Thoughts on Paul Graham's essays and Hackers & Painters

If two years ago I had known of Paul Graham’s essays or his book, Hackers & Painters,  I know I would be better off today. I cringe at the thought of all the time and money I have lost up to this point. But mistakes are what they are, and as the cliché goes, the mistakes have taught me a lot.

The reason why I know I would be better off is because his writings, to me, are like a startup GPS that talks. “So you want to start a startup? Alright then. Get the right gear man, and let’s go! North is this direction.”

A little later, the GPS talks again, “Read the sign posts, watch your head, duck – OUCH! That must have hurt. Here’s some hydrogen peroxide for that cut. Get back up, keep going.”

A little later, the GPS talks again: “You’re going the wrong way. Make sure to go West at the next crossroads and then go Northeast. Say what? No. Absolutely not! No R&R right now. Here, have some ramen and a drink of water. Keep walking.”

That is the kind of direction I need and needed.

It’s not that the compass I was using before was bad. It’s just that it did not, and does not, fit with the web-based startup in my head. The compass was based on numerous books on how to start your own business, non-profit organizations that provided free courses on drafting a business plan, a marketing plan, creating the projected financials (all of it is guess work so does anyone really take it seriously?), understanding a P&L statement, seminars on how to get investor funding, and legal advice, etc. It’s obvious to me now, that none of these folk were from Silicon Valley. A web-based startup does not fit into the mainstream way of doing things.

It sounds odd for someone like me, who is not a hacker, to be inspired by Paul Graham's writings. Believe you me, Hackers & Painters was like reading about a foreign world with its own culture, language, and way of life. Fascinating. It’s like a secret society that only the ones in it understand. Kind of like the Freemasons and their secret codes. I could never be a part of their world, but I feel confident when I say that I get it, I get their passion. And even though I am not a hacker, my idea needs one to make it happen, and this is why Paul Graham’s writings are a gift.

Elevator Pitch and the best ROI - Pitching Hacks

“Summarize the company’s business on the back of a business card.” —Sequoia Capital. That is so much easier said than done.

I have read numerous articles, blog posts, and books on starting a startup. My compilation boils down to some iteration of these must-have components: Problem, Solution, (or solution first and then how the product/service fixes a problem), Competition, Business Model (how will the company make money), and Team. And, don’t forget the wrap up.   All of this in a pitch.

My initial thought: "Seriously?"

I attempted to write several renditions that would include the components – but none of them worked for me, so they sure as hell wouldn't (and haven't) worked for an investor. But there is hope… I found a PDF, Pitching Hacks by Nivi and Naval. Pitching Hacks cost me 9 bucks and it is the best money I have spent on Interlogues. A must read. Truly.

The advice is succinct, explicit, with examples that I could understand. I felt and still feel inspired to create a pitch that works. Note that Pitching Hacks contains a lot more information than just the elevator pitch, but right now that is the only topic that interests me.

Pitching Hacks starts with this: “Investors don’t invest in businesses. They invest in stories about businesses. You can tell a story in a sentence; you can tell a story in a paragraph; and you can tell a story in a 20-minute pitch. Startups need to do all three.” Thinking of the pitch in three parts helped me tremendously.

The one sentence pitch, which Nivi and Naval call a high-concept pitch, is a single sentence that distills your startup’s vision. This one-sentence is not necessarily the tag line. It could be, but doesn’t have to be. The PDF explains the difference and why – with examples.  This was an Aha! moment. 

Nivi and Naval go on to say that in the one paragraph pitch, expand on the high-concept pitch and provide a segue into the 20-minute one.

Once you have the opportunity to give the 20-minute pitch, include the major components which are: “traction, product, team, and social proof. And investors care about traction over everything else.”  Read the PDF to find out more about each compenent.

So far I have this for my high-concept pitch: Interlogues is a Behavioral GPS Mechanism with a Blogger-like functionality.

The sentence pitch starts like this: A tool that takes any person from point A, a habit that impedes their success, to point B, a habit that promotes their success. 

I am working on the rest. Yay!

Thoughts on Steve Blank's Lean Startups aren’t Cheap Startups

I am quickly becoming a fan of Steve Blank.
Entrepreneur Corner.com introduced me to him and I now go to Steve’s site directly.  His post Lean Startups aren’t Cheap Startups is a valuable read. I wish it would have been at my hand’s reach back in January of 2009 when I began a series of mistakes that I have had to fix since April. Steve says this: “A Lean Startup is not about the total amount of money you may spend over the life of your startup. It is about when in the life of your company you do the spending."  When there is limited funding there is no such thing as “do-overs or iterations without onerous penalties.”  Isn't that the truth!

Steve goes on to write that the “key contributors to an out-of-control burn rate is 1) hiring a sales force too early, 2) turning on the demand creation activities too early, 3) developing something other than the minimum feature set for first customer ship.” Taking these steps before finding the product/market fit can be not only costly but destructive. His recommendation is to use the Customer Development process which boils down to this: “preserve your cash as you search for a repeatable and scalable sales model.”  I learned this lesson the hard way.  I try to see this mistake as being a short-term loss for a long-term gain, but some days it's hard to do.

The process that Steve writes about has two parts which are Iteration and Execution. Under iteration there are two steps: customer discovery and customer validation. The customer validation identifies the repeatable and scalable model.

As I read through this section of Steve’s post, I interpret his writing as a corroboration of the decisions I made to remove a content-layer from Interlogues. I believe that now Interlogues has a repeatable and scalable sales model.  It's a good thing, good place to be in this journey, but a costly one.

Now... let's not forget.  I still have to build the tool before I can sell it.

To get funding - to build the tool, I need to make a much better impression on investors, on anyone for that matter.  And to make a better impression, I need to improve my elevator pitch. It's not so good.  OK.  It's the pits.  I need to improve it dramatically.  So I am setting out to get it down to an art form.  I can hear you laughing, my good friends.  Really, no joke. I can curbe my passion of wanting to tell everyone every single boring (to them) detail about how great I think this tool is and will be.  So I'll get to working on creating that succinct and effective pitch.