Startups in stealth mode need one piece of advice.

Just Stop.

As in stop being in stealth mode.  Stop asking for advice.  Stop doing your start-up.  You're not ready.

You're a naive-bullshiter.

I would know.  Been there...

I started my first internet company while getting my MBA.  I remember calling up my best friend to tell her I was starting a company but refused to tell her how the product would work.   I had taken classes on IP, first-mover advantage, etc.  I knew that I needed to protect my ideas from people that could steal them.  And while I knew she wouldn't steal it, I needed to be very careful.  You see Apple is very secretive and that's why they're so successful.  So I should be very secretive.  I hired a lawyer, and he gave us an NDA template and told us that anyone that had knowledge of our proprietary data had to sign it.  If we weren't careful about this, our IP claims would be worthless.

At first, I did this because the lawyer had told me to.  But what was really going on?  I was obsessed with my brilliance.  For a little self psycho-evaluation, I thought that my idea was world changing, and it helped validate how I wanted to think of myself.  It felt good to take myself so seriously.

Since I was a new entrepreneur, I knew needed a lot of advice.  As I reached out to successful investors and entrepreneurs, I made each of them signed my nifty NDA.  Some wouldn't, so I just asked them for general advice.

Oh, and what was the company?  It was yet another Web 2.0 flavor of a question-and-answer, poll-your-friends site with a distant revenue model and no user acquisition strategy.  Ran if for two years before we shut it down with almost no revenue achieved.  Shocking, I know.

I wish just one of those experienced advisors from early-on had slapped me in the face and called me on my delusions.  They were all so encouraging, so proud of my entrepreneurial drive.  What I really needed was for someone to tell me in no uncertain terms that I was acting naive.  That my foolishness would contribute to my failure, which was almost inevitable.

Funny, how we always have to learn lessons the hard way.  When I started FlightCaster, I immediately told everyone I could about the concept.  I learned an incredible amount in those early days, and it worked out pretty well in the end.

I'm now getting a lot of phone calls from friends of friends, MBA students, etc--all wanting some advice on their brilliant idea.  I love talking to all them--it's so much fun to help someone that is on mile .3 of the marathon.  I'll do just about anything for an entreprenuer that reaches out for help.  I'll help with product development ideas, offer feedback, make intros to investors (if I would myself invest...)--anything to help someone succeed.  About once a month, I get a call from someone that won't tell me the idea, but still wants advice and even introductions.  Yikes!  I just tell them to stop.  They're not ready yet.  

If you're one of those guys, this post if for you.  

Please stop.  You're wasting your time.  At least give yourself a fighting chance to succeed.  This might be a bit cruel, but so is failure, which is where you're headed. 

Let me a share a few reasons why you don't need to be in stealth mode:

1.) Execution is more important than the idea

This is the easiest lesson.  Your ability to create a product is far more important than your ability to think up a product.  This is a hard lesson if you're not the one that will do the building, because it means that your contribution is not as valuable as you thought.

2.) Someone else has the exact same idea.

The adage is that if you have a good idea, there are 5 other people already doing it.  If you have a great idea, there are 15 other people already doing it.  One of the reasons you're foolishly in stealth mode is probably because you haven't done enough market research to realize that people are already working on this.

3.) Totally unique ideas generally don't make it

If you have a 100% totally unique idea, you're either too far ahead of the market or you've picked a market so small that no one cares.  Either way, you're in for trouble.

4.) The most likely cause of failure is your incompetence, not losing to the competition

Start-ups are really hard on so many levels.  The likelihood that you execute beautifully but then lose out to someone that stole your idea is so incredibly low, you shouldn't think about it.  The likelihood that you build a product that missed the mark, is an almost certainty.  Optimize around the problems most likely to shut you down.  Paul Graham always told us to focus on the one enemy that matters: the back button.

5.) You desperately need real feedback

Perhaps the biggest reason not to be in stealth is that you're robbing yourself of great feedback.  Most companies miss the mark on the first product.  The great companies learn quickly and iterate.  Skipping the learning part by being secretive just reduces the time you'll have to iterate before running out of money.

6.) First mover advantage is just silliness

The obit has been written on first mover advantage.  It rarely helps.  Facebook wasn't the first to social networking, Google wasn't the first to search, YouTube wasn't the first to video, yada yada.  First mover advantage was a flawed theory that helped pre-product internet companies raise billions of dollars in the 90s.

I could go on, but this is a fool's errand.  If you're reading this and don't agree, you're probably just not ready to do a startup and all the rationalizing in the world won't help.  Of course, it's incredibly pompous of me to make that judgement, and I do hope you prove me wrong.  I understand that you have your reasons and that there are certainly valid exceptions that my rash over-generalizations are not capturing.  

But you approached me for advice.  Please stop.

Find discussion of this post on Hacker News

 

******************
I'm Jason Freedman.  I co-founded FlightCaster.  
You should follow me on Twitter: @JasonFreedman.
You can send me a Linkedin request or become my bff on Facebook
Thank you Appsumo!

-

Not all MBAs suck at startups. Learn how to spot Durant MBAs.


I've been meaning to write this post for awhile--since I originally started this blog actually.  When I originally warned startups to beware of MBAs, it was not to say all MBAs are bad for startups, but that one should be 
careful when working with one in an early stage startup.  To be clear, most are bad for early stage startups, but certainly not all.  

This post is about learning which MBAs get it and which ones suck.  Any why.


Why All The Hating?

