The Ultimate Cheat Sheet For Starting And Running Your Business(techcrunch.com)
techcrunch.com
The Ultimate Cheat Sheet For Starting And Running Your Business
http://techcrunch.com/2013/08/24/the-ultimate-cheat-sheet-for-starting-and-running-your-business/
16 comments
Some of these answers are outright dangerous in my opinion. This list is quite a mixed bag.
The list isn't intended to be 100% serious.
Those are the worst kinds of lists then. Because if it's not clear whether they are or are not 100% serious I'm left here trying to figure out how he got to that conclusion on some contentious point and I start doubting my own strategies where we disagree.
But really, I think the author by himself meant all of it to be serious, just that he tried to be humorous along the way.
But really, I think the author by himself meant all of it to be serious, just that he tried to be humorous along the way.
It seems to me it is like most short quick comments, there might be some valuable insight if you apply it right but sure you can easily mis-apply the ideas.
I think it is pretty obvious no advice from a list can really be used to guide your decision. But it can make you think, "founder is the head of sales" - am I really making a good decision hiring a head of sales so quickly? Yes, the founder is wonderful but a lousy sales person. Similar to the no hiring a CEO idea. Avoid doing so is the advice, if you want to question that impulse but if there are good reasons to, well you have to decide based on the actually situation you face.
I generally find such lists of general advice close to worthless. I actually find this one worthwhile, but sure it has plenty of advice I don't agree with. What I really care about is if it provides some insight and sparks what seems like useful thought.
I think it is pretty obvious no advice from a list can really be used to guide your decision. But it can make you think, "founder is the head of sales" - am I really making a good decision hiring a head of sales so quickly? Yes, the founder is wonderful but a lousy sales person. Similar to the no hiring a CEO idea. Avoid doing so is the advice, if you want to question that impulse but if there are good reasons to, well you have to decide based on the actually situation you face.
I generally find such lists of general advice close to worthless. I actually find this one worthwhile, but sure it has plenty of advice I don't agree with. What I really care about is if it provides some insight and sparks what seems like useful thought.
Not quite sure how you came to that conclusion when the first two sentences of the post are "This is going be a bullet FAQ on starting a business. No joke."
It is a bullet FAQ. You can't deny that. Just not a serious one.
That type of language is consistent with the humor in the author's other articles.
That type of language is consistent with the humor in the author's other articles.
Could someone please elaborate on why an LLC would not be good for selling your company?
I'm aware that it wouldn't be preferable for outside investment, but this is the first I'm hearing about issues with sale to another company.
I'm aware that it wouldn't be preferable for outside investment, but this is the first I'm hearing about issues with sale to another company.
LLC is incredibly flexible, and incredibly easy to convert to a C if you do actually need.
He's wrong on that, conflicts with all his other MVP product advice. LLC is the MVP corporate structure.
He's wrong on that, conflicts with all his other MVP product advice. LLC is the MVP corporate structure.
Half of these answers is common sense, the other half is shitty advice. You can't answer by "yes" or "no". Bad delivery too.
When I read about an area I know little about I generally don't want to disagree too strongly with anything. But this, even on a somewhat renowned blog, is written in such a defining way. It doesn't fit all that I read about startups to be so molded. My understanding of PG's essays is that this is still true with raising money. And this article seems very sure that it can be light hearted, reminding us that sex with employees can work (there are some forms of rape from consensual where one has standard work power over the other). Who is this list for? No-one would act on this, so it's a joke piece? Is there some in joke from experience?
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I googled "choice ambiguity". Nothing useful jumps out. Anyone have a good reference? https://www.google.com/search?q=%E2%80%9Cchoice+ambiguity%E2...
I read that as 'none of my competitors stand out from the field'
Longest comment I'll likely ever write here. While reading this keep in mind that it is easier to criticize than it is to write and that 101 applies to me even more than it does to James Altucher who I tremendously respect.
