Any other business
Jason Calacanis: 30 ultimate tips for startups
12 min read
05 October 2010
American blogger-turned-entrepreneur-turned-angel-investor Jason Calacanis gave a fantastic keynote speech at the Future of Web Apps conference in London this morning, offering his top 30 tips for startups. Here they are.
From Bill Gates slitting people’s throats and Zuckerberg “screwing his partners”, Jason Calacanis didn’t hold back at the Future of Web Apps (FOWA) conference this morning.
Although Jason Calacanis isn’t everyone’s cup of tea – he’s been likened to Marmite before, you either love him or hate him – his wealth of experience has taught him a few tricks. Here they are:
1. There are samurai and there are rice pickers
To succeed in a startup, you need to be ruthless and driven. Be ruthless. Otherwise, you’ll end up as a rice picker.
2. Don’t over-estimate the downside risk
You may need to swing the bat multiple times before you’ll hit the ball. If you try and fail, get up and try again. Failure is not a death sentence. Learn and start over.
3. Pick your investors
Make sure you find the investors that will actually add value to your startup. Picking investors who won’t is wasting your time and their time and money. How? Work backwards: what have they invested in before, what are they passionate about? Does that relate to what you’re doing? Find the ones in your sector, and tell them what you want. But make sure you already have a product to show.
4. Sell promise, not performance
When you start, sell on what your startup can be, not what it is at the moment. What is your big vision? People care about what your startup will scale up to, not what you’re doing now. What will your company do when it’s a $100m company?
5. Pick the right beach to surf on
Pick something that will be big. Trend-spotting is important. If you pick the wrong beach to surf, you could work extremely hard and still come up short. Pick the right market and the right people.
6. Define your culture
State exactly what the people coming to your company should be like. Set a tone and define the culture, or you’ll get into culture wars inside the company. When you hire people, make sure they fit the culture.
7. Fire the good people
Good people are what you do not want, you want great people. Forget about bad or average people: “those people should be fired on sight, beheaded and thrown in a dumpster”. Think of your startup as an Olympic-calibre team, you need an exceptional performance level. Good isn’t good enough. Fire the good people, or they will drag down the great people.
8. Pick apples from the orchard
If you go to the source (colleges, universities, schools) to find talent, then you get them before they’re jaded and cynical. Everyone seems to be looking for superheroes in startups, yet nobody’s willing to make superheroes. By picking apples from the orchard, they won’t go rotten.
9. Have a great domain name
You have to have a great domain name. If you don’t, investors will think you’re not a great entrepreneur. Getting a great domain name is hard – it’s a test, to see if you’re resilient enough as an entrepreneur. It doesn’t have to be the perfect dotcom, but should be good enough so that you don’t have to spell it out over the phone.
10. Have a stunning logo
It’s 2010, there’s no excuse not to. “It doesn’t have to be expensive, just beautiful or stunning. Otherwise it looks like you don’t give a sh*t.”
11. World class design and user experience
Keep it simple. It’s important to show people you are serious. In Calacanis’s words, “If you don’t, then it’s a telling sign that you don’t give a sh*t.”
12. Be the brand
You need to be the brand. Put your logo on the bottom of your email, get a shirt with the logo, put it on your Twitter background. If you don’t love your brand, why should an investor? Live the brand.
13. Talk to customers
Who is your customer? What do they want? Go to a coffee shop and show your website to strangers (“just offer them a cup of coffee!”). Put them in front of your website and see how they use it. Watch them and learn. Getting to know your customers will help innovate your product.
14. Delight users
This is the higher level of understanding your user. Figure out what makes them happy, and do it.
15. Break bread with your team
The number of times that you eat and go drink with your team, the better you’ll work together. If there are people in your team who consistently don’t want to get involved, they’re probably not part of the culture, or there’s a problem.
Continue reading Jason Calacanis’s top tips on page two.
16. Sales solves everything
If money is coming into the business – and you’re not losing money – then everything will seem fine, even if you don’t have investors. Having no revenue is scary. “You need to focus on revenue; the earlier, the better.”
17. Always be recruiting
Even when you’re not recruiting, meet with people who are looking a job. Always. Otherwise you’re missing potentially brilliant employees.
18. Low salaries, high stock options
Important for startups. You want to attract people who aren’t in it for instantaneous gratification and quick money. You want people who are interested in making your company huge, not in fast money. A startup employee will make at least a third less than another company. You want people who get excited about building the company, not big money.
19. Fire fast, hire slow
People really take their time when something isn’t working out – people avoid firing people. But if you have doubts about an employee, you’re probably right. Confront the issue straight away and if it isn’t working, then get rid of them. “If there is any doubt about a person, then there is no doubt.”
20. Iterate and pivot
You need to be constantly testing and evolving your idea to survive. Just as important is the ability to pivot your ideas, because it’s more important where you end, not where you began. “Do this by listening to your users, creating a product that delights them, and not being afraid to pivot and innovate.”
21. Winning is more important than being right
Winning is the most important thing. Embrace change and win. Nobody wants to work at a company that doesn’t win.
22. Nobody remembers how you got there
Not advised, but being ruthless can pay off. As Calacanis says, “you can screw everybody along the way and when you win, very few people – if any – will remember how you got there. Zuckerberg (Facebook’s founder) screwed his partners multiple times, screwed the users, screwed their privacy, didn’t care, and now he’s the most successful guy in our industry. Bill Gates did the same: companies got in bed with him and woke up with their throats slit.” Calcanis says the bottom line is this: “This is hardcore samurai madness. If you can’t handle it, you’ll get your throat slit. This is gangster sh*t. Nobody cares how you got there, just that you got there. Play the game.”
23. Now sell the performance
Once you have a company and you’ve raised funding for it, sell the performance. Originally you sold promise, but then you need to sell performance. Show them a hockey stick curve. “Investors are not the smartest people in the world, they just want to win. Performance is what matters.”
24. Product wins
“Product wins. Product wins. Product wins. Today, the best product with the best user interface, with the best domain name, with the best design, will win.”
25. Trees don’t grow to the moon
There is a shelf life for every startup and your startup can only grow so much, which leads to…
26. When to sell
It’s time to sell when 1) you don’t have passion for the product anymore, 2) you can’t grow the business anymore, or 3) you’ve been offered a disproportionate amount of money for the asset.
27. Create a marketplace
You have to have two, three, four, five people trying to buy your company. It’s critical, or you won’t ever be able to sell your startup. You won’t get the best price.
28. Now sell the promise again
Once you’ve done all this, you need to sell the long-term promise. How will your startup continue to grow?
29. Stay classy
Once you’ve sold and become huge, don’t start acting like an idiot. “If someone has given you tens of millions of dollars, shut the f*ck up. Don’t criticise them.” You’re still in the game, don’t bite the hand that feeds you.
30. You only have to be right once
Just swing the bat three times, four times, and you will hit the ball. It will happen. But the problem is that most people don’t swing the bat three or four times. They don’t even swing it once. They just sit on the bench and think of swinging. But when you get to the second or third time, you know how the game works – you have to keep swinging the bat.