It has become hip to bash MBAs.  Some of my favorite rants have been from Mark Suster, Stu Wall, and DHH.   My overarching take on this discussion is that MBAs are more useful post-product-market fit and less helpful (or outright bad) pre-product market fit.  When a company
is in the exploration phase, all the skills of an MBA are backwards.  MBAs are sophisticated thinkers that can create high quality business plans.  But in the pre-product market phase of a company, the entrepreneur's job is to find the repeatable business model, wherever it may be hiding.  At this stage, iteration trumps planning.  Speed trumps quality.  Perseverance trumps intelligence.  Passion trumps sophistication.

Because of the structure and curriculum of business schools, MBAs are better trained for the later stages, when the goal is optimizing value, not finding it.  My favorite analogy comes from a commenter on Hacker News

"I like to think of this topic using an automotive racing analogy: Fortune 500 companies are the formula 1 cars. They need a great big team to perform efficiently, and minor tweaks applied correctly can yield significant results. The MBAs are the specialists who work the electronics and the advanced controls for the race cars. A team working on a formula 1 car could find a way to increase down force by 5%, or they could install a GPS system to analyze turns and scrape 1/100s of seconds off of lap times, and that edge could help them win.

Startups are cars with a very different purpose. They are project cars, and they have 1 purpose: to go. Forget GPS systems and down force. These cars need tires and a working steering wheel. It would be a mistake to think about installing spoilers on a car that doesn't have all 4 tires, just as it would be a mistake to worry about ideal liquidity ratios in a startup. Entrepreneurs are the mechanics who decide to take on these 'project cars'. Eventually, as the car project develops and grows, specialists (MBAs) can be brought on to find the minor, yet precise changes that will improve the car's results."

Of course, this is not by accident.  Business schools teach what the vast majority of its students need: specialist skills in large-scale optimization.  Entrepreneurship, it turns out, is a very different beast that requires a very different academic approach.


Business School is not Entrepreneurship School: Sloan vs. Durant


Steve Blank has been advocating for the Durant School of Entrepreneurship.

Billy Durant founded GM, was fired, founded Chevrolet, was fired, regained control of GM, and was fired again.  He was a true start up founder, but very few have ever heard of him.

It was Alfred Sloan that later became CEO of GM, grew the company, invented cost accounting, and effectively founded the modern corporation. He was an accountant and MIT named their business school after him.

Business schools teach Sloan-style business fundamentals.  It's not a bad thing--it's just not relevant for pre-revenue, pre-product market fit companies.  During the iteration and customer discovery phase, companies need founders versed in the Durant School of Entrepreneurship.

Learn how to spot the Durant MBAs


When hiring or picking co-founders or doing investment due diligence, you're searching for data that predicts success.  The list below is a collection of possible data points that can indicate whether someone gets it--whether they have a bit of Durant in them.  

1. Previous Founder Experience
The best entrepreneurship school is doing start-ups.  Nothing replaces the education gained when your product fails, when you struggle to make payroll, when you raise money and become accountable to investors, when you build and sell products people want, when you reach profitability, and when you go bankrupt.  All these experiences provide perspective that make formal education more valuable by providing a unique lens to judge the relevance of each lesson.

Perhaps, more importantly, anyone with previous founder experience, that wants to stay in startups is proving through their actions that they have real entrepreneurial determination.  As Paul Graham often says, the most important predictor of success is determination.

2. Previous Startup Experience
Size matters.  Doing product management for a 100 person startup is not the same as being a first employee, but it is more relevant than coming from a McKinsey.  I often tell first year MBAs to spend their summer internship working for the smallest company possible.  My first venture back start-up experience was at MocoSpace when it was being run out of an incubator--it was an incredible experience for seeing how startups work.

3. Technical Experience Building Products
It's painful to work with people that have never built anything.  Many VC won't invest in non-technical founders.  As a non-technical founder myself, I know it's a huge weakness (I did however just code my first video game...).  My first startup was building lofts in college.  It wasn't super technical, but it forced me to put together an ecommerce website, an engineering process, buy supplies, etc.   You don't have to be technical, but it's better.  If you're not technical, you still have to have experience building products. As Brad Feld says, great entrepreneurs have a complete and total obsession with the product.

4. Write Something People Read
Y Combinator founders will see the immediate corollary...Paul Graham's overarching advice is that the most important task at first is to build something people want.  A blog is a product that people make a decision to read or not read.  Anyone that has a well-read blog has at least proven that they can create something that other people find valuable.  The same goes for having Twitter followers, a high Hacker News Karma score, etc.  For MBAs, putting yourself out there on the internet can be far more powerful than any resume.  I love talking to people that email me their Hacker News username, because I can then go learn a lot about them and see quickly how they're perceived in the hacker community. 

5. Read the Right Stuff
I have generally found that most successful founders I know have at some point read a ton of blogs and books.  Paul Graham calls his essays the startup FAQ.  Why would anyone not read them?  I've put together a pretty good recommended list.  At some point, you need to stop reading and start building--but everyone should have at least read through a good portion of this stuff at one time or another.

6. Hang out with Startup People
My favorite part about living in San Francisco is that it sometimes feels like every person I meet works at a startup.  This network of friends provides knowledge transfer, inspiration, collective support, etc.  I can't imagine doing a startup without it.  It's not just Silicon Valley--If you're in Boston, you should know the guys at betahouse.  If you're in Colorado, you should know the Techstars guys.  Every city has a startup center, be there.  On that note, one of the toughest parts about business school for the would-be founder is that you hang out with consultants and bankers all the time.