1 & 2)
That's US start-ups only. Elsewhere consult a fellow starter-upper and/or a corporate lawyer.
4) I'd build the product after finding the first customer, and I'd build it together with the first customer. I'd stay away from friends-and-family money at all costs. My friends-and-family are worth more to me than whatever money they can supply and the risk of failure is no different for this new fantastic idea than for any other.
6) Debatable. I work for quite a few venture capital companies and NDAs, while not the norm are definitely in play especially in the bigger deals.
7) I'd weigh those a bit more careful depending on where the centre of gravity lies. If someone contributes just an idea and won't be doing any work an equal portion would not be on the table because it will become a deadweight in the long term.
9) depends. If the service is marketing then that would be up for discussion. Large amounts of leverage in marketing can be a big success factor and a partnership with a company with both eyeballs and experience can make life a lot easier. One way this is sometimes structured is through an investment part of which is then spent at the company doing the investment, other times it is an outright swap. Complex but workable.
10) only works for b2c. Not everybody builds apps.
11) contradicts 4.
12) strong disagree. If you feel that you're selling yourself short then simply don't. Venture capitalists telling you to take money at any valuation ...
15) no way. No deadweight, even if that brings business. Likely they're just trying to offload their friend and you'll end up with deadweight and you still don't get the business or it turns out that it nets less than the friend costs. This doesn't scale unless you fire the friend right after you do get the business (in case that happens...). Needless to say this is unethical.
16) stay in touch but not once per month, you've got better stuff to do than to re-visit all your rejects once every month. Selling starts at 'no', so do keep an eye out, they never leave the 'prospect' bin.
20) do it, but if you can charge for it.
25) some sour grapes there. Contradicts 23
26) If it were easy to distinguish the obvious losers from the obvious winners this would be actionable.
27) when you need them.
28) Cisco.
31/32) It depends. Taxes are at some stage in your development unavoidable. If you are putting everything on red then not paying taxes can be a valid strategy, it can also be the fast track to bankruptcy. Adjust to your comfort level and don't let VCs push you into making bad long term decisions, their goals are not aligned with yours.
35) Don't. It complicates matters tremendously and opens you up to potential lawsuits and any move you make after that will be classed as favouritism with the rest of your crew. It also makes for a very uncomfortable atmosphere in case the relationship ever sours.
36) Employees should be fired if and when they don't keep up their end of the employment arrangement or when you can predict you will run out of cash (this can be costly in and of itself!). If your employment agreement states you should not gossip then don't, otherwise I don't see how you could fire someone for that. Employees with an attitude are pretty common and those are often the best people.
41) then work like hell on getting your revenue more balanced. One customer that can sink you is a time-bomb waiting to happen.
44) do your homework and know your competition better than they know themselves. Know their weak points and their strong points, show how your attacks drive at their weak points and how your defences are taking care of their strong ones. This can be a lot of work. But don't let yourself be taken for a ride by your competition, you are driving your own course.
45) Figure out what it is worth to the other party. The cost+ model is likely going to end low, especially if you are a dominant player and/or have a significant userbase or network effects in your offering.
47) that's just sad.
48) this works if you run a lawyers office and in some b2b offerings. (I'm trying to imagine github charging extra for github pages or issues).
49) b2b only
52) only a little bit and only in the beginning. and make that clear.
56) debatable. Blog if it works for you, if it doesn't cost you a lot of time you need to spend elsewhere and if you can do it as part of some strategy. Don't just blog to blog.
57) strong disagree. Care about what you are netting and keep track of which sales are netting you money and which ones are losing. Get rid of the losing ones. Revenues are nice for a flip or a crash-and-burn strategy but at some point you're going to run out of infused cash and you'll have to stand on your own 2 feet. Don't be caught out with lots of revenues and negative profits when your growth plateaus. If you do you're dead.
60) I'd hear them out first.
62) that seems to be one for the FAQ.
