I just gave a presentation on 42Floors to 150 people.  It went well. I was really proud of:  1) our team, 2) our product and 3) the way we were able to present it.  It was as if we were telling people about it in our living room, but there just happened to be 150 people there.  Afterwards, several people told me that it felt like it was a very polished presentation.  But the reality is we didn’t practice at all.  In fact, three minutes before we went on stage, my co-founder turned to me and said, “Jason, we really should’ve practiced.” I said, “Nah, don’t worry.  We’ll be fine.” And we winged it, and it came off ever so naturally. 

Before I pat myself on the back too much, let me tell you how I felt inside.  Thirty seconds before I was supposed to go on, I was standing there on the side and all of a sudden my heartbeat went from normal to racing like I was in the middle of marathon.  Uggghhh.  I hate it when this happens.  It's kind of like how you feel when you blush: you're reminded how little control you have over your own body.  For a brief moment, I was upset with my body for reacting this way. I was upset with myself for reacting this way, actually.  I should be more confident than this.

For some background, I’ve done a tremendous amount of public speaking. I did speech and debate in high school, I’ve spoken to lots of large crowds, I have given this type of presentation many, many times before. This was also a really friendly crowd, and it was super informal. There was no reason for me to be nervous. But, there I was ready to go on, and I was worried that people standing near me would literally be able to see my heart beating this fast.  

However, in those thirty seconds, from when my anxiety took hold until I started speaking, I squashed that nervousness almost completely.  And that's what this post is about.

The key to public speaking is establishing a routine that solves for the thirty seconds between when your anxiety starts and when you need to go up on stage.  After that nothing else really matters.  Most normal people do not engage in public speaking regularly enough to be able to actually change any of the fundamentals about how they speak.  The very best you can hope to do is to not sound worse than you do when speaking in your own living room.  And that itself is actually a really good axiom to start with:

Don’t try to become a good public speaker, just try to speak like a normal person while in public.  

And the key to speaking normally in public is to squash your anxiety thirty seconds beforehand. Here are a few tricks that I know. Give them a shot.

How to Speak Like a Normal Person While in Public:

Dribble Twice, Spin Once  

So this trick will take a little bit of time to develop, but it’s probably the single most important thing that I’d recommend.  When you watch a basketball player go to the free-throw line with the game on the line, he or she does the same routine every single time. It's always some sort of dribble twice, spin once routine.  With the spotlight on him, he doesn't want to think about some small aspect of his form.  He wants to not think at all.  So he focuses on his trivial routine: dribble twice, spin once, shoot.  The best he is hoping for is to shoot as well as he normally does in practice.  

I do the same thing with public speaking.  I have found a very specific set of physical actions that I do seconds before I start speaking.  For me, it’s a specific stance that I get into where I stand up very straight, my toes are slightly pointed out, I take my hands and I clap them together.  I grasp my hands together really firmly and rub them slowly with my elbows held high.  

I do it this way for one key reason – this is what I usually do anyway.  As in, if you see me in my own living room, surrounded by friends, recounting a story of a time when I did something really awesome, you will often find that I am naturally in this stance.  This is my natural confidence stance.  So, when I’m feeling nervous, I force myself deliberately to take on my confidence pose.

Jumping back to this public speaking event the other day.  At T minus 30 seconds, my heart was beating incredibly fast, but at T minus 25 seconds I had one thing on my mind – hands clasped together, assume the pose, everything else will work out.

You need to find your confidence pose. Whatever your two dribble, spin once routine is going to be, you need to find it long before your public speaking moment.  The single best way to find it is to ask your co-founder or friends to find it for you.  Show them this post, tell them you want help finding this pose, and then at some point in the next several weeks, they will see you do it naturally and can point it out for you.  And then, you need to figure out exactly what it is about this pose that feels good and practice it over and over again.  So the next time when you’re up on stage and you’re getting really nervous and you have that weird feeling where you just don’t know where to put your hands and you just know that in your pockets is like the most awkward thing in the world...at that point – dribble twice, spin once, and shoot.

Death to Powerpoint

Powerpoint is this devious device that takes reasonably good speakers and makes them painfully bad. Traditional bullet-point laden Powerpoint decks are only useful for communicating your ideas with visuals and emailing them to people. They are not useful for aiding you in your speaking ability.  And that’s why most really good speakers stopped using Powerpoint in the traditional way. Throw away all slides that have more than ten words on them (or move them to an appendix).  

It’s okay to use slides when they takes almost no focus off of you, the speaker.  That’s for two reasons.  The first is, the focus really should be on you, so having an Apple-like slide with one or two words on it is totally fine because it communicates a point and gets the focus back on you.  (Note—the only exception is when you demo your product.  Then you do want the attention on the screen.)  The second reason is even more important:  Powerpoint bullet slides take away your attention from your audience.  When you turn around to read a slide, you are forcing yourself out of your own rhythm. 

Speak to Two People

Remember our goal is to speak like a normal person in public.  The best way to speak like a normal person is to actually talk to a real person, and not hundreds of people.  So, as I stand there about ready to speak – in my stance, rubbing my hands together – I look to the left side of the room and to the right side for a random person that seems comforting.  When I actually start speaking, all I want to do is speak to those two people. I’ve never met them but I want to lock in on those two people and just tell them a simple story as if they were sitting in my living room.  I can pace back and forth and look left and right in the crowd, and yet all I’m really doing is going back and forth between my two people.   It’s super simple; it totally works.

Embrace Your Ums

Um is a verbal tick.  It is unconscious and nearly impossible to remove.  If your career is going to be an actor, public speaker, politician, whatever . . .  go work on your ums and this post was never for you anyway.  If you are a normal person, you are not going to get rid of them.  And anyone who harps on you because of them is actually doing you a disservice because they are forcing you to speak differently than you speak as a normal person.  Paul Graham is one of my favorite public speakers, and he says um all the freaking time.  But, he’s a powerful speaker, he’s lucid and most importantly, he’s authentic.  Focus on what really matters.