7. Become a Domain Expert
As Mark Suster says, domain experience gives entrepreneurs an unfair advantage.  My co-founder Evan Konwiser brought incredible domain expertise to FlightCaster.  Spend 5 minutes reading his blog, and you'll quickly understand that he understand more about the travel industry than any person you've ever met.

Beware of MBAs that fail all or most of these items--odds are they will doom your startup.  And for those aspiring MBA entrepreneurs out there...stop fiddling with your B.S. Powerpoint deck and get started on this list.

Find discussion of this post on Hacker News


******************
I'm Jason Freedman.  I co-founded FlightCaster.  
You should follow me on Twitter: @JasonFreedman.
 You can send me a Linkedin request or become my bff on Facebook

 

 

The Drag Coefficient Scoring System. How to decide what size startup is right for you.


"You can titrate the amount of startupness you get in your job
by the size of the company you join."

 

 
 
I had an MBA contact talk to me today about his interest in working for a startup.  He's studied entrepreneurship in school and interned with a VC last summer.  I asked him what size startup he wanted to work for.  He said,  "I'm up for anything--the smaller the better."
 
Really, I thought, up for anything?  You can go a year without a salary?  You're okay with the stress of a startup that is always on the verge of death and will most likely, based purely on odds, find its way there?  
 
So I asked him a few quick questions-- Are you married?  How old are you? How much debt are you bringing with you from school?  For this guy, there was no way he was joining a small pre-funding startup.   He has a wife and 2 kids to support, a mortgage, and load of loans to pay for.  Why bother looking for a company pre-Series A when it's clear you need something less risky.
 
People that are interested in entrepreneurship and not already wealthy need to be realistic about their drag coefficients: the factors in their life that prevent them from accepting too much financial risk.  
 
 
 
Start-up Drag Coefficients
 
1 point: Mortgage

1 point: Undergraduate loans

1 point: Graduate school loans

1 point: For every 5 years after the age of 20

1 point: Ring, fiance or spouse

1 point: Each kid

_______________

Total:

The Drag Coefficient Scoring System

For each point total, I've defined what I think is most likely the earliest possible startup entry point.
 
 
1-3 Points: Startup Founder
The vast majority of start-up founders I know fit into this category--or at least did when they first started their company.  They generally don't have as much opportunity cost in terms of career yet.  They're generally young and can live very, very cheaply.  A lot Y Combinator companies are filled with young college drop-outs or recent grads that can survive on virtually no income.  Paul Graham nailed the micro-seed funding model by realizing that $15000 could keep 2 young founders going for a long time.
 
For example...
You recently graduated college or dropped-out.  You get to be a full founder with all the equity, upside, and pain that goes along with it.  Good luck.
 
4-6 Points: Early Employee at a Seed-Funded Startup
The tough reality for many aspiring entrepreneurs is that once you accumulate more than 3 drag coefficient points, it becomes very difficult to start a company and last through the ups and downs.  Most companies don't raise enough money for sustainable salaries or become profitable for at least 6-9 months and often longer.   
 
For example...
You just finished a master's program.  You're 29 years old with 2 sets of loans and fiance.  You can join a company with some initial funding and momentum.  You're a product-oriented person that can contribute directly from day one.  You'll start with healthcare and a salary.  Being a first employee and taking a small salary willalready be a significant amount of risk in your life.  You'll probably get at the very most 5% of a startup but probably closer to 1% depending on whether you're a first employee and what specific skill set you bring to the table.  

7+ Points: Later Employee at a Series A or Later Startup
Funding and/or revenue is stability.  A company doing well towards the end of its Series A funding most likely already has solid revenue coming in.  If you do your homework, you can get a good idea of how much money is in the bank, how likely the company is to get follow-on funding, etc.
 
For example...
You've been in startups for several years and founded a company when you were younger (it was a 'learning experience').  Now you're 32 with a family started.  You have the skills to be a founder, but you simply can't take the financial risk anymore.  You're not ready to work for BigCo because you love the startup environment.  You can expect a decent salary that is some discount below your market salary, but still decent money to live on.  You'll get a fraction of a point of equity, which may some day give you a nice bonus but will almost certainly never make you rich.
 
 
 
 
 
I first heard about drag coefficients from Steve Hafner, the founder of Kayak and Orbitz.  He was at dinner at Dartmouth telling us about the time he quit his job to start Orbitz.  He had realized that the older he got, the more unlikely he would be to take a huge risk.  I hear a lot of people talk about how they are getting this degree or taking that job in order to prepare to someday do a startup.  What they seem to underestimate is the powerful effect these drag coefficients have on their ability to endure risk.  If you're still young and interested in being a startup founder, the most precious commodity you have is time.  And it's perishable.
 
We started FlightCaster only weeks after my previous startup went under.  I was only a few months away from 30, and I knew the clock was ticking.  Having just failed at a startup, any reasonable person would take some time to earn money again.  But I knew that I had 3 drag coefficient points and would soon have 4.  All my friends were getting married and buying houses.  Waiting even 6 months might take me out of the founder bucket.  I quit the job I just gotten, and we started FlightCaster.  Best decision I ever made.
 
 
 
 
 
 
 
 
Find discussion of this post on Hacker News.
 
 
 
******************
I'm Jason Freedman.  I co-founded FlightCaster  

Please do connect with me through your social network of choice and just mention we're meeting through my blog.

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Product, Ambition, Leverage: How Y Combinator companies raise money

 

Over the last year, I've seen many Y Combinator companies raise funds.  YC companies are able to raise money faster than most companies, including those that have more progress to show.  While the YC name attached to a company definitely helps, there is more going on here.  YC companies get valuable advice from Paul Graham and the YC network of alumni.  Through feedback and iteration, they learn how to play the venture fundraising game.