63) Hm. They're all likeable, at least most of them. Turning up the charm when talking to founders is something VCs have down pat. That doesn't mean that you shouldn't be looking very closely at the terms sheet. Don't like something? Strike it and see if the deal stands. If not then walk. You don't need to sleep with them, you need to find a good partner. If you like someone but they screw you over afterwards that contract is all you have.
67) weird.
68) depends. If you're in enterprise IT then make that 6 months. Those sales trajectories can be very long.
71) Wonder what Brin & Page have to say about that.
73) You do have boundaries. You need your rest or you'll mess up for all your other clients. If a client is important enough that they can call you at night then by all means, serve them but reserve that privilege for a very select group or you'll be looking at burning out in a year or two.
76) Don't borrow from the business if you have partners. Pay everybody or pay nobody.
81) Find a good middle ground between the two, it can be done.
82) rubbish. For a VC your private life is not as important as it is to you. If a VC I worked for told a founder to quit their relationship I'd resign on the spot. It's none of their business, really.
90) not every business revolves around traffic. Some business I know have very little traffic and are immensely profitable.
94) No, but make sure you're not accidentally violating your contract.
99) That's really up to you. Don't sell if you don't feel like it. Ask Mark Zuckerberg.
100) Some people do.
1 & 2)
That's US start-ups only. Elsewhere consult a fellow starter-upper and/or a corporate lawyer.
4) I'd build the product after finding the first customer, and I'd build it together with the first customer. I'd stay away from friends-and-family money at all costs. My friends-and-family are worth more to me than whatever money they can supply and the risk of failure is no different for this new fantastic idea than for any other.
6) Debatable. I work for quite a few venture capital companies and NDAs, while not the norm are definitely in play especially in the bigger deals.
7) I'd weigh those a bit more careful depending on where the centre of gravity lies. If someone contributes just an idea and won't be doing any work an equal portion would not be on the table because it will become a deadweight in the long term.
9) depends. If the service is marketing then that would be up for discussion. Large amounts of leverage in marketing can be a big success factor and a partnership with a company with both eyeballs and experience can make life a lot easier. One way this is sometimes structured is through an investment part of which is then spent at the company doing the investment, other times it is an outright swap. Complex but workable.
10) only works for b2c. Not everybody builds apps.
11) contradicts 4.
12) strong disagree. If you feel that you're selling yourself short then simply don't. Venture capitalists telling you to take money at any valuation ...
15) no way. No deadweight, even if that brings business. Likely they're just trying to offload their friend and you'll end up with deadweight and you still don't get the business or it turns out that it nets less than the friend costs. This doesn't scale unless you fire the friend right after you do get the business (in case that happens...). Needless to say this is unethical.
16) stay in touch but not once per month, you've got better stuff to do than to re-visit all your rejects once every month. Selling starts at 'no', so do keep an eye out, they never leave the 'prospect' bin.
20) do it, but if you can charge for it.
25) some sour grapes there. Contradicts 23
26) If it were easy to distinguish the obvious losers from the obvious winners this would be actionable.
27) when you need them.
28) Cisco.
31/32) It depends. Taxes are at some stage in your development unavoidable. If you are putting everything on red then not paying taxes can be a valid strategy, it can also be the fast track to bankruptcy. Adjust to your comfort level and don't let VCs push you into making bad long term decisions, their goals are not aligned with yours.
35) Don't. It complicates matters tremendously and opens you up to potential lawsuits and any move you make after that will be classed as favouritism with the rest of your crew. It also makes for a very uncomfortable atmosphere in case the relationship ever sours.
36) Employees should be fired if and when they don't keep up their end of the employment arrangement or when you can predict you will run out of cash (this can be costly in and of itself!). If your employment agreement states you should not gossip then don't, otherwise I don't see how you could fire someone for that. Employees with an attitude are pretty common and those are often the best people.
41) then work like hell on getting your revenue more balanced. One customer that can sink you is a time-bomb waiting to happen.