Don’t Memorize

Memorizing does absolutely nothing for you.  The only thing worse than a scripted, memorized speech is a ‘read’ speech.  So, don’t ever read your speeches, either.  You are pitching your start-up and trying to inspire people to believe in your vision.  It doesn’t matter what the actual words are, they’re all judging you anyway.  And when you memorize your speech, or read your speech, you are communicating that you suck at this.  And you don’t.  You’re a normal person – you have the capacity to speak like a normal person.

Practice with Live Ammunition

Over-practice can really hurt you, especially if you do it in a fake way.  One of the worst things you can do to prepare is to practice over and over again alone.  Because that is nothing like the situation that you are going to be in.  We speak very, very awkwardly alone.  When you are making passionate speeches inside of your car, you look like a crazy person and you feel like a crazy person.  Your performance there will be nothing like your performance on stage. Your goal, always remember, is to get back to how you speak in your living room.  So do that.  

Ask your co-founders to put you on the spot in front of groups of people.  So, if you guys are at some random party, empower your co-founders to play this little trick on you:  Without giving you warning, they can yell out for everyone to get quiet because you want to tell them something.  You will have zero time to get nervous, you will have to start immediately, and you will do the best job that you can.  And if you do that five times before your big public speaking engagement, you will be far better prepared than if you had spoken to the mirror a hundred times.

One final note to that group of 150 people that just saw me speak:  Yes, I was absolutely, totally, freakin' nervous.  If that’s you as well, you already know how to reach me, let’s practice together.

You're acting as if the current bubblicious fundraising environment will continue indefinitely. 

You're acting as if all of your unproven hypotheses will turn out correct.

You're acting as if your seed round valuation increased your likelihood of success.

You're acting as if your investor excitement at the seed round automatically transfers to a bridge round.

You're acting as if you won't need to pivot.

You're acting as if Good Times RIP never happened.

You're acting as if you already have product-market fit.

You're acting as if you already know that you're the next Dropbox.

You're acting as if headcount is a definition of your success as an entrepreneur.

You're acting as if you've forgotten how to be scrappy.

You're acting as if being a cockroach is a bad thing.

Stop Acting As If

If you're seed-funded, you're probably spending money too quickly.  I'm seeing it everywhere right now.  Take honest stock of where you are in your startup.  What  true risks do you face?  What are proven data points and what remains as a hypothesis? 

The traditional criteria for Series A funding is stable and significant month-over-month growth in traction and, for many of us, revenue.  If this isn't you, you need time to get there.  The ideal time to raise your A round is when you have stable growth for at least 4 months.  You still need 2-3 months in ideal situations to do the raise and you never want to be signing documents on fumes or they'll smell your desperation.  Combine all that with the fact that it's difficult to raise in Nov/Dec and June/July.  Now work backwards, how much time do you actually need?  Are you spending money too fast?

I bet most of you have to answer yes.

The Series A capital crunch is very, very real.  But it's not externally motivated.  There is no liquidity reason that explains why there's plenty of money available to seed concepts and not enough money available to A rounds.  In fact, the A rounds have just stayed the same, while the seed round funding has exploded.  My own view of the situation is that investors realized that it was worth throwing money at a good team in a big market in case they go on to build Dropbox.  By the time that team spends its seed money, it's pretty clear whether they're going to be a hit.  If you don't look like a home-run like Dropbox did that stage, you're not going to sail through your A round.  Investors are going to judge you through all the traditional Series A metrics and not the dreamy team-based standards that got you through the seed stage.

So what happens when you start to run low on seed cash but you haven't proved Dropbox-like traction or revenue yet?  You start thinking bridge round.  You go back to your investors and you gauge their interest.  These are the same investors that you forced to decide on you in less 39 seconds during your bubblicious seed round.  The same investors that felt like they overpaid for that initial equity or signed convertible debt with sky-high caps.  Even if they're good guys, even if they like you, even if they believe in your vision...they have a fiduciary duty to their LPs.  You will be significantly diluted or you will cease to exist.  For many of you, it will be the latter.

And it will be your fault.  You spent your money too fast.

For those that make it through bridge financing with heavy dilution, you will still report it to the world as a success.  Why wouldn't you?  Your investors will reiterate their faith in you to everyone that will listen.  Why wouldn't they?  No one will know that you had heavy losses.  As a startup community, we don't share our losses openly when the startup is still in process.  And for that reason, the data that backs up all my assertions won't be available for several years.  By that time, the hands will all have been played.  Don't wait for overwhelming evidence before you act.  Go get some advice, think hard, and then act decisively.

Prepare Now for The Series A Capital Crunch:

Adjust your runway to 18-24 months

For the typical seed-funded company that raises $750k to $1.5M, you should give yourself at least 18 months until you need your A round.  With 2 months of buffer, 2 months to raise the money, and 4 months of traction needed as evidence, that's 8 months taken out of that 18.  At least.  That gives you, at most, 10 months to find product-market fit.

Keep headcount low, low, low

Stop thinking that your headcount defines your progress as an entrepreneur.  Stop asking everyone how big their team is.  Keep your team small until there's overhwhelming proof that more people will equal more growth.  The BackType guys had a team of 3 and they did just fine!  Be a cockroach.

Raise more when you can

When things are going well, raise more money.  If your seed round was raised on convertible debt, don't wait for that equity round.  You may have 3-6 good months which are providing additional data on your company, but still far off from what you need for an A round.  If you can add on more money on good terms through more convertible debt, do it!

Keep AngelList up-to-date

AngelList traction will explode in 2012.  If you have the ability to raise additional funds between rounds, AngelList is going to be the way you do it.  Keep your profile up to date.  Keep engaging with investors.  AngelList makes it easy on both sides to keep everyone aware of your progress.  If you have pent-up demand from an over-subscribed seed round, AngelList can help you broadcast some recent progress and pile on some back-up fuel.