 
Below are the three things I see YC companies doing extremely well:
 

Product

Paul Graham tells each YC company at the beginning of the 10 week session to focus on the product.  The biggest advantage a start-up has over larger competitors is the ability to make progress quickly.  His obsession with speed forces companies to build simple products that provide immediate utility to their users--there's simply no time for superfluous features.  It often means that YC companies launch with a tag-line that starts with "The Dead Simple Way to..."  This is consistent with the YC mantra: "Build Something People Want."
 
From a fundraising perspective, this focus on product answers one of the biggest concerns investors have with any startup: the ability to execute. By launching in 10 weeks with functional applications, investors know that the team can deliver.  Many startups can sell gorgeous slideware, but with YC companies, there's no doubt the team can produce.  I've heard many investors complain about how YC companies launch with what looks like just a feature and not a full company.  And yet, they still invest.  They know that any team that can produce a working product this quickly will be able to adjust to the market and aggressively execute as business opportunities emerge.
 

Ambition

 
TNG.
 
The Next Google.  The venture capital model is built on finding the one company that will return the fund.  Paul Graham asks each startup at some point how they will become The Next Google in their industry.  This vision part is often difficult for product guys that are focused on bugs, user support, the next feature, etc.  Investors are not interested in what you've built, they're interested in what this company will become in the next 5-7 years.  Mike Maples calls this being a thunder lizard.
 
In your investment deck, you need to tell the story about how you become a multi-billion dollar company.  For the practical entrepreneur this will be tough.  Just try this:  Write down the 5 biggest challenges you have.  Now assume you rock it on each.  The result should be billions of dollars.  If it's not, you're either in too small of a market for venture capital type returns or your ambition is too small.  YC companies are successful at raising money before they have significant traction or much a product built because they know how to sell an ambitious vision.
 

Leverage

You want it.  Deals don't close without it.  Your leverage is based on your best alternative (known as a BATNA).  For YC companies, PG urges us to maintain a low burnrate so that we never need to raise money.  As he says, be like a cockroach, impossible to kill.  The best way to enter into the fundraising process is when you don't immediately need the money.
 
Once you decide to raise capital, the best way to generate leverage is to make the deal competitive.  When you have several term sheets available, you become a hot deal and investors will suddenly perform amazing feats to avoid losing the deal.  The reality is that most deals don't close at all without competitive terms sheets.  As multiple investors become interested, you should work to keep everyone on the same schedule.  Term sheets magically breed term sheets, so once you get one bite, others are certain to follow.  The impertive for you is to make sure you don't stop pitching once an investor becomes interested.
 
 
 
___
 
 
 
If you get product, ambition, and leverage right.  You're in great shape.  It also helps to know how to play the game.  A few more random tips:
 
 
Research each firm's process:   Each firm has a process and key items they're looking for in their investment thesis.  Do your homework.  Often, VCs will spell out exactly how it works in their blogs.  Portfolio companies are also usually more than happy to help you out if you ask nicely.
 
Always use a warm introduction: If you can't build up your network enough to provide you with quality warm introductions, than you're not ready to fundraise.
 
Stack your meetings:  At the outset, you should be pitching 10-20 times per week.  Not only does this help you get good numbers, it also helps create buzz.  Investors talk to each other and it's good if they've heard of you before they meet you.
 
Only meet with partners: I know of no startups that were funded by a firm when their entrance point was through an associate.  Do everything you can to only meet with partners.
 
Iterate quickly: If you are doing it right, you should be changing your pitch on a daily basis.
 
Never, ever lie to an investor:  It's a very small community with a very good memory.
 
Communicate urgency:  You should communicate how quickly the process is moving.  Investors want to know if you're about to sign.  If you're not in a hurry, it's because not enough investors are interested in you, and that's a bad signal.
 
Create buzz: investors need to hear about you at least 3 times before they get interested.  That means you should prepare some big announcements to hit one after another.
 
Work the back-channel: As you're working to build excitement, use other entrepreneurs, investors and advisors to tell your story and communicate urgency.

Synchronize your progress: You want all your term sheets arriving on the same day.  You actually have a lot of control over this process based on how you communicate urgency.
 
Don't become a shopped plan: You have 8 weeks from the point at which you start pitching to close your round.  Any longer and investors assume there must be something wrong since you've been shopped around and no one else has committed.

Understand what a non-yes means:   In most cases, VCs will never tell you 'no'.   So how do you know if investors are interested?   As PG tells us: look down at your hands.  If you see term sheets, they're interested.
 
 
 
 Find discussion of this post on Hacker News.
 
 
******************
I'm Jason Freedman.  I co-founded FlightCaster.  
I would be remiss not to recommend the following opportunity: @JasonFreedman.
Don't be shy.  You can send me a Linkedin request or become my bff on Facebook

 

The 6 best startup books to read before starting your company


Most of the startup learning curve is a learn-on-the-job endeavor.  Nothing replaces the real experience of managing your own company; however there are some lessons that are worth learning ahead of time.

Smart entrepreneurs learn to pick out which teachings should be followed and which should be discarded. 

