A year ago, I didn’t know any of this

Things I learned while building my first startup

(Originally posted on medium)

 

It’s been the most interesting time of my life. For what it’s worth, here’s what I think I learned in a year of building a venture-backed startup with 15 amazing people and a product used by companies all over the world.

Cheating product research

Making a good product is hard. You can’t fly by instruments, because at first, there aren’t any. You can get a basic sense of direction by building something you’d use yourself. This way you already have some idea of what’s missing and what would be awesome to have. Our major de-risking trick was to build something that we knew at least one person would buy: ourselves. I know it sounds like chickening out of product research, but hey, startups are hard so I’ll use any unfair advantage I have.

Far-sightedness versus near-sightedness

I was disappointed to find out that customers don’t buy visions and frankly they don’t give a damn for your revolutionary ideas about software. They buy things that work today, meaning features and immediate results. So you must take small steps along the path customers carve for you if you want to be relevant. But you can’t let them lead you completely, you still need to see far ahead and nudge everything towards a destination that exists only in your head. This is a hard, schizophrenic, mind-bending design process. One of the hardest things in my life today is the constant choice between being far-sighted for one thing and near-sighted for the other.

Growth versus optimisation

The geek inside me wants to optimise. It’s a comfortable space. Have something, tweak it to make it better. Be smug about it. When that something is 100 signups, best spend your time getting another 100, instead of improving conversion by 0.5%. In the beginning, growth is the only thing that matters.

Focus

Measure everything. You never know when it’ll come handy. But it’s easy to fall into the nerdy trap of trying to interpret everything to soon, and improve every single metric. This isn’t helpful. Find out the one thing, the one metric, that impacts your growth the most and throw all your weight on it. Every three months, re-evaluate what is the one thing that matters most. With all your team. Features, marketing, time, every single person in the team pushing the biggest lever for growth. You’re not strong enough yet to be pushing two levers at once.

Actual customers

I learned to not shy from asking people to pay for our stuff. If you think they won’t, then you’re building the wrong thing. Build something people want to buy. When you find a few of them, make them very happy. It should be bloody obvious, but in the startup twilight zone it isn’t, and in your early days of despair you’ll take anything for “traction” even if it’s a random bunch of freeriders sending you in the wrong direction. Ignore them and listen to the folks with credit cards in their hands.

Selling versus explaining

Some people think I’m a good salesman. I’m not. I just cheat my way out of having to sell. Here’s how to cheat in sales: (1) Make something awesome that makes a ton of sense, and (2) Explain how it works and why it makes sense. Tip: the first part is the tricky one. All other methods of selling are too fragile to build an entire company upon them.

A self-evident future

The best way I’ve found to explain what we’re doing to investors is to walk them through a self-evident vision of the future. Help them think about why the current status of our market cannot remain the same in 5 years, and what it will probably look like when it changes. Then I only need to show them that the future looks remarkably like what we’re building today. How do you make your vision self-evident? If you ask this question, then your problem is not the pitch, it’s that you don’t know why you’re doing what you’re doing.

Inane argument killer technique

VCs will find a million ways to explain to you why this will never work, or it won’t work so well, or it will work but it won’t be scalable, while insisting that it must have “a mobile strategy”. I have discovered a technique for insta-killing these inane discussions. It’s called “the graph with actual customers and revenues that grow faster every month”. In my experience, until you have a (real) graph like that, don’t even bother. When you do, you’ll never grow tired of hearing “please go back to that slide”.

Startup misery folklore

80-hour weeks, all nighters, eating ramen noodles, maxed out credit cards, sleepless agonising nights tortured by 3-week runways.. I say that’s bollocks. Build a happy workplace, strive to be efficient, have a sensible business model and pay your people enough to live comfortably. What makes you a startup is that you’re innovating and building something from scratch. Having a shitty lifestyle is just a shitty lifestyle no matter how much hipster-sauce you dip it in.

No compromise on people

You want to disrupt an industry by going up against companies whose stationery budget for the year is bigger than your seed funding. You’re not going to do it with average people, so this is one area you can’t compromise. Making the company attractive to bright folks, actively searching for them and inspiring them to join and stay is probably the single most important job of a startup CEO. If you get that right, everything else becomes so much easier.

Doing things differently

Don’t. There are so many things to do, and if it’s your first time running a company, it’s tempting to do it “my way”. Formulaic aspects of running a startup are formulaic because they work well this way. By all means, you need to do some things differently, but differentiation has an impact if it’s intentional, calculated and in small, precise doses. Doing everything differently looks more like you’re doing random shit and you have to ask to ask yourself if that’s indeed what you’re doing.