Top companies get their A rounds pre-empted

If you're doing well, your A round will be pre-empted by smart investors. Recognize that the lack of a pre-empted A round means that you're going to have to really earn it.  If your investors are really pleased with your progress but not pre-empting the next round, than you should take their enthusiasm with a grain of salt.

Find an Adviser that will tell you straight

The best source of data on whether you're being realistic with your spending is from advisers that are still entrepreneurs and are only 18 months ahead of you.  Preferably a friend that has no financial interest in your company.  If you don't have someone like this, make sure you get one quickly.  Make sure it's someone that calls you on your shit.

Cut headcount now

If you were overzealous and you're reading this entire post with a sense of dread, the time to act is now.  Recall Sequoia's advice in the RIP deck--the CEOs that are decisive are the ones that last.  Believe me, I know how painful it is to let people go, especially good people.  But if you're running heavy, there's really no way to tighten the belt without reducing headcount. 

Embrace austerity as a company culture

I know how it feels to be funded with other people's money.  After months or years of bootstrapping, of promising your cofounders and employees that everything would be better once you're funded, you just want to fulfill that promise.  It's so natural to overspend.  Resist that temptation.  Don't believe for a second that expensive perks are necessary to retain great talent.  The same truth in hiring holds now as it always has: engineers stay with companies that respect them and challenge them and, in the end, provide them a real opportunity to change the world.   

That's it.  I've said my piece.  If I'm wrong, you'll just grow a little bit slower.  If I'm right, acting now may well reverse a failure into a success.  Slow it down.

Find discussion of this post on Hacker News

I got a really big response to this post:  Please, please, please stop asking how to find a technical cofounder.  There were three types of responses:

1. MBA friends pinged me to apologize for being that guy.  Several of them proudly informed me of their attempts to learn to code.  (Hell yeah!)
2. The Hacker News crowd applauded with approval.  Ranting on MBAs is pretty on theme in our world.
3. And a bit surprisingly, a bunch of hackers pinged me asking for help on how to find a good business cofounder.

I have to admit that I had never really thought much about that third one.  Supply and demand are so off when it comes to technical talent that I thought that all good coders must be able to find business cofounders easily.  Of course, this is just plain wrong.  Finding a great business cofounder to complement your technical abilities is a big challenge.  There are few great ones out there and they're usually great because they're already proven...which then means they aren't looking for a new technical cofoudner.  And just as MBAs don't have a prayer at evaluating technical talent, coders really struggle to evaluate unproven business cofounders.

This stuff is hard no matter what.  Finding the right cofounder is harder than hiring and hiring is already super-tough, bordering on impossible.  But there is more to finding a business cofounder than just iteration and luck.  You need to approach the problem correctly.  Start with this:

Don't search for a business cofounder.

It's approaching the problem from the wrong angle.  When you search for a business cofounder, you're saying that you can't handle the business side of your startup. That's just dumb.  I know hundreds of technical founders that handle the business side of their startup just fine.  And if you're not yet good at the business side of startups, you need to get good.  That doesn't mean you need an MBA (Hah!).  You just need to understand the basic fundamentals of startup economics: cost of user acquisition, lifetime value of a user, market size, etc.  If you're not learning this stuff, you're doing your startup a disservice.

Now, it does usually follow that if and when you find a good non-technical cofounder, he will take over most of the business side of the task list.  But that is usually because in pre-product market startups, building the product is the biggest bottleneck for moving forward so the non-technical guy just picks up all the lower priority stuff that gets left over...like the business stuff.  So, don't judge your potential cofounder on his business ability.  You need to find a different heuristic.  I have one key insight to offer:

Find a business cofounder that truly rocks at something.  Anything.

Something. Anything.  Well, almost.  FInd someone that is good at one specific, concrete thing that is valuable to your startup right now.  If you're talking to a 100% generalist, it's just not going to work.  Not yet anyways.  He may turn into an impressive entrepreneur someday but that will be on a future startup after he's burned your's.  Good non-technical cofounders need to be able to contribute on day one or they become restless and start causing trouble like invading product development with feature creep or distracting everyone with premature fundraising talk.

Also, being really good at at least one thing means that he's demonstrated the ability to reach high levels of quality.  Your hope is that he can then replicate that in all the needs that your startup will have over time.

Here are three types of non-technical cofounders that rock:

The Camp Director (motivation)

A camp director has this magical way of getting talented people to provide help.    It's mostly just sales, but being a straight-up salesman is not enough.  Camp directors sell a vision.  All the freakin' time.    If you're not good asking for help or don't enjoy it, this is the skillset in a founder that you're looking for.    

My technical cofounders almost never ask for help.  They solve coding problems by figuring it out for themselves.  Great engineers love the challenge of working through a solution on their own. 

Whether it be employees, investors, advisors, media, users, whatever, camp director style cofounders get people on board and generally love doing it.   Want proof that you found a great Camp Directot cofounder?  You'll see it everywhere in the quality of people that he attracts to help with all sorts of random things.

The Steve Jobs Protoge (product)

I love chess.  I love everything about it.  My Dad gave me a small, hand-carved chess set when I was 8 year old.  We would play up at the condo in the mountains on snowy evenings.  We played on vacations.  I always wanted to make sure he was playing his hardest.  God forbid he would let his 8 year old son beat him...

While I was going through my quarter-life crisis, travelling all over the world, I started collecting interesting chess sets in foreign countries.  While in Bolivia, I found a hand-carved chess set that was the size of a coffee table.  I had to have it.  I had to carry the base of that table in my lap for most of the 18 hour trip back to the states.  It was so worth it.