This is my common response I send when friends ask for a book list.  I actually think blogs are far more important because they're real-time and often include comments that can help the reader learn the subtleties and exceptions of an argument.  As I've said before, instead of reading this blog, I highly recommend these:

But there's something nice about books.  Books are consumed in a different setting.  They linger on bookshelfs.  They get highlighted and earmarked.  If you're new to the startup world, I would recommend reading and re-reading the following 6 books.  In fact, I would go farther and say that you should not start your company until you read through this list:

The 6 best startup books to read before starting your company

Lucky Or Smart? by Bo Peabody

A lot of this book is understanding how to put luck on your side.  I put this book as first though because it can help you understand if you want to be an founder or a manager.  Founders are a special breed.  Peabody claims it's the B- players that like to hack systems so that they get 80% of the result for 20% of the efforts.  Managers are early employees, A+ players, that can take a founders vision and create something remarkable.  It's helpful to understand which one you are.  And it's helpful to know how luck and intelligence work together.

As he says: "I was smart enough to realize I was getting lucky"

Getting Real by the guys from 37 signals

 

If you've never built a product or if you're a non-technical MBA, start here.  The purpose is to learn the basics of agile development early on.

The m.o. of 37 Signals is:

"We believe software is too complex. Too many features, too many buttons, too much to learn. Our products do less than the competition – intentionally. We build products that work smarter, feel better, allow you to do things your way, and are easier to use."  

Getting Real is how they teach you to do the same.



Guy will show you how to start the company and how to raise money.  This is your replacement for whatever textbook you used in your entrepreneurship class.  It's a nuts and bolts guide to what you do at each stage of start-up process.  Kawasaki is great about helping you understand how investors will view you.  

One great example, he directs you against putting a competitive profile slide in your pitching deck that shows your features vs. their features.  He's seen this enough times to know it's a useless cliche: the entrepreneur always claims to have more features than the competition.  His solution is to list out your unfair advantages and their unfair advantages in order to prove you have a reasonable perspective on your market.  Good stuff.

The Four Steps to the Epiphany by Steve Blank

From my vantage point, Steve Blank is this year's favorite author, blogger, professor, and speaker.  I know that some venture capitalists give his book out to all newly-funded management teams.  (To show how aware I am of my own hypocrisy--Steve Blank teaches entrepreneuship at a business school--perhaps better than anyone else anywhere.)

Blank outlines a method called customer development.  In his words:

"Your startup is an organization built to search for a repeatable and scalable business model.  Your job as a founder is to quickly validate whether the model is correct by seeing if customers behave as your model predicts. Most of the time the darn customers don’t behave as you predicted."

Rework also by the guys from 37 signals

Rework is a collection of essays from their wonderful blog, Signals vs. Noise.  Reading it as a whole is a nice way to learn about how to think of your startup as a business that needs to make money.  These guys are pro-bootstrapping, pro-profits, and anti-venture investing.  They're a nice counterpoint to much of the startup literature that focuses on how to raise money as the primary goal in the early part of a company.  

This is a good last book for this list because it gives you insight into founder culture.  One of the most interesting (and unexpected) aspects of being in Y Combinator is that we got to see so many other founders working on their startups.  Entrepreneurship can be a lonely endeavor and it's nice to have some perspective on how other founders manage ups and downs while executing at very high levels.  The early days of the startup are the most interesting and unlike anything that comes afterward.

In her words:

"This is what productivity looks like.  This is the Formula 1 racecar.  It looks weird but it goes fast."

___

Those are my 6.  Would love to hear in the comments what other books you recommend.

Find discussion of this post on Hacker News.

 

******************

I'm Jason Freedman.  I co-founded FlightCaster.  

 I would be remiss not to recommend the following opportunity: @JasonFreedman.

Don't be shy.  You can send me a Linkedin request or become my bff on Facebook.

 

Dear MBAs, go the extra mile when pursuing a startup internship

MBA recruiting programs focus almost entirely on on-campus recruiting.  Students are wined and dined literally on day #1 by large companies such as McKinsey, BCJ, General Mills, JP Morgan.  It's an unbelievable process with expensive dinners, networking sessions, mountains of shwag.  Remember, MBA programs are designed to help people prepare for the very careers these companies are offering.  The integration of the career development office and the structure of the MBA program is almost seamless.  Most of that process takes place in the fall, culminating in on-campus interviews in late January.

 

By the time you get to April/May/June when startups are ready to seriously think about hiring interns, the vast majority of the class already has their BigCo internship.  And because those BigCo internships will most likely lead to full-time offers, those MBAs have a sense of certainty and stability that can be very alluring.  They have large paychecks coming, pre-internship retreats at fancy resorts, Facebook groups filled with successful, attractive people, mentor assigned, etc.

 

There are two types of MBAs that apply for a startup job in the late spring: those that failed at snagging a BigCo internship and those that deliberately waited.  For the former, they are beaten down and depressed, desperately looking for a plan B.  For the latter, they deserve kudos for sticking to their guns.  Regardless of whether it was deliberate or not, an MBA pursuing an internship needs to understand that the process can take just as much work as getting a BigCo internship--only, there's no career development process bringing startups to campus to make it super easy.

I've seen most MBAs fail at getting good internships with early stage startups.

 

________

 

I had an MBA come into our office a couple of weeks ago to seek advice on getting an internship with a startup this summer.  I asked him what he wanted to do, and he responded:

 

"I'm willing to do anything.  I could help do analysis, anything with excel/powerpoint, could help raise money--really anything.  I just want to be involved."

 

 

Oy.

Let's translate this sentence from the perspective of a founder:

Willing to do anything:  You have no idea what we do on a day-to-day basis and you'll need me to figure out something to do to keep you busy.

I could help do analysis, anything with excel/powerpoint:  You basically have two skills, both involving Microsoft office products.  You'll spend a week on the most complex, gorgeous spreadsheet I've ever seen, totally ignoring that fact that it's garbage in, garbage out.  

could help raise money: You think that your presentation skills are so good that you'd be better in front of investors than the actual founder.  You don't understand that investors look for determination, passion, technical ability, and authenticity. 

