A year ago, I didn’t know any of this

Things I learned while building my first startup

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

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

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 realized 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.

The day after fundraising

One of the best lessons about fundraising, I learned through a hobby of mine: photography. You see, amateur photographers, like all hobbyists, tend to spend a lot of time obsessing about cameras, lenses, tripods and other pieces of gear. The latest and greatest and how to get it. They stuff their bags with the best gear money can buy and they frequent forums talking about it.

But the best gear in the world, doesn’t guarantee you any good shots. Spending your time taking photos does. Waking up at 5am for that morning light. Walking up a hill for the better view. Picking the best gear can often worsen your chances to get good photos. Time spent in forums and shops is time not spent taking photos.

Worse, focusing on gear is addictive. It’s easy to talk about. There’s so many options. Every fool can talk about it online so there’s a million blog posts about the best mix of lenses. And many clever people compete for your attention, to make money with photo magazines, events, classes, you name it. Meanwhile there’s fewer blogs that make you a better photographer, there is no recipe or brochure to help you there, and the best photographers are not chatting on forums — they’re out there taking pictures.

Like many of my friends in the Greek startup ecosystem, I was elated to hear last Friday, that 40+ million euros, maybe even up to 80, have been secured for technology venture capital. I admire the people who put together the funds and I’m excited about the possibilities. It was a day of celebration, and celebrate we did. It was a day of optimism, and as someone who left his job to start a new company a few months ago, optimism is my lifeblood.

On the other hand, I can’t help thinking that amounts far greater than those were thrown in the Greek market before, with little impact. Yes, I know, this time is different. There’s an entrepreneurial ecosystem much more eager to pick up the money and make something of it. But let’s not fool ourselves — it’s nowhere near as mature and as large as it would need to be to absorb these investments. So the hard bit is still ahead of us.

Coming out of 2 months spent fundraising for my own company, I know first-hand how debilitating this “gearing up” process can be. Every hour spent fundraising was an hour not spent improving our product, getting customers, hiring, marketing, getting things done. Perhaps worse, when fundraising is at the top of your mind, your focus on the stuff that matters is not as sharp as it should be. You think, “let’s secure the money, and we’ll solve that later”. I can’t imagine what it’s like to be in this state of mind for 1 year or more — as it happens with many entrepreneurs.

I can’t imagine what it’s like for a whole ecosystem to be focusing all its discussion on fundraising for years and years. And this was generally the situation in the Greek startup scene for far too long. It’s mind-numbing.

Last Friday, I could almost hear the sigh of relief from that pressure in the amphitheater around me during the Open Coffee presentations. But I also sensed the emptiness of a numb community that arrived at the end of an obstacle course only to realize that the journey just begun. And there’s no blogs to tell you what’s next. No events or competitions are suddenly going to crank out the 100-something good startups it will take to absorb these funds.

The freshly minted funds treated us with a sudden dose of stimulant(don’t you love seeing VCs pitching to entrepreneurs for a change?) and while we were busy cheering, they hit the big red reset button on our collective conversation. The lights came back on and all our ecosystem was collectively expecting had been delivered. A shiny new camera but no pretty pictures yet. All the “let’s get people into startups” and the “let’s find money to do startups” discussion is kind of over. So what will the next discourse be about?

I think it should be about what kind of companies we build. How do we make products that are exportable, instead of trying to mimic concepts from “the valley” and simply import bad copies of them in our immediate (and impoverished) region. How to build companies that can grow larger than we are, how we can be better managers than our predecessors, how we can train people to greatness, something that few Greek companies did in the past. It should no longer be about the courage to start up, but the stamina and responsibility to keep feeding the families of your employees, to seek revenues, to get out of our little echo-chamber and compete with the best in the world. Sounds glamorous, but it mainly involves getting punched in the face without quitting.

And I bet this discussion is going to bring some realism into our discourse, because the problems of actually making a great company are no longer a theoretical discussion about what we would do if we had the money. For starters, I’ll be glad to see some stupid fluff discussions fade into irrelevance, like how you need to go to “the valley” to find funding. Now it’s easier to get it here. I won’t miss the startup competitions either.

Quaint as they are, I’m sure people would rather spend their effort pitching for capital than pitching for a winner’s certificate. I won’t miss the “mentors” (with no money) and the “bridges” (to nowhere). Let’s start talking about what kind of products can be built in Greece with 50k or 300k that can be sold abroad.

Let’s start talking about how to build an advantage in the EU market over an American company with the same product. Let’s start talking about what kind of people skills are in shortage, and find ways to fill the gap. We can all chip in money to things that train them. Or find countries where we can import them. Or outsource the activity? Don’t know, let’s discuss.

Let’s start talking about how to put together efficient operational economics, cheap offices, infrastructure bundles, co-hosting workspaces, you name it. Let’s start talking about the services we need from the market. Lawyers, accountants, suppliers, and how to breed an ecosystem of people doing these jobs who can benefit from our funding and create know-how around us.

Let’s start talking about work ethics and employment culture, mainly how to build healthy companies with happy employees who don’t work 80-hour weeks “because we’re a startup.”

Let’s start talking about where we’ll find the people that can manage 100-staff companies, because it’s not a given that we, the founders, can do it just because we started the thing.

Let’s start talking about banks, loans, liquidity, and a financial systemthat can connect to online payments, provide guarantees to international suppliers and is prepared to do it for young companies. It’s not. We will need to find ways to make them play well, too.

Let’s talk about many things. But now, the talk must not be about finding the money. It must be about using it and returning it.

The drachma startup

This post was originally published in 2012. Back then, we’d just started a tech company in Greece and — unsurprisingly — people were asking if we were out of our minds. This was our attempt to answer that question. Three years later, I still stand by it.

Is this a terrible place to start a startup?

I don’t think so. 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 eager to make a career in a difficult job market. They typically work harder 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 like 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 exciting young company that the best will try to get a job at. You’ll get the best folk. Remember, tech startups live or die by the talent they can get.

It’s cheap

A startup is fighting against the clock with limited resources. Your funding will last longer in a country where your salaries and opex will be quite a bit lower than London or San Francisco. As my co-founder is fond of saying “paying three times the rent won’t improve the quality of the code.” 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 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. A time that makes you 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. Nothing says “wartime CEO” like regular Grexit speculation.

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, it’s a country ran by muppets, making headlines for all the wrong reasons. But you’re free to be different; just ignore them. As for the bureaucratic hurdles, they’re only a hassle, not a show-stopper.

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 entrepreneur 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 rationalisations 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.