More recently, I've been playing Chess With Friends on the iPhone with one of my oldest friends Mike.  We average a little more than a game a month.  We must be 30 games in at this point. Sometimes when my phone buzzes with a new move notification, I get nervous.  I'm worried he's made a move I didn't predict.  Of course, this happens all the time, so my fears are justified.

When we hit the trough of sorrow with FlightCaster, Mike and I played pretty frequently.  There were a few mornings in which half the morning was wasted away thinking through moves.  In what was otherwise a pretty tough time emotionally, playing chess him was a welcomed reprieve.

Chess is comforting to me because it's an exercise in pure rationality.  At my level, still recreational, I can apply pure mental horse power to any problem and do fairly well.  Mike is a better player than me when it comes to strategy and experience with openings, so I often have to win by brute-forcing the visualizations of the moves.  If I do this, he does this, if he does that, I can do this...I've heard Bobby Fischer could think 14 moves ahead.  I can get up to about 7 until veins start popping out of my head.

Mike is also more gifted positioning player.  He understands at a more abstract level how to get his pieces into superior positions, even if it means giving up pieces in the process.  It's often a joy to watch...and incredibly frustrating.  If you play chess, you know the feeling.

***

Sometimes, while daydreaming, I wonder how similar chess is to startup life.  I've determined it's not.  I think there may be a lot of neat similarities to chess and entrepreneurship, but ultimately chess is too controlled.  One of the defining aspects of surving and thriving in startups is managing entropy.  Chess is calculated, predictable, strategic.  Chess is how startups look after they've already been successful and Harvard Business Review is writing cases about how the crystal clear vision of the genius founder translated into market domination.

But I've found a variation of chess that is a true equivalent to the chaos that is startup life.  It's called Bug House.  You're going to love it.

Bug House is a way to play team chess.  That's right.  Team chess.  4 people, 2 teams, 2 boards, 2 timers.  I was over at Dropbox with Ivan Kirigin and they introduced me to it.  No surprise, by the way, that those genius Dropbox guys are playing this insane game. They started playing a lot more recently after Makinde Adeagbo left Facebook and joined Dropbox, bringing the heat.  Just wait, Bug House may be to 2012 what Settlers of Catan was to 2010. (okay probably not, but still...)

Here's how you play.

I played with Ivan as my partner.  Ivan played white versus his opponent.  I played black versus my opponent.  The win in Bug House goes to the team the logs the first victory, on either board, against that board's respective opponent.  So, if I beat my opponent, Ivan and I as a team would win.  Each game is separately timed with 5 minutes per side.

So we both start playing our games independently.  No interaction for the first few moves on each board.  However, when Ivan captured a pawn from his opponent (remember his opponent was playing black since Ivan was playing white), Ivan handed the white pawn to me!  I could now choose to move my normal turn or place the pawn anywhere on the board.

Take a second and visualize the craziness that began to ensue.    Here's a random youtube video of some guys playing.

Every time, I thought through a strategy even a few moves into the future, it would totally fall apart if my opponent magically received a rook or a bishop from his partner.   Half a dozen times, I faced certain checkmate when Ivan magically saved me with captured pieces.  At our best, Ivan and I would communicate our needs to each other.  But with that fucking timer, there was just no time so I would just capture pieces and give them to him.  There was no planning, no control, no time.

As time went down on both boards, we made incredibly fast moves.  I've used to regular speed chess.  I can see the board and make quick decisions.  That totally fell apart when the whole context of the game shifted dramatically move to move.  Veins were popping out of my head left and right.  I realized at one point that I had been holding my breath for too long.  Right, of all things, I also needed to remember to breathe.

By the way, Bug House is British slang for insane asylum.

And this my friends, is the perfect parable for startups.  

Happy Thanksgiving everyone...

Startup buds!  Listen up...We're starting to get some flak for going a bit over zealous on the minimum viable product strategy.  Robert Scoble just ripped into us for approaching him with too many poorly-constructed concepts that are not ready for the light of the day.  Dismiss his criticism at your own peril.  I think he was right. 

Reid Hoffman's Rule #6 is "Launch early enough that you are embarrassed by your first product release."  He's also right.

What's an entrepreneur to do?

They're both right.  We need to be presenting far better first versions to the world AND we need to be launching much much earlier.  I wanted to give you a little view into how we tackle this issue at 42Floors.  If you go to 42Floors right now, you won't be impressed.  Sorry.  We're not ready to show what we're building to the whole internet world yet.  We have, however, been showing our product to lots of people in the commercial real estate industry.  They contact us on AngelList and we give them access to a private site and get their feedback.   Here's a frontpage that we've heavily tested with commercial real estate professionals:

Good customer development is filming the trailer and then deciding whether to make the movie.

We got tons of awesome feedback.  Brokers liked some aspects but not others.  Tenants had very different impressions.  We told them to be brutally honest with their feedback and they certainly were.  And we, in turn, were not emotionally attached to our product in the slightest.  This was full-blown hypothesis-testing mode for us.  Want to know the best test of whether you're actually in hypothesis-testing mode or simply going through the motions?  

Good customer development means throwing away code.  

And oh, man, have we thrown away code.  This front-end failed our tests.  The front-end above is not at all what 42Floors will be doing as a company.  It's actually from earlier this year when we were still searching for our product.  We threw it away.  When we iterate early on as a startup, we don't hesitate to try new things and that means throwing away old things.  It's soooo much easier to throw away code when you don't have a full-blown code base.  The emotional attachment to that sunk cost is very real.  

It's also very tough on morale to throw away something that's fully built.  One of the reasons we've iterated so quickly is that we never built the back-end.  We're now deep into our latest iteration and it's the one we'll launch with...soon!   When we do show you all what we've built, I'm certain it'll blow you away.  I can say that with such confidence because I have real data from all of our hypothesis-testing.  Paul Graham tells Y Combinator companies to launch when they provide a full quantum of utility.  When we launch, we will only be doing 1% of what we have planned, but that 1% will make some people in commercial real estate very very happy...so happy that they'll pay us money on day one.