I just want to be involved: Your classmates have sweet-ass internships with consulting firms and banks, getting paid $25k to party all summer.  You're making a huge sacriface to be here.  We should be so lucky to have you!  We just have to make sure we keep you entertained all summer.

 

There's a place for an MBA like this--it's just with a bigger company that has a more formalized internship program.  Series A and pre-funded startups don't have time for this sort of mindset.  They need 100% of the people on board building stuff, not strategizing on stuff.  A non-technical startup person needs to be kicking ass on user experience mock-ups, business development, marketing, social media, SEO.  They should be bringing their execution skills to the table, not asking for a good learning experience.

 

Contrast this with a hacker that contacted us recently for an internship.  He first contacted us through twitter by RT'ing us and responding to interesting posts.  He then showed us his open source projects and then offered to spend his spring break hacking with us.  In two weeks, he really helped us move forward on some big architecture problems.  I would do anything for him--hire him, recommend him, anything.  I've never seen his resume, read his cover letter, or checked a reference on him.  But he knew how to contribute.

 


 

MBAs!  You too can contribute through an internship!  But YOU have to go the extra mile.

 

A few suggestions for getting a job with a startup:

 

1. Pick the right size of start-up where your current skill set can be utilized

2. Read the startup's blog and add to the discussion with insightful comments

3. Follow the founders on Twitter and RT and @respond when appropriate

4. Engage with the general startup community: Build up your twitter account, blog readership, and Hacker News karma score

5. Learn the startup's actual challenges by talking to people in advance of requesting an internship

6. Propose your own internship project

7. Do an unsolicited proof-of-abilities project in photoshop or balsamiq if you want to be product manager

8. Do an unsolicited SEO analysis if you want to do marketing

9. Be respectful but uber-persistant

10. Move to where you want to work

11. Accept the fact that the best opportunities become available in May and June

12. Get other founders to highly recommend you

13. Throw away your resumes and cover letters--they're no longer needed.

 

Most importantly, try to internalize the risks a startup CEO faces when bringing in a non-technical MBA intern.  The actual cost is probably not much if the company has already raised money and if the internship is subsidized by the MBA program.  The real cost is in focus, time, and company culture.  Getting a startup to devote their time to you is a huge risk to them and you need to prove that that risk is worth it.  

 

In contrast, a large company will treat its internship program as mostly an advanced hiring process.  You don't actually need to contribute that much since the internship is little more than an extended interview process.  For startups, they can't even think about hiring that far into the future, so you have to be worth it on contributed value alone.

 

 

Find discussion of this post on Hacker News.

 

******************

I'm Jason Freedman.  I co-founded FlightCaster.  

I would be remiss not to recommend the following opportunity: @JasonFreedman.

Don't be shy.  You can send me a Linkedin request or become my bff on Facebook.

 

Become a morning person. How to end insomnia for $520.99

[edit 7.29.2012: see the bottom of this post for up-to-date recommendations]

 

 

I regularly can't fall asleep.  

I often can't fall asleep even when I feel tired.  

Once asleep, I generally sleep through the night just fine.  

It's nearly impossible for me to wake up early in the morning.  

Pulling an all-nighter is surprisingly easy for me.  

I generally direct my lifestyle to avoid morning commitments.


I have delayed sleep phase syndrome, a common form of insomnia.  Sound familiar anyone? 


Or as Wikipedia describes it:

 

Attempting to force oneself onto daytime society's schedule with DSPS has been compared to constantly living with 6 hours of jet lag; the disorder has, in fact, been referred to as "social jet lag".[7] Often, sufferers manage only a few hours sleep a night during the working week, then compensate by sleeping until the afternoon on weekends. Sleeping in on weekends, and/or taking long naps during the day, may give people with the disorder relief from daytime sleepiness but may also perpetuate the late sleep phase.
People with DSPS can be called extreme night owls. They feel most alert and say they function best and are most creative in the evening and at night. DSPS patients cannot simply force themselves to sleep early. They may toss and turn for hours in bed, and sometimes not sleep at all, before reporting to work or school. Less extreme and more flexible night owls, and indeed morning larks, are within the normalchronotype spectrum.

 

 


6-7% of adults report delayed sleep phase syndrome and 17% of university students have symptoms that qualify (from a recent study).  My sense is that entrepreneurs, through both cause and correlation, have significantly higher rates of insomnia than the general population.  I'll talk a lot more about this relationship in a future post, but the anecdotal evidence of morning-hating entrepreneurs is not difficult to find.

If you're like me, you've tried lots of different methods.  You already know about exercising, skipping caffeine, eating well, developing sleep habits, using white noise or a fan, etc.  If you actually have delayed sleep phase syndrome, none of these actually work.  And because they take so much discipline, you generally don't keep up with it anyways.  I get so annoyed by people who have normal sleep cycles offering me solutions that work for them.  Simple solutions like listening to pleasant music, counting sheep, taking a bath...they just don't work.

 

I've bought virtually every gadget out there and seen lots and lots of doctors.  After years and years of struggling with this problem, I actually have a fairly normal sleep pattern now.   

 

Here's how I did it:

 

1.             Avoid bad light at night 

2.             Get bright light in the morning

 

It's actually that simple.  Caffeine matters and sleep habits matter, but none of them fix the underlying problem: that your circadian rhythm is not working right.  I first realized this when working at summer camps growing up.  I always had tremendous sleep problems during the year and then they would magically go away every summer when I was up at camp.  The key was that at summer camp, I was exposed to early morning light outside every day and I had no access to the bright blue light of TVs and computers at night.  In response, I went to sleep at normal hours and woke up (reasonably) easily.

