12 startup lessons
Answering my interview questions
I was recently interviewed by two founders to be an investor in their company. I wrote about the experience (and benefits) of this approach here…
The questions started by asking about relevant companies I’d invested in and the lessons I’d learned from those companies. Every startup journey is so different that providing very specific learnings didn’t feel helpful. And yet, there’s too many generalist lessons to choose from. I limited myself to twelve and here’s what I wrote… (*thanks to my friend Tom Billings for the nudge)
1. I know nothing: in startups, every time I think I have something figured out, someone else comes along and does it differently and better
2. Cash is king: running low on cash was the single biggest source of friction and stress for founders and boards
3. Resilience is crucial: Bill Gates said it best…
“Most people overestimate what they can do in one year and underestimate what they can do in ten years.”
4. Founder decision making:
- (a) Beginner’s mind: question everything, seek lots of advice and data, then trust your instincts and move on
- (b) Once you’ve made a decision, all you’ve got is your ability to learn from it (most decisions can be iterated or reversed)
- (c) Avoid ‘resulting’: you can’t be right all the time and you can’t tell the quality of a decision by its outcome — focus on decision process and nudging the odds in your direction over time
5. Founder self-awareness and learning: the role of a founder is not a single thing over time, it is a constant personal growth journey. The best founders embrace this and actively try to recruit themselves out of a job. (*getting a coach can really help)
6. The founder psychological battle:
- (a) Extreme pessimism — expecting, looking for and fixing major existential problems in the business; combined with
- (b) Extreme optimism — otherwise you’d never continue, and you need to take everyone on the journey with you
7. Boards: There are diminishing (and potentially negative) returns to each additional VC you seat around the board table
8. Forecasts: a valuable exercise but the one thing we know for sure is that things won’t go to plan
“I have no use whatsoever for projections or forecasts. They create an illusion of apparent precision. The more meticulous they are, the more concerned you should be.” (Warren Buffet)
9. The journey: it’s always longer, more painful and more expensive than you think, optimise for people you trust and want to work with
10. Funding: always be clear on what your next round investors are looking for (investment optionality is valuable, even if you don’t know you need it)
11. Before you scale: understand your customer economics, then check again
12. Great companies are bought not sold — cliché but true