If you're into commercial real estate, contact us now and we'll share it with you.  For everyone else, go ahead and follow us on AngelList and we'll keep you updated.  

Stuff we startups do that doesn't delight users:

Office space
Launch parties
Health insurance plans
Salary negotiations
Founder equity splits
Series F stock
Office Food
Team-building activities
CRM systems
Bookkeeping
Head count
Working in SOMA
Convertible debt caps
Valuations
TechCrunch
Karma scores
ISOs
Powerpoint
Business Cards
Banks
Lawyers
Desks
1099s
Bug Trackers
Agile Processes
Advisory Boards
Hiring
Cap Tables
Payroll
Meetups
Meetings

Of course, much of this stuff still needs to get done.  At some point.  And some of it really is important to the process that eventually creates delight for users.  But none of it directly delights users.  They're all inputs.  None of it is product.  When you build a great product, one that delights users and achieves product-market fit, you'll have lots of time to work on all these things and optimize them to your heart's content.  When your product is not even built yet, none of this stuff matters.  But your startup, in the pre-product phase, is basically a ticking time bomb.  The only thing that can prevent it from exploding is user delight.  User delight attracts funding, enhances morale, builds determination, earns revenue...Until you get to user delight, you're always at risk of running out of money or, much more likely, losing a key engineer to something more interesting.  Time is your most precious resource.

Don't. Waste. Time.

Paul Graham mentors startups to avoid these time sinks: "The most dangerous way to lose time is not to spend it having fun, but to spend it doing fake work."

Some strategies for not wasting time on fake work

Delay it

Anything that can be postponed should be.  If your startup never makes money, you won't care about setting up that bookkeeping system.  In fact, you'll wish you had that 10 hours back to talk to more users.  It's not even the hours that matter though, it's the mental focus.  You want your only two top-of-mind subjects to be your product and your users.  Just about everything can be fixed later.

Fix things once they break

The best bookkeeping solution is a shoebox.  I swear by it.  At FlightCaster, we didn't leave our shoebox system until we had acquisition interest.  When they asked for a balance sheet, we paid a bookkeeper and CFO to quickly fix everything.  A couple thousand dollars later, everything was totally organized.  

Solve problems quickly, even if only partially

When you incorporate, there will be 347 options you can think about.  Founder provisions, stock structures, by-laws, etc.  Don't worry about them.  Just solve this task as fast as possible with the simple defaults.  In general, just try to do whatever a bunch of other high quality startups have done.  Don't even bother to understand the options until later.  When you're ready to raise an equity round, take a few days with your advisors and lawyers and amend all your documents to get it right.  The only thing that can't be changed later is the 83B--get that done correctly within 30 days of incorporation.

Outsource all over the place

I've purchased health care plans so many times now I know exactly what I'm looking for.  I still use an insurance broker though.  I have Raj from Expert Quote take care of everything for me.  Yeah, he gets a commission, but if it saves me a bunch of annoying calls with Anthem, then it's worth it.  It's one less thing for me to think about.

Later on, hire a good part-time CFO

A part time CFO will do all your administrative tasks for you, either themselves or by hiring someone to do it for them.  It's awesome.  Yeah, you probably think you want to learn all this stuff in order to be a better informed founder, but seriously, you don't.  Whether you understand, at this point in your career, how city and state taxes work is simply not important.  Give up some control, stay focused on product and users.

Don't obsess over vanity stuff

We still haven't made business cards for 42Floors.  Why?  Because we just haven't gotten around to it yet.  I prefer Bump anyways.  Or I use old business cards. Or I just grab the other person's card  and snap a photo of it using CardMunch.

There is a good time to learn all this stuff by the way.  When you're not actively doing a startup, go learn this stuff.  Read these books.  Make it a casual hobby.  Just don't think that getting good at this stuff will make you significantly more likely to build a great product. 

If you just HAVE to work on any of this stuff, click on any of the items in my laundry list at the top.  Each link is a snippet of help that should help you solve your problem quickly, though probably not perfectly.

That should be good enough.  For now.

Clemenza:  That Sonny's runnin' wild. He's thinking of going to the mattresses already.

Sonny:  No, no, no! No more! Not this time, consiglieri. No more meetings, no more discussions, no more Sollozzo tricks. You give 'em one message: I want Sollozzo. If not, it's all-out war: we go to the mattresses.

—The Godfather

It's time for 42Floors to go to the mats.  We're hunkering down.  It's go time.  My loving girlfriend has approved this.  My friends understand.  My family is supportive.  Getting a startup off the ground takes an almost superhuman effort.  It takes obsessiveness.  It takes 100% time commitment.  It takes tremendous focus.

For the past 9 months, I've been living the good life in San Francisco.  I've been working hard on 42Floors, but not obsessively hard to be honest.  I actually lead a fairly balanced life with a daily workout, reasonable hours and weekends mostly off.  That's not bad.  I've done a few extracurricular activities, most important of which was helping create NFTE Launch.  During this time, I've gotten my broker's license and learned a ton about my industry.  I've met with 100s of entrepreneurs and spoken by phone to almost everyone that contacted me through this blog.  It's a been wonderful time.

But it's time to go to the mats.

When we started FlightCaster and Openvote before that, we had to live with each other...because we didn't have enough money to afford separate rent.  We look back fondly at those times when 5 of us were living in a 3 bedroom apartment.  Yeah, we had no space.  Yeah, some of us slept on the floor.  Man, we worked our asses off during that time.  There's something magical that happens when you devote yourself to something with such intense focus that the rest of the world is forgotten.  It's not sustainable.  It may not be healthy.  But it's the single best way to launch a company.