 

It took me years, but I've now found the right mix of gadgets and systems to duplicate this success:

 

 

1. Avoid Bad Light At Night

 

This is super important.  The body falls asleep as melatonin rises and serotonin falls.  Seritonin is stimulated by blue wave light.  Very simply, the more light at night, the harder it is to fall asleep.

 

Let's be real here though, I'm not turning off my lights or living by candle light.  There's no way I'm turning off my HD TV, Macbook, iPad, or iPhone either.  I need ways to limit bad light at night without hampering my digital lifestyle.

 

For the computer, I use a program called f.lux.   It adjusts the color of your screen to reduce the blue light composition.  It's far more important to reduce blue light than it is to simply turn the brightness down, though I do that too.  F.lux will slowly adjust my monitor color levels to a light red tint after sunset and then return to normal after sunrise.  It has a Disable-for-an-Hour feature that lets you easily bypass it whenever you want.  I highly recommend it and it's free.

 

I double up with a physical filter as well.  I got a blue light filter made by Low Blue Lights, which is basically just a high-priced orange clipboard, but I'm not complaining.  With a little piece of velcro, it affixes to my monitors and really blocks out the blue light.  While F.lux starts working at sunset, I use the physical filter when I'm using my laptop in bed.   Want to see just how effective this is?  Have it on for just 10 minutes in a dark room, enough for your eyes to adjust.  Then remove the filter.  You'll be shocked at how blindingly bright your monitor now looks, even on its lowest setting.

 

Low Blue Lights also sells red light bulbs that you can use as a reading light.  These are awesome.  They always feel way too low in intensity when you first turn off your regular light, but once your eyes adjust, you realize that there's still plenty of light to read by. 

 

2. Get Bright Light in the Morning

 

There are two reasons to get light in the morning.  First, the early light will help you wake up and feel refreshed.  Additionally, the light, if bright enough, also helps you reset your circadian rhythm so that your body will start the countdown to night earlier.  Several gadgets can help you achieve this:

 

First, I use a sunrise alarm clock.  This is an alarm clock that slowly turns on to mimic a sunrise (duh).  The beauty here is that you set it to start 30-60 minutes before you need to wake up.  It increases the likelihood that you'll naturally wake-up before your alarm goes off.   With my sunrise alarm clock (and all these other methods...), I wake up before my alarm all the time.  It dramatically changes your mood to wake up naturally.

 

You can geek out on your success by tracking your sleep habits.  I use Sleep Cycle : An iphone app that monitors your sleep by tracking your tossing and turning.  It also has a built in alarm clock that tries to optimize the time it wakes you based on when you're in the lightest sleep.  I don't use it anymore since the sunrise alarm clock works so well, but it's a nice idea.  My friends at WakeMate are working on a similar concept.

 

While the sunrise alarm clock will help you wake up, it won't reset your circadian rhythm--which is the root cause of delayed sleep phase syndrome.  If you have the means, go spend half an hour in bright sunshine outdoors and you'll be fully reset.  If you have any type of normal job or class schedule, this won't be possible.  You need really bright light in the morning to reset your schedule and it needs to be done every morning.  Your office light probably gives you 500 lux of light.  Standing outside on a bright day is closer to 10,000 lux.

 

I have two powerful lights.  The first is a bright flourescent light that supplies 5000 lux of light.  Importantly, I have it sitting next to my bed, and the bulb part reaches out over where my head is.  I connect this light to a standard timer, the type you use to program your outdoors lights.  I set it to go on about 15 minutes before my alarm clock.  This way, if my sunrise alarm clock (which uses a normal bulb) doesn't wake me up, I get a huge burst of light as well.  Ideally, I would have large bay windows that wash me with natural sunlight at the perfect time each morning, while blocking out all light the night before when I try to go sleep.  Since that's nearly impossible to pull off, this is the next best thing.

 

I generally get out of bed pretty quickly after my 5000 lux overhang light turns on.  By then, I'm refreshed and awake, and I start my morning routine.  I still haven't gotten the needed ~30 minutes of bright light to reset my circadian rhythm though.  If I don't get this bright light early in the morning, it will be harder for me to go to sleep that night.  

 

So, while eating my breakfast, I have a 10000 lux light that sits on my table pointing into my eyes.  I've tried the really big box lights from BioBrite.  If you're really struggling to adjust your schedule, this is the way to go.  If it's overkill, than I also recommend the much smaller light notebook.  It delivers 5000 lux of light but is far less intrusive.

 

 

 

Shopping list and total Cost: 

 

$0      F.lux

$30    Blue Light Filter

$25    Low Blue Light bulb

$120  Sunrise alarm clock

$130  Bright overhanging light

$30    Timer

$180  Light notebook

$.99   Sleep Cycle

 

So, for a total of $520.99, you can squash probably one of the most frustrating bad habits in your life.  

 

There are, of course, many many other solutions--please share what has worked for you in the comments.