44) do your homework and know your competition better than they know themselves. Know their weak points and their strong points, show how your attacks drive at their weak points and how your defences are taking care of their strong ones. This can be a lot of work. But don't let yourself be taken for a ride by your competition, you are driving your own course.
45) Figure out what it is worth to the other party. The cost+ model is likely going to end low, especially if you are a dominant player and/or have a significant userbase or network effects in your offering.
47) that's just sad.
48) this works if you run a lawyers office and in some b2b offerings. (I'm trying to imagine github charging extra for github pages or issues).
49) b2b only
52) only a little bit and only in the beginning. and make that clear.
56) debatable. Blog if it works for you, if it doesn't cost you a lot of time you need to spend elsewhere and if you can do it as part of some strategy. Don't just blog to blog.
57) strong disagree. Care about what you are netting and keep track of which sales are netting you money and which ones are losing. Get rid of the losing ones. Revenues are nice for a flip or a crash-and-burn strategy but at some point you're going to run out of infused cash and you'll have to stand on your own 2 feet. Don't be caught out with lots of revenues and negative profits when your growth plateaus. If you do you're dead.
60) I'd hear them out first.
62) that seems to be one for the FAQ.
63) Hm. They're all likeable, at least most of them. Turning up the charm when talking to founders is something VCs have down pat. That doesn't mean that you shouldn't be looking very closely at the terms sheet. Don't like something? Strike it and see if the deal stands. If not then walk. You don't need to sleep with them, you need to find a good partner. If you like someone but they screw you over afterwards that contract is all you have.
67) weird.
68) depends. If you're in enterprise IT then make that 6 months. Those sales trajectories can be very long.
71) Wonder what Brin & Page have to say about that.
73) You do have boundaries. You need your rest or you'll mess up for all your other clients. If a client is important enough that they can call you at night then by all means, serve them but reserve that privilege for a very select group or you'll be looking at burning out in a year or two.
76) Don't borrow from the business if you have partners. Pay everybody or pay nobody.
81) Find a good middle ground between the two, it can be done.
82) rubbish. For a VC your private life is not as important as it is to you. If a VC I worked for told a founder to quit their relationship I'd resign on the spot. It's none of their business, really.
90) not every business revolves around traffic. Some business I know have very little traffic and are immensely profitable.
94) No, but make sure you're not accidentally violating your contract.
99) That's really up to you. Don't sell if you don't feel like it. Ask Mark Zuckerberg.
100) Some people do.
This is only your fourth longest comment.
Your longest is https://news.ycombinator.com/item?id=943618.
Ask me how I know that ...
Your longest is https://news.ycombinator.com/item?id=943618.
Ask me how I know that ...
Ok, you got me there :)
So how do you know that?
And if you know that, do you also know what is the longest comment?
At a guess, you've scraped all of HN into a db.
So how do you know that?
And if you know that, do you also know what is the longest comment?
At a guess, you've scraped all of HN into a db.
That is quite a bit of effort criticizing something that ought to be taken tongue-in-cheek.
I'm pretty sure I could write a 1-100 list too and simply answer every question with: "Depends" and it would be just as correct.
I'm pretty sure I could write a 1-100 list too and simply answer every question with: "Depends" and it would be just as correct.
Quoting the lead here:
"This is going be a bullet FAQ on starting a business. No joke. If you’re a lawyer, feel free to disagree with me, so you can charge someone your BS fees to give the same advice. If you can think of anything to add, please do so. I might be missing things. If you want to argue with me, feel free. I might be wrong on any of the items below."
Yes, it was quite a bit of effort. And I hope that effort will go towards people getting more mileage out of this list and fixing some of the most terrible advice in there which was definitely not marked as a joke.
"This is going be a bullet FAQ on starting a business. No joke. If you’re a lawyer, feel free to disagree with me, so you can charge someone your BS fees to give the same advice. If you can think of anything to add, please do so. I might be missing things. If you want to argue with me, feel free. I might be wrong on any of the items below."