So, the 42Floors crew talked this over and we all agreed that we wanted to go to the mats.  We're moving out of our respective apartments.  We're all switching to a Maker's Schedule.  We rented a house in Redwood City for 5 months for all of us to live in and work out of.  

We can't fucking wait.  While it'll be hard work and the intensity will get to us at times, we also know what makes going to the mats so special.  It's really an opportunity to perform at our absolute highest levels.  When's the last time you've done your best work?  How many times in your life have you worked at peak capacity?  How many hours a day are you really productive?  This will be the most productive time in our lives.  It's pretty cool.

You know what else is cool?  Our sweet-ass startup house!

When I saw this place on Craigslist, I knew that it was just made to be a startup house.  Check it out:

(download)

Click here to download:

VIDEO0063.3gp (7.97 MB)

(download)

Click here to download:

VIDEO0068.3gp (6.66 MB)

Pretty sweet, eh?!  Startup life may be really hard...but that doesn't mean it can't also be fun.

 

Find discussion of this post on Hacker News

***

 

 

And please come check out my new startup, 42Floors! 

We're fixing commercial real estate.  Forever.

Sign-up to learn more at 42floors.com, and like us on Facebook, and follow us on AngelList, and follow us on Twitter.

 

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

I'm Jason Freedman.  

I've got a sweet-ass new company: 42Floors.  

Previously, I did FlightCaster.

I welcome connections on Linkedin,  Facebook, AngelList and Twitter.

When I first heard about AngelList, I thought it would never work.  They had grabbed some of the top investors in the tech world and put them on a distribution list for entrepreneurs to spam?  How could that possibly work? 

And then we started hearing about a startup here and there getting a little funding from someone off of AngelList.  I couldn't tell whether it was bad startups finding dumb money or just personal connections orchestrated personally by Nivi and Naval.  Either way, I didn't take it that seriously.  I was in the middle of our FlightCaster acquisition; raising a round of funding was the last thing on my mind.  Whenever people asked me for fundraising advice, I was never down on AngelList, but I never remembered to bring it up.  It just wasn't relevant yet.

It is now.  Mark my words, 2012 will be the year AngelList explodes with traction.

AngelList is for real.  It's here to stay.  And it's going to totally change the way we all raise money.  I don't know if Nivi and Naval planned it this way from the beginning, but they've turned AngelList into Facebook for startups.  It's not just a funding list, it's a full blown social network specifically designed for social credibility in startups.

Before I explain, I'll give you the super quick primer on AngelList for those of you that haven't use it.

Startups go on AngelList and create a profile for each entrepreneur and for their startup.  The startup profile includes a very brief screenshot section, a place to post advisors, current investors, and some financial information that has privacy toggle settings.  Investors can create a profile that post their previous investments, their areas of expertise, and what types of investments they like to make.

So far, pretty simple stuff.  Well-executed and clear.  There are a bunch of other little features on the profiles like status updates, references, etc.  But overall, it's still very similar in content to Crunchbase.

The magic comes in how the social dynamics of AngelList are managed.  AngelList uses Twitter-style following instead of Facebook-style friending.  Anyone that wants to follow a startup or an investor can follow them.  We've seen this show before.  On Twitter, your follower count is a pretty significant indicator of social proof.  On Angel List, it works the same way. 

Having a few hundred followers is a way to signal that there is pent-up demand for information about your startup.  I think of it as priming the pump.  It's not as powerful as the social proof that comes with telling the world that some A-List investor just put money into your startup, but it's the signal that comes out earlier.  

In the pre-AngelList days, we used to accomplish this feat by creating buzz amongst investors.  As anyone that has done the Sandhill Shuffle will tell you, startup investing is an incredibly small and social community.  When we raised for FlightCaster, almost every VC with whom we met knew our story before we got to them.  Like most entrepreneurs, we stacked our meetings all at once so that our name popped up multiple times in VC chatter.  We met with 50+ investors during our pitch process...in two weeks.  It was the busiest week of my life.  It was also incredibly inefficient, very distracting to product development, and very risky to us.  We had no way of knowing if the timing was right, no insight into our level of buzz, no feedback loop on our accomplishments.

Now, with AngelList, you can show that pent-up demand online, through your follower count.  We put 42Floors on AngelList before we had even firmly decided on our product.  When we first posted our profile, we had only figured out our problem, fixing the broken process of commercial real estate, but we hadn't yet nailed a minimum viable product. Our profile is still super empty. All we really say is the problem we're solving.

We're not currently fundraising, but I'm having lots of great conversations with investors right now.  And this has become the most surprising additional perk of AngelList.

AngelList is a massive source of great customer development.

In building our commercial real estate product, we've needed to talk to lots of brokers, landlords tenants, real estate investors, etc.  Some of these people are hard to reach.  I keep posting to AngeldList each of my 'needs'.  As I've said before, investors are great at providing valuable introductions.  One, they like helping out and two, it's a way for them to prove their value-add as an investor without having to commit to cash.  

When we finally start fundraising, I'll use AngelList to broadcast who our early investors are to the rest of the investor community.   By that time, we'll have hundreds follows that have learned about our progress from day one.  This is how we answer Suster's call to invest in lines, not dots.

All of this means you need to start now!  If you wait until you're actually raising, you won't have time to build up a following and it won't work as well.  You don't have to have your investment deck ready yet.  You don't have to have your advisors ready yet.  Set-up your profile as fast as you throw your Launchrock page up.  As always on this blog, here are a few suggestions to get you started.  More to come as we experiment...

AngelList Reading

Thoughts on AngelList, "Social Proof", "Spray & Pray", & The Network Effects of Large Scale Investing — Dave McClure

"AngelList Fucking Rocks. Period.  it's the single greatest innovation in our industry in the last 5 years (aside from LinkedIn, Facebook, Twitter, & Quora) and it's great for almost all participants. and while social proof can be abused / misused, so can gasoline... doesn't mean you shouldn't fill up your gas tank and go back to riding horses."