Drawing first blood

Investors, advisors, employees, your network.. if you’ve done a good job they are all people that can and will support you, put more power behind your every thrust. However, you have to draw first blood. Take the first risk, open the first door, sell the first client, articulate the vision, ask for what you want, be on the frontline. You’re the poor guy with the machete at the head of the expedition clearing up a path through the jungle. Don’t expect anyone to do this for you or on your behalf.

Strength and determination

Running a startup is a constant struggle to persuade all sorts of people to ally with you and trust you. Investors, customers, employees. They don’t care if you’re having a “dark hour” or you’re being crushed under the burden. Nobody cares to ally with the weak and the wounded. No matter what, you must appear strong, determined, going places. This can be really hard sometimes, so it helps if you’re a little crazy-determined to start with.

Saying no

I learned how to say no. It’s a survival skill.

Having fun

Yes, it’s hard, but so are all amazing and rewarding things and it’s only possible if you enjoy it. And I am enjoying it, dammit. Every moment of it. Even the really crappy ones.

Here’s why we dropped our free plan

We used to offer a free plan for light use of Workable. A few weeks ago we eliminated it. In its place we created a very affordable plan at $19/month.

There has been plenty of interesting debate on the merits of freemium for consumer products. I think our experience offers an additional perspective, from the standpoint of a b2b SaaS company.

So I’m sharing our reasoning here, for what it’s worth.

Limiting design choices to things that can scale infinitely at near-zero cost is a recipe for making mediocre products.

Free users are not really free, even for a digitally distributed product like Workable. They typically outnumber paying customers by a factor of 10 or more. As Workable started becoming more and more popular, we realised that this isn’t going to scale. We know that a few months from now we would start getting crushed under the weight of our own success.

The best features become impossible to incorporate in the product. You can’t add any high cost-per-use features that require third-party technology or heavier operations. For example, we wanted to offer our users a better viewer for resumes, advanced parsing capabilities, better search algorithms, and so on. The cost to offer it to thousands of users for free became prohibitive.

We are simply not willing to limit ourselves, our product and our customers to mediocrity, so we found a low-end pricing that’s affordable for light users but permits us to build the product they deserve.

Some would say why don’t you offer the better features only to paying customers? But this is not as simple as it sounds. Do you create a gimped product that’s lacking half the functionality? Do you maintain a good version of a feature and a poor one at the same time, with all the complexity this adds to the product?

What about support? Do you ignore non-paying users, offer them no support or bad support? This will only lead to frustration and bad customer experience for a huge volume of people, eventually destroying the product’s reputation.

The idea that free users generate free marketing is self-defeating.

It’s easy to think that the more users you have, the more free marketing you get.

More accurately, it’s happy users that create free marketing for a product, and we haven’t found a magic way to make free users happy at zero cost.

Don’t look for evangelists among the people who think your product isn’t worth $19.

Users who can be made happy enough to create good word of mouth about your product, are probably the same people who would pay for it already.

Free users are notoriously hard to please. They want something for nothing. They probably don’t like your product too much and they’re not getting a lot of value from it. (if they did, they wouldn’t mind paying $19 or $49 for one of your inexpensive plans)

Free users will get the worst possible experience. They see the most minimal version of your software, you have put limits on their use of good features that cost you money, and they’re last in priority for customer support.

Maintaining a second-class version of our product, just for the sake of having a free plan, would only create a mass of under-served customers, ultimately hurting our brand.

On the internet, your $1,000/month user doesn’t have a stronger voice than the guy who never paid for software in his life.

When someone tweets “this product sucks” readers can’t tell if this is coming from someone who got the good version of the product or the bad, unsupported one. Oh, and for every paid user you probably have 10 or 100 free ones. They will be louder, by sheer numbers alone.

Is it really good marketing to make a mediocre impression to a lot of people? We decided we would rather have fewer people experience our product so that we can give them a product worth experiencing with the quality, features and support that we want to define our brand.

Customers who expect to get real value out of your product are the only customers you have a chance of making happy.

There’s a world of difference between “free” and “very affordable”. It forces an honest decision. Will I really get value out of this product, enough to justify paying for it? If someone is not getting $19 worth of value out of Workable, then we’re not solving a real problem they have.

We only want customers that we can hope to make happy and we don’t see a sustainable way to do this for non-paying customers.