Yes, it was quite a bit of effort. And I hope that effort will go towards people getting more mileage out of this list and fixing some of the most terrible advice in there which was definitely not marked as a joke.
I'd like to read this but I am not going to switch back and forth between the article and the comment to figure out what "that's just sad" refers to.
This is way too narrow in general, and a number of the points are just wrong. He spends a lot of points talking about "clients" and "revenue" like every successful company has those right off the bat.
My absolute favorite is the irony of #21 (Should I focus on SEO? No), when this post was originally published on Quora.
My absolute favorite is the irony of #21 (Should I focus on SEO? No), when this post was originally published on Quora.
I love this list. If you follow James Altucher for some time, this is basically all his experience very much condensed.
As with all advice, it certainly does not apply 100% all the time for your context. But this is some sound advice from someone who has a bit of experience building business, both successful and failing.
As with all advice, it certainly does not apply 100% all the time for your context. But this is some sound advice from someone who has a bit of experience building business, both successful and failing.
There is no one size that fits all. I've been following JA for the past year or so. He has unique business story but he sells his advice like it'd apply everywhere. Buyer beware.
90) I have no traffic. How do I get traffic?
Shut down your business.
My biggest issue with this article is the use of "her" in the question, "when should I have sex with an employee?". Can people who are interested in men not run businesses? That's not even subtly sexist.
Whether it's a him or her, a boss having sex with an employee is probably a very bad idea:
- If your partner ever has a disagreement with you about their job or if the relationship ends on unfriendly terms, they can turn around and hit you with a sexual harassment lawsuit that you can't afford (either in terms of expense or time).
- It will be a morale-killer for other employees, who will think your partner is getting preferential treatment (whether it's true or not).
- If the employee you're sleeping with isn't doing their job well, it will be harder to fire them (due to emotional baggage and/or threat of a lawsuit).
- If your partner ever has a disagreement with you about their job or if the relationship ends on unfriendly terms, they can turn around and hit you with a sexual harassment lawsuit that you can't afford (either in terms of expense or time).
- It will be a morale-killer for other employees, who will think your partner is getting preferential treatment (whether it's true or not).
- If the employee you're sleeping with isn't doing their job well, it will be harder to fire them (due to emotional baggage and/or threat of a lawsuit).
And what's the pictures illustrating this article? Why tattoos on women's backs? Especially when, as you point out, women appear in the article only as potential sex partners.
That's your biggest issue with list?
81) My wife/husband thinks I spend too much time on my startup?
Divorce them or close your business.
I think it was just an oversight rather than blatant sexism.
Divorce them or close your business.
I think it was just an oversight rather than blatant sexism.
You must find day to day life very tough if you take any kind of issue with such tongue in cheek articles as this. It's full of jokes.
Well, the author is a man, so it might be an understandable choice. He has to choose something...
This cheatsheet is ridiculous. There is no one-size-fits-all prescription. For example, IANAL but I was told by council that incorporating in Delaware means that you'll have to travel to Delaware to litigate.
Splitting equity equally with the guy with the idea? I AM an idea guy, even I have to say that's crazy. An idea without execution isn't worth anything except maybe a clever throw-away side-plot in a Neil Stephenson science-fiction story. (Although if you think differently, please contact me through my profile.)
Honestly, if you're going to take advice from someone you want to take advice from someone with a great reputation as a smart, successful, honest, and generous entrepreneur or investor. Along those lines I think DHH has done a great job (bootstrapping FTW), although I think he tends to underestimate his luck with timing. Fred Wilson has also done a great job with his excellent blog, avc.com. Warren Buffet, although not really an entrepreneur, has talked unwaveringly about sound business principles for 50 year - and he has the knack of making it sound like common sense.
Take Altucher with a big grain of salt, is all I'm sayin'.