Venture Capitalists Actually (Slightly) More Active Than Angels on AngelList — All Things D

"AngelList counts about half of the investors in each category as active participants. Active seed fund investors have taken 5.6 AngelList intros on average, active multi-stage VCs have taken 5.4, and angels have taken 5.

Of the VC firms, General Catalyst Partners has the most intros, at 64 spread among five partners. The rest of the top five are Atlas Venture, Bessemer Venture Partners, First Round Capital and Charles River Ventures."

Why would a seasoned entrepreneur use AngelList? — Quora

"It's the difference between going door-to-door to sell vacuum cleaners and placing an ad on Google. One approach is a pain in the ass. The other is fast, easy, efficient.

Or think of it like this: you do everything else online, why wouldn't you raise your money online? You put your code on GitHub. You put your servers on Amazon. You buy customers on Google. You market on Twitter. And you can raise your money on AngelList."

Is AngelList technically violating the general solicitation rules of Regulation D by sending out mass emails requesting investment? — Quora

"(i) AngelList is not soliciting investors in violation of Regulation D because they have a “substantial and pre-existing relationship” with all of the investors; and (ii) AngelList is not a “broker” requiring registration because they are not receiving a commission or being compensated for their assistance."

 I tried to go after cold money and make it warm. Instead, I should have gone after warm money and made it hot. — Jen McCabe

"AngelList is amazing. Worth it. Worth it. Well worth it. Do it. Be ready. Take time to prep and maximize your opportunity. Study how to hack the system, like any other."

Find discussion of this post on Hacker News

One of my favorite parts of the startup community is that we generally all acknowledge that we're not playing a zero sum game.    We create value by creating new markets and disrupting old, inefficient markets.  Sure, we compete against each other as well, but in general, the communal spirit of entrepreneurship is a rising tide that lifts all boats.

We need to do an even better job of supporting each other though.  And more so than just with introductions, helpful blog posts, advisorships.  We need to support each other on a personal level.  We need to acknowledge that almost every entrepreneur goes through startup depression at some point.  And most of us go through startup depression quite regularly.  

I go through it all the time.  During FlightCaster, it hit me several times.  The worst of it was 12 months into the company.  As a team, we were struggling on lots of fronts.   Our business development was going slowly, our complex prediction system kept breaking, and our team was starting to argue.  We weren't getting enough users to our site.  Paul Graham warns all YC companies that this period will come.  He calls it the Trough of Sorrow:

Oh man, it was the worst.  I fought with my cofounders, who also happen to be some of my closest friends.  We had heated meetings with our investors, trying to explain why things were not going smoothly.  Not only could I not fix everything, many of the problems were my own fault.  I could feel my team starting to doubt my leadership.  I couldn't blame them, I was too.

On the inside, I didn't just feel bad or sad or stressed.  Worse, I felt empty.  Startup depression is like running an ultra marathon on no sleep.  It's the lack of energy that is so tough to overcome.  It sucks.  I didn't approach each day with creativity and endless passion.  It was just hard.  And it was so so tempting to give up.

And I would give up.  I remember those mornings  when I came into work late.  I would wake up at normal time and just not get out of bed.  Maybe I'd watch reruns of the Office or mindlessly browse Reddit.  I'd mope around my apartment wanting anything but to go to work.

This is startup depression.  It happens.  It happens to all of us.  We get it and deal with it in different ways, but we all get it.  There's no way to avoid it in this line of work.  Entrepreneurs choose this life and the rollercoasters are very real.

I have emerged from every one of my startup depressions just fine.  Sometimes, it lasts days and sometimes it lasts just a few hours.  I always come away stronger and I've learned a lot in the process.  I want to share a few of the things I've learned.  

How to Obliterate Startup Depression

Get help from your cofounder
Max Levchin of Paypal and Slide fame just spoke at Y Combinator's Startup School.  He talked fondly of the time Peter Thiel, his cofounder at Pay Pal, told him straight up that everything would be fine.  They were in the midst of a funding round going south and Max was losing faith.  With a few timely comments and rock solid confidence, Peter put Max on his shoulders that day.  That's what cofounders do.  I would never have made it through FlightCaster without my cofounders' support.  Cofounders need to support each other during the down times.  It's perhaps the single most important task your cofounder can do for you.

Get a startup advisor
In a previous post, I talked about the difference between a strategic advisor that helps you raise money by lending credibility and a startup advisor that helps you navigate all the small shit.  A startup advisor that is only 12-18 months in front of you on the path will know exactly how you feel.  He'll be able to tell you honestly whether everything will be alright.  Sometimes it will be, sometimes it won't.  But you need an outside perspective to help you see the difference. Want to know whether you have a great startup advisor?  If you haven't gone to them during your down moments, than you don't have one.  Get one.

Invest in your own health
The single greatest perk of the company that bought FlightCaster was the health program. They had a nutritionist on staff that bought all healthy foods and an on-site gym that had an incredible communal workout program.  Check out the video I made for them while there.  You may not be able to afford an on-site gym for your startup, but you can still invest in health. Create good habits when things are going well and stick to them when things go south.  Right now, I go climbing every Tuesday and Thursday morning with an old friend.  No meeting is ever scheduled during that time.  It's perhaps the most important standing commitment on my schedule.

Be open with your community
Too many of us fall victim to startup bravado.  We always portray our startups as unstoppable successes.  I hear it all the time when I talk to people.  The first 10 minutes of a conversation are about how great everything is going.  If I stick around long enough, we finally let our guards down and admit just how much we're struggling.  Communities like Hacker News and Y Combinator can be daunting because we witness such success from our peers.  It is intimidating.  However, if you're honest within a community like this, you will always be impressed by the response.  Check here, here, and here for great examples.