Let’s be honest. Whatever you do, supporting an overwhelming host of free users does have some cost, even if you manage to keep it low. Guess who will pay this cost? The paying customers, of course. We don’t think that’s fair.

We know that not everyone will like and need our product enough to justify paying for it, and that’s ok. We just want to spend all of our effort and resources serving those who do.

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This post was originally published on medium

The art of asking for startup advice

Asking for startup advice is a skill.

You can teach yourself how to do it and you can improve with practice. I was very lucky to have had great mentors and advisors by my side when we started Workable. The most useful thing they taught me was how to ask for help, how to make it count, and how to give back. Learning this skill is a gift that keeps on giving.

For whatever reason, perhaps the exposure from Workable or this blog, I get a lot of emails from young startups, usually asking for advice on their business plan or fundraising. Cool. I love to hear new ideas and it feels great to help when I can. My time is limited, but I try to give 20 minutes to as many people as possible. Yes, it can be a bit tedious for someone who’s very busy, bu I’ve met some great people this way, I’ve found companies I ended up investing in and I’ve learned a lot.

I did notice though, that most people don’t know how to ask for help. So, here’s a little bit of meta-advice. A list of tips on how to ask for advice. It’s probably not the perfect list. But I promise you that if you do what I describe here, you will get way more value from each contact you make, and you’ll leave behind a good professional impression regardless of your business’ circumstances.

1. Be open and specific

Don’t be the guy who sends out a vague email saying “I’m thinking of some business idea and want to talk to you”. Talk to me about what? Do you want advice? Co-operation? Career mentorship? What are you up to? How do I know I can help? What kind of help am I expected to give?

When you send an intro email, be very specific about who you are, what you’re up to, and how you would like the other person to help. You can do this in two sentences. Watch this:

“Hi, we’re an early stage startup making recruiting software for SMEs and Steve suggested that you have a ton of experience selling enterprise software to small businesses. I’d like to show you what we’ve built and ask for your feedback on our marketing – we won’t need more than 20 minutes for an introductory call.”

It takes less than a minute to read this email and figure out what I’m asking for, if they can help and what they need to do to help.

2. Make it easy

Chances are you’re asking a person who’s busier than you are to set aside hard-to-find time to help with your problems. Make it easy for them to do so.

Make it clear you’re only asking for 15-20 minutes of their time at first. Say that you’re available at a time of their own choice. Offer to Skype or call them on their number of choice. Do NOT insist in meeting face-to-face for a coffee or at their office, unless they suggest it first.

Simply put, your attitude should be “if you have 20 minutes of your time that you’re willing to give to me, I’ll take it even if I have to call you while you’re walking your dog, hell, even if I have to come walk the damn dog with you.”

3. Show up

If you’re offered a meeting or call, take it. Duh? Who wouldn’t, you may ask. Recently I decided to allocate a time slot on Saturday afternoons for taking advisory calls like these. You’ll be surprised at how many people started declining or asking for a more convenient time.

If you can’t be bothered to follow through and show up, maybe you didn’t really need or want the help in the first place. Don’t give the impression of someone who’s prepared to waste other people’s time without being prepared to do their part.

4. Don’t give up easily

Busy people may take some time to respond. They may cancel or reschedule. This doesn’t mean they don’t care or that they’re unprofessional. (so long as they dont’ overdo it)

You are not being disrespectful if you send a couple of reminders. You can do it politely and show you care and are willing to wait and try again. Of course, if someone says “I can’t” or ignores you several tries, then it’s time for you to get the message. But better send one email too many than one email too few.

5. Do everyone’s homework

The burden is on you to make the most of the meeting. If there’s some preparation to be made, do it.

Send some information in advance if there is something to share. Send the meeting request. Add the other person on skype and send a polite “ready when you are” notice 5 minutes ahead of time. Thank the person who introduced you. Read up on the other person on LinkedIn. If you have specific contacts to ask for, find out who he may know beforehand (social networks make this easy).

Try to make it so that the other person can walk into a call with almost zero preparation and waste not a single minute on the practicalities – so that all the time goes into what you need to get out of the meeting.

6. Set an explicit goal

Two super important questions:

a) What do you hope to get out of the meeting?

b) What do you wish the other person remembers after the meeting?

Pick one answer to a) and one answer to b). No more.

Be explicit about them. Lead the meeting with the answers to these two fundamental questions. For example:

“Thanks for taking the time to talk to me. My main goal in this meeting is to understand if my company is ready to seek funding and if not, why not? I hope that by the time we’re finished you will know how to describe what we do in one sentence, in case you need to talk about us with a prospective angle investor.”

