’s because motion leads to feedback and learnings. Overthinking leads to procrastination.
MVP every new idea - no/low-code enables even non-technical people to build products fast. Build it whenever you have a conviction for a new idea/process/feature. It’s normal not to know exactly what you need until you start building. Do not try to make things perfect. Creating the solution will teach more than any debate/research.
Let your curiosity carry you - exploring great products, content, and websites will lead to serendipitous findings. The most complex problems I ever worked on got solved by exploring what seemed like completely irrelevant products. When immersing ourselves in a complicated problem, our brains are wired to seek a solution. Study the finest products and read the best content. Your mind will subconsciously find potential solutions.
Learn just enough to be dangerous - you do not need to be a world-leading expert in any field to succeed. All you need is a strong bias for action and basic knowledge to make quick decisions.
Write things down and overcommunicate - every call, meeting, or quick interaction needs a well-written summary. Writing things down brings clarity to all parties involved. It’s hard to distill and synthesize, that's true. Yet, it will help you reduce the number of misunderstandings when done right. The bigger the organization, the more critical it is to overcommunicate.
Every business founder starts a company envisioning success.
But more often than not, founders go through a lot of uncertainty, failures, and problems—all that before (if ever) reaching some level of success.
That's why it's a good idea to keep building a list of learnings that guide your decision-making. Every time you stumble on new learning, write it down. It will become your internal guide on how to solve problems.
After all, running a business is hard. The underlying technology moves. The competition moves. The market moves. At the same time, you face fierce talent competition.
And knowing that most of the problems are your fault sucks. Because you hired the people. You made all the critical decisions.
As a leader, you have the highest degree of responsibility.
But as Charles Dickens once said:
"Genius is the infinite capacity for taking pains."
If you don't want to be great, you never should have joined/built a startup.
I hope the above list of startup learnings brings valuable insights. The process of writing all that down was invaluable for me. I hope it will help you to become a better leader.