Be conservative in other parts of your life
With a startup, you tie up most of your net worth in a single, illiquid stock.  That stock is heavily correlated with the stability of your salary, your availability of healthcare, and your mental state.  For this reason, you should not have any risk in the rest of your finances.  I keep all my money in an FDIC-insured bank account.  Sure, I would like to make a better return, but I can't take the risk of compounding my losses if the markets tank.  Startup life is hard enough already, don't lose your money with optimistic investments.  Money troubles is an incredibly efficient way to trigger depression.

Create company rituals
You need some way to break free as a company when you hit the seemingly endless Trough of Sorrow.  One of our traditions at 42Floors is winning or losing each day.  Some days we lose.  We're open about it.  A few weeks ago, we got chewed up by a potential investor.  We were all down on it.  As we were moping around the office, I sent everyone home.  We lost that day.  Tomorrow is a new day.  And we celebrate the fuck out of the days we win.  During my first company, I never celebrated our first term sheet because I didn't want to count my chickens.  That was stupid.  A term sheet was a huge fucking accomplishment!  And by the time we signed definitive documents on that round, we were so chiseled that we felt beaten up.   At 42Floors, we celebrate every day that we win.  Right away.  Whether it be a term sheet, a code push, or a happy user — wins should be cherished.  You never know how long it will take to get another one.

Get your house in order
During FlightCaster, I moved apartments during our funding round.  Wow, that was horrible.  In the midst of gut-wrenching highs and lows, I also didn't have a stable place to live.  Fight the startup battle at full strength.  There's nothing better than going home to great roommates, caring friends, and a loving significant other.  I joined a communal ski house when I moved out to the Bay Area.  My favorite part about my ski house is that no one there cares about technology or startups.  We don't compare investors, we don't talk user traction.  It's awesome.

Talk openly about depression
Don't be afraid of the word.  Depression is not some word to be whispered under your breath or handled with kid gloves.  Getting depressed doesn't make a person weak.  It doesn't mean that someone will be unsuccessful.  We all have depression at some points.  We also all have jubilation at some points.  The high and lows come as a package.  You rarely get one without the other.  I talked extensively with an old colleague about the ways we each dealt with depression.  It's much easier to battle it when you're not hiding it.  And if you need professional help, go get it.   Whatever you do, don't bottle everything up inside.

Of course, you can't really obliterate startup depression.  But you need to have the mindset that  it's beatable.  You should treat it just like you would any user acquisition problem or business model challenge.  Create processes to solve it.  If you don't treat it as a tangible problem that needs solving, you'll be like a toy boat floundering in rough waters: helpless to control your own fate.  And with startups, rough waters are always on the horizon.

We're getting closer and closer to the launch of 42Floors.  I can't tell you how excited I am to share what we're doing with all of you.  I really think we have a chance at fixing commercial real estate. I'm also nervous.  I call the period we're in now Delusional Optimism.  All of our ideas look gorgeous in Photoshop.  No customers have left us.  We haven't run out of money.  We haven't faced bad press.  We haven't had users choose the back button over the sign-up button.  No depression, no problems.  Delusional Optimism is the best.  And it can't last. 

Shit's about to get real.  Things will get tough.   Bring it on.  We're ready.

In my first company, I had built a polling application that was doing decently as a social website on college campuses and as a Facebook app.  We were working hard to think of new ways to acquire customers...classic B2C type stuff.  We had some connections to IBM and we started talking with them about how we could sell them on our platform.  Somewhere along the way, we thought that this app could be a great fit for enterprises as well.  Some kind of internal productivity app.  

Let me repeat that.  We were going to sell apps to IBM.

IBM toured me around the company with tons of conference calls.  I made proposals, calculated estimated costs, built mockups.  I worked my ass off.  I reached out to my advisors for help on the sales materials to make them perfect.  As money in my company was dwindling down, I stopped paying myself.  I was on the verge of closing a deal with IBM and optimistic that we would make it through.  We eventually did run out of money, so I funded the company a few more months on my own.

Finally, I pushed for a go/no-go meeting with IBM.  After months of talking and lots of excitement, my IBM contact said they were still interested by wouldn't have a budget for the product.  They said check back next fiscal year.

A sad ending to my little company.  We struggled another few weeks on our B2C strategy.  But we were done.  And it was my fault.

Not because I failed to close IBM.  I know now that we were never going to close IBM.  IBM doesn't do deals with startups.  They were happy to give an eager young entrepreneur a bit of their time, but they never had any intention of writing a check for our services. I should have never gone down that road at all.  Who knows if we would've been successful with our consumer apps, but I can say for sure that we would have had a better chance of success if we hadn't gotten so distracted with IBM.

Now, I know as an entrepreneur, I'm supposed to break down walls and do things that others don't think is possible.  But seriously, was this really the best use of our time?  I had no experience with enterprise software or B2B sales.  Our product wasn't even really a good fit.  AND IBM?!  With 20/20 hindsight, I can't think of a worse company to sell into.  They're big.  They're slow.  And wait for it...they're a fucking tech company!  Why would they ever need our help?

To be clear, this little strategic misstep was 100% my fault.  I pushed for it.  I was naive.  And I paid the price for my suckiness. 

But I got so much help along the way.  Advisers that proofed my proposals, answered my questions.  They mentored me.  They cared about me and wanted me to feel good.

This is hard to say, but I wish they had believed in me less.  Encouraged me less.  Supported me less.  I wish someone, anyone, had put a stop to my foolish ideas.  I'm incredibly confident and stubborn.  I believe I can do anything.  So additional support is kind of wasted on me.  What I really needed is someone that could break through my confidence and tell me straight that I was being an idiot.

It is possible to be this type of adviser.  I now ask better questions of my advisors and explicitly welcome their roughest criticisms.  I gravitate towards those advisers that rip into me with skepticism and challenging questions.  One of my oldest friends has been that adviser for years.  He never believes a word I say.  He pushes me to be better.  I love that.