Very few people do this. Be one of those people, and you’re guaranteed to get more value from the discussion.

When you’ve given me a goal, I can instantly put everything you say into that context. If the question is whether your are ready to get funding, I won’t waste time asking for irrelevant things and I will evaluate everything you say in a way that tries to answer that question. If you tell me “remember this one thing” I know where to focus and I will carry the information you want me to.

7. Something worth fighting for

People who spend their precious time to help others rarely do it out of pure altruism. They do it because they find it interesting or exciting.

Entrepreneurs are the kind of people who would be running 20 companies if they had the time to. They love ideas. They love to entertain exciting thoughts. If you can get a mentor excited about some aspect of your project, run with it.

Give him the sense that this is something worth going an extra mile for. They may spend more time with you, offer to introduce you to other advisors, investors, partners. You can’t get this every time, but you’ll need to learn to recognise when you’re striking a chord with someone’s interests, and capitalize on it when it happens.

8. Follow up with your request

Always follow up. Even if the meeting was a waste of time, send a simple “thank you” note. It takes 2 minutes and it’s good manners.

During the meeting, make a note of follow-up actions and send a reminder. Often in an advisory call the advisor will vaguely or explicitly mention some things he could do for you. E.g. a person he knows that could be helpful. A company that  might want to buy your product. Whatever. Send an email asking for a follow up on this.

Watch how easy this is: “Hey, thanks so much for your time yesterday. We learned a lot from our call and some of the ideas we discussed are very helpful in refining our plan. You mentioned that your friend mr. Stevenson is an expert in our domain. We’d love to talk to him. Could you send an intro email? I’m including a 2-paragraph description of our venture below this line, so you can simply forward it to mr Stevenson if he’s interested to find out more before taking an introduction.”

Neat. Now the advisor can honour his promise by pressing a few buttons on his smartphone the minute he received your email. (if he needed to remember the task and write his own description of your company he would “do it later” which is another way of sending “this email will be seen again in 2 months when I clean up my inbox”)

If that something is not an immediate ask, try something like “Thanks for offering to introduce us to potential investors. We are honoured at the suggestion. I will take the liberty to bother you once again when we’re ready to raise our next round.”

9. Turn every pass into a shot

Occasionally an advisor will take active interest and start throwing passes at you. An intro to someone he’s met who might be useful to you. A useful article. Whatever.

Never, ever, let these passes go to waste. Always follow up, even if they are not particularly useful at the time. Always give the impression that if I spend 2 minutes firing up an email intro for you, my time did not go to waste.

I’ve had the good fortune to have advisors who would send 5 or 10 such emails for me in a single week. Sometimes I had a hard time keeping up with them and following up.

I came to realize that this is partly the reason they’re successful, because they keep doing things, they keep emailing and following up and connecting dots. I started driven by the desire to honour their attention, and I ended up learning how to constantly turn passes into shots. Some of those shots ended up on goal. I guess, if I didn’t do that, they would eventually divert their passes to someone else, someone who wouldn’t waste a good ball.

10. Offer to reciprocate

You may think you can’t do much to help mr. Advisor because he couldn’t possibly need you. Maybe it is so, maybe not. Either way, there is no harm saying something like “hey, I have no idea what I could possibly do to return the favour but if I can ever help you out with something, don’t hesitate to ask”. The worst that can happen is that you cannot be helpful but you are polite and respectful.

Also, keep in mind that, people’s goodwill and interest are limited and fleeting. When you find someone who consistently helps you in meaningful ways, you should not assume this will go on forever. Find a way to create a long-term interest for the helpful person, in a manner that also motivates them to continue their contribution. Maybe you can offer them to invest in your company at a large discount, give them a symbolic (small) equity option, give them a seat in your advisory board.

These are not things to hand out lightly to anyone, but if you find someone who is truly and genuinely making a difference for your company, ask them directly and try to find a way to forge a lasting and mutually rewarding relationship.

The good guys win in the end

The drachma startup revealed

workable stickerThis post is from my – previously anonymous – blog “The Drachma Startup” where we chronicled the crazy journey of building a startup during the darkest hours of the Greek financial crisis. The drachma startup is now a growing company with 9 employees, customers all over the world and 700k euros in venture capital funding. Yes, the drachma startup is Workable. It’s time to merge it with my personal blog – I simply don’t have enough time to maintain two separate blogs talking about similar topics.