 

 

[Edit 7/29/2012:]

Finally, a company made a decent product that addresses this issue.  I now whole heartedly recommend the Naturebright Per3 as both a sunrise alarm clock and bright overhanging light.  It replaces the need to work with our own timer, since it's integrated into one.  I've bought two, one for each side of my bed.  I've now also bought over a dozen for friends and family members that suffer from delayed sleep phase syndrome.  Reception has been quite positive.  Go try it out-

 

NatureBright Per3 Deluxe Wake Up Light


 

 


Find discussion of this post on Hacker News and on Reddit

 

******************
I'm Jason Freedman.  I co-founded FlightCaster.  
I would be remiss not to recommend the following opportunity: @JasonFreedman.
Don't be shy.  You can send me a Linkedin request or become my bff on Facebook 

Beware of MBAs! The business school curriculum teaches how to suck at startups

I have an MBA from Dartmouth's Tuck School of Business.  It was some of the best experiences of my life.  I met fabulous friends, learned from incredible professors, and developed in many important my ways.  My entrepreneurship professor, Gregg Fairbrothers, is one of my all-time favorite teachers and he taught me a lot about doing start-ups right.  The professors and administrators at Tuck never claimed they were teaching me how to run a startup.  In fact, they were explicitly teaching general management curriculum to be applied towards larger businesses.

 

The problem that I see a lot now that I've been in startup land for 4 years is that too many MBAs think that their education in business can be applied directly to startups.  They forget that startups are not a smaller version of a larger company.  Applying a set of frameworks designed for success with larger companies is a good way to guarantee failure when dealing with start-ups.  Professors like Gregg Fairbrothers preach this all the time.  Yet, I still get calls regularly from MBA friends ready to do their first start-up, believing that their MBA education will give them the right tools.

 

The reality is, we MBAs come with a lot of baggage.  A good way to understand why MBAs are damaged goods for startups is to understand the actual curriculum.  


 Here are standard core courses at any business school: 


Strategy: 

 This is the most dangerous of all MBA courses.  In this course, you learn high level analysis, using the 3 C's, the 4 P's, and, of course, Porter's Five Forces.  So, on a typical day, you read a 15-page case on a company's mistakes and then apply one of these frameworks to think through how you would have done it differently.  Doesn't sound so bad right??  Wrong!  This is all high-level business strategy for larger companies.  For a start-up, no one ever knows what will work and what won't.  That's why there's such a focus on iteration in the lean startup methodology.  Great startups figure out what to do by building really fast, listening to customers, and iterating.  More like guess and check.  An MBA, fresh out of a Strategy course, will try to figure out everything on a white board, naively believing that they can think their way out of mistakes.

 

Accounting: 

In accounting class, you study the annual reports of big companies and learn about gross margin, cash flow statements, balance sheets.  You learn that assets=liabilities + equity and how to convert LIFO to FIFO.  This is all really, really useful if you have warehouse full of stuff and customers that pay on credit.  Pre-revenue start-ups usually have no Cost of Goods Sold, no revenue, none of that.  The only accounting you need is to know how many users are out there, how much it costs to acquire a user, and how much money you'll have from that user.  That and a shoebox to store your receipts until you're ready to pay someone to type them in and do your taxes for you.  An MBA will way-over complicate things with talk of deferred taxes, accrual basis, yada yada--and they forget that their gorgeous, complex set of spreadsheets fails the most basic axiom of all analysis: garbage in, garbage out.

 

Organizational Behavior:

OB was one of my favorite classes.  I would love to have a company big enough someday to implement some of the stuff on building great structure.  For startups with less than 10 people, all that stuff is irrelevant.  No one in OB tells you to let your top hacker work whenever or wherever he wants or that status meetings are best done standing up or that people are motivated more by technical challenge then by compensation.  To be fair, when you're startup gets big enough (over ~20 people), it rocks to have an MBA come in and start to implement structure just as it's really needed.  Too much structure before that gets in the way of the magic.

 

Corporate Finance, Financial Markets, Statistics:

Not really sure how these apply to the startup world.  Once I exit for millions of dollars and need to figure out where to put my big pile of cash, they may become more useful.  Our 8 person company doesn't worry about the optimal debt to equity level or whether we should be doing any currency hedges.  Corporate finance for the start-up is best served by reading Signals vs Noise to understand the dangers of raising money and following Venture Hacks to learn the tricks of working with Venture Capitalists.  MBAs will generally know how to read WalMart's annual report but will be lost in the complexities of a cap table.

 

Management Communication:

This is the most painful to include.  Management Communication teaches how to develop awesome powerpoint presentations.  It's actually a very useful skill and, if you're a consultant for a top tier firm, learning how to put together a perfect leave-behind-deck is invaluable.  For a start-up, you want your presenter to internalize Guy Kawasaki's 10-20-30 rule.  You want your decks feeling like a Steve Jobs presentation.  It's about selling a vision, not presenting analysis.  MBA start-up decks always have way too much text, boxes, and arrows.

 

 

___

 

 

 

 

Perhaps the most difficult part lies in the underlying motivation of why people get MBAs.  Any MBA will tell you that it wasn't the academics that drove them to their master's degree.  Unlike almost every other master's field, in which mastering the content is of primary concern, MBAs usually blow off classes after the first semester (especially at the top schools).  Most people get an MBA because of the network.  They have learned that having a group of successful friends will open doors for you.  Pedigree from a top school=better opportunities for success.

 

For start-ups, only one thing matters.  Can you build something that people want.  Your pedigree is exactly worthless compared to this simple ability to execute.  And for an MBA that just spent 3 years (remember, the application process takes a year!) and over $120,000 building a network, it's really difficult to hear that the network and the education are no longer as big of an asset as you had hoped.

 

Find discussion of this post on Hacker News

******************
I'm Jason Freedman.  I co-founded FlightCaster.  
I would be remiss not to recommend the following opportunity: @JasonFreedman.
Don't be shy.  You can send me a Linkedin request or become my bff on Facebook.