This is my favourite post from back then. Almost a year later, still in the beginning of our new business and with a hard fight ahead of us, I still stand by every single word in it. So I’m reposting it for those who haven’t had the chance to see it then.

I promised you a positive post, one that talks about why Greece is a great place to start a company. Here it is then.

Greece has one of the most educated, and most unemployed workforces in Europe. There’s a ton of young engineers, with great degrees, experience studying or working abroad, speaking good English and possibly one or two other languages, eager to make a career in a difficult job market. They typically work more than the average European and the best among them are determined to prove that they are just as good as their European or American peers. And, at least in my experience, if you give them a meritocratic environment to compete in, they will often prove themselves above expectations. I’ve said it before, the myth of the lazy Greek is only a myth.

A meritocratic, export-oriented company is spoilt for choice in Greece. Try hiring engineers, or finding a great designer in a place lice Silicon Valley. You’d think it’s the best place to find good people, right? Right, some of the best are there. They’re working for Google and Facebook, they’re getting hired by the latest, hottest Y-Combinator startup sex symbol. You’ll pay top dollar for the middle of the pack. In Greece, you ARE the hot startup, the better workplace, the promise land that the best will try to get a job at. You’ll get the best dudes. Remember, tech startups are mainly a war for talent.

Startups are becoming an actual career choice. Traditionally the Greek career dream has been to get a degree and “settle in” at a government or corporate position for life. Greeks were risk averse and in days of prosperity top talent would have to give up lucrative prospects to try the startup scene. Now, some of the best people in market are either unemployed or insecure. There is less to lose, and entrepreneurship has become kind of fashionable. Startups have a shot at attracting talent that was previously taken by the big boys.

In Greece, startups are a good family. There’s few of them. They’re the dreamers, the makers, the romantics, the people that want to make a difference in this failed country. And they know each other, they support each other. Everything they do is news. Their successes are celebrated, even the small ones. Apart from the warm, cozy feeling, this gives you a networking potential that would be harder to achieve as a small fish among paypal-mafia high-rollers in the startup hotbeds of the world. There’s less funding around but also less competition for it. There’s less publicity, but you’ll get it. So long as you don’t get trapped in the small Greek market, it’s a great place to make your first steps and grow up as an entrepreneur.

It’s cheap. A startup has little money and is fighting against the clock. Your funding will last longer in a country where your salaries and opex will be quite a bit lower than London or San Francisco. A few extra months on the runway could make much more difference to your product than a better tax system or a livelier startup scene.

It’s (still) an EU country. The trade, employment and mobility benefits you get anywhere else in the EU are not so different than what you get in Greece. Yes, we have a mad, unstable government of monkeys who invent taxes as they go along, place restrictions and make your life a little harder. But still, if you want to operate a European-minded company, the bureaucratic hurdles are only going to be a bit of extra hassle, it’s not a show-stopper.

It builds character. A political and economic crisis that turns everything on its head is practically challenging. It’s also a new deck of cards to be dealt. It’s also a time of opportunity that rewards inventiveness. It’s also a time that gives you perspective about what are the big things and what are the insignificant things, helps you set priorities. It’s also a time that forces you to think carefully, extra carefully about your every step, plan your finances, protect against risks. A company born and tempered in the midst of a situation like that may find opportunity that was inaccessible in a stable market, may be better trained for future adversities.

It’s nice. It’s possible to build a good lifestyle here. You don’t need to earn a lot to enjoy a nice home, good food, great entertainment options, replenishing weekend breaks from work and good weather most of the time. Despite the countless nuisances of life in Athens, it’s still an interesting city to live in, it’s beautiful in many ways, and social life can be great. A startup is a lifestyle choice as much as it is a career one, and if you do things right it can fit well with a life in Athens.

You’re making a difference. An entrepeneur is driven by the desire to make a dent in the universe. It’s pretty clear that Greece won’t be magically saved in the short term, and that a better future will not be carved by its political class. If in ten years we have a healthy economy it will be the result of nerds working behind the noise of the news, building productive and profitable enterprises, giving work to people, restoring the credibility of Greece as a place that makes good stuff. When my children ask “Where were you in the crisis of 2012?” I want to say I was there and did the best I could.

Perhaps the last point is the most important one and all the others are mere rationalizations for it. I believe the good guys win in the end. There has never been a better time for the good guys to give it their best shot, it would be a bloody shame if the adversities of the crisis scared them away. Besides, entrepreneurs thrive in situations that make no sense.