Chapter 1 Getting Started
- Deeply understand real customers and problems, solve the problem
- Disciplined Entrepreneurship by Bill Aulet
Chapter 2 The Team
- Have a co-founder, avoid burnout.
- No more than 6 until product market fit ($1mm in recurring revenue).
- Morale, Communication and Organization, Efficiency.
- The first product should always be viewed as prototype. For feedback only.
- Startups don’t usually fail because they grow too late, usually because too early
- Scale to market share – Marketing, Sales, Customer Success, DevOps, Engineering, Product, non-tech (Recruiting, Training, HR, Finance, Legal, Office)
- Meeting overhead. 25 people system works for 25,000.
Part II Individual Habits
Chapter 3 Getting Things Done (GTD)
- Process every item in inbox. if <2 minutes, do it immediately, else place it in following list: Next Actions, Waiting For, Someday/Maybe, Agenda, Projects, Review, Goals
Chapter 4 Inbox Zero
- Email, text, Slack, CRMs, other tools. Inbox Zero everyday. Check twice daily.
Chapter 5 Top Goal
- Schedule two hours each day to work on Top Goal only, every single work day. Period. No emails, text, calls and messages.
- Do the important things first.
- Start from 30 minutes, increment to 2 hours.
Chapter 6 On Time and Present
- Critical to be on time
- Be present, composed, prepared, focused.
Chapter 7 When you say it twice, write it down
- twice -> yet again, write it down, say, wiki.
Chapter 8 Gratitude
- Confirmation bias. Ask “what is wrong/right here?”
- Fun, feeling good. Compliments work
- I am grateful for ___. Doesn’t have to be hard or painful.
Chapter 9 Appreciation
- Outward extension of gratitude. Let them know.
- Recipient feel better, connected, appreciative, view recipient more positively.
- One hour each week for follow-ups and outreach.
Part III Group Habits
Chapter 10 Writing vs Talking
- Require that anyone who wants to discuss an issue write it up, along with the desired solution, ahead of time
- extraordinary thorough analysis vs draft (invite comments and questions), write out responses prior to the meeting.
- the extra effort by one person creates a net savings in time and energy across the whole group.
- Do no allow people to bring up issues that they have not already written up.
- Require all participants read and comment on each other’s updates and issues.
Chapter 11 Decision Making (Getting Buy-in)
- invest emotionally in that decision.
- make people feel they are part of the decision, their input contributes to the final outcome.
- 1. manager makes the decision, announces it to the team, and answer questions. (Pro: little time. Con: little buy in. No collective knowledge and experience)
- 2. manager creates a straw man, shares it with the team, invites team to give feedback, facilitates group discussions, determines final answer. ( Pro: more buy-in. Some benefit of collective wisdom. Con: more time)
- 3. manager invites team to a meeting where dilemma is discussed from scratch with no straw man. Manager and team equally share ideas. Final decision is determined by consensus if possible. (Pro: most buy-in, collective wisdom. Con: takes the most time)
Chapter 12 Loudest Voice in the Room
- Elicit people’s truest thoughts
- People assume that as CEO you have more information than they do, perspective probably more correct.
- not to “tip your hand” beforehand, have people write down their vote and/or thoughts prior to sharing your perspective.
Chapter 13 Impeccable Agreements and Consequences
- cause of inefficiency – sloppy agreements. => spreading virus of unproductiveness and decreasing morale. Antidote: Impeccable Agreements 1) Precisely defined. 2) Fully agreed to by all relevant people.
- Precise – successful follow-through can be judged by third party
- Must be consequences for breaking agreements.
- Apologies not required, commitment must be committed to.
Chapter 14 Transparency
- Share all relevant information, both negative and positive. => great comfort, use their brilliance and talents to adapt.
- Excluding 1) Compensation. 2) Performance reviews.=> heated debates, relative comparisons, shame => big distractions.
- Unless entire company trained in radical transparency.
Chapter 15 Conflict Resolution
- Repeat what is said (summarized, of course)
- People stop repeating once repeated after (summarized)
- to resolve conflict, need to get each person to state their deepest, darkest thoughts, and then prove that each has heard what the other has said
- Step 1: Get Person A (the person with less power in the relationship) to state their deepest darkest thoughts about Person B. (Supply thoughts, be dramatic, if you were in their shoes, A will guide you. each time, go further, until A has stated their raw, unvarnished thoughts around anger toward person B)
- Steer them back to statements of facts if they become judgemental.
- Step 2: Get Person B to confirm that they have head what Person A has said.
- ask B to repeat, summarize the key points, until person A answers “I feel heard”
- Step 3: Switch roles
- Step 4: Walk down the line of emotions
- a moment of deep understanding. Fear, sadness, joy, excitement.
- respect for each other, even if they still do not agree with the others’ positions.
- Step 5: ah ha moment of understanding, seal it with a physical connection, a hug, a handshake, a high-5
- Step 6: co-create a plan so that misunderstanding and acrimony do not enter the relationship again.
- Step 7: Write down the verbally agreed upon plan.
- Next actions, a responsible person and due date.
- check-in time for all to view and ensured actions have been completed.
Chapter 16 Conscious Leadership
- more interested in learning than being right
- recognizing when fear, anger, sadness have gripped our though processes.
- shifting back to a state of curiosity where we are receptive to all ideas and creativity, even if they contradict our own.
- It is in a state of playful curiosity that truly elegant solutions are achieved.
- The Drama Triangle
- – We believe that we know the right answer, and try to convince others to see our point of view. (not able to see other perspective, no full information)
- – We never truly share our deepest, darkest thoughts and feelings for fear of offending others. (others do not appreciate our perspective, because we haven’t fully shared it)
- create an environment where ideas can flow freely.
- hero: “I temporarily solve the situation by ___”
- victim: “I am negatively affected by this in the following ways: ___”
- “I am powerless to permanently solve this situation because: ___”
- villain: “I blame <name> for creating this situation by doing <action>”
- continue the cycle until no one left to blame => brainstorming solutions.
- easy to come up with elegant and complete solutions once all of the “worst” information is on the table, and nothing remains hidden.
- highly recommend using a knowledgeable outsider to facilitate the meeting, at least for the first time. keep the team on script. or will be messy.
- key to success. consider their interests in your decisions.
- Joy Vs Fear
- they realize fear was their primary motivator, once fear is gone, their life improves, business suffers.
- Be motivated by joy. Best of all worlds. Business thrive, life amazing.
Chapter 17 Customer Obsession
- Not making a product – Solving a customer problem.
- Continually live the customer problem. Sit with the customer, ask, observe, regular and constant basis.
- Focus should permeate every part of the company, sales to engineering (especially, insist engineers regularly join customer support and sales calls).
- Sales – customer centric mindset. Only you know how feasible each solution is.
- listen to customers’ pain, they will trust you to decide which solution best erase that pain. Build trust.
Chapter 18 Culture
- Unspoken set of rules.
- principles, basis of culture as a guide to hiring and firing.
- If people have fun, they spend more time, energy and awareness at the company. => better problem-solving and collaboration => stronger company, more value. Events, hangouts(outside of work), invites (don’t require)
- Key metric is output, not hours. Inspire and motivate.
- create and track goals, habits, agreements, KPIs openly and receive and provide feedback, and fun. => motivated to work hard. (sense of direction. contributing)
- Lead by example.
- particularly positive benefit. bond organically and with a wide range of people, extends hours. > simple pre-tax calculus
- Interact, no electronics at the meal table.
- = “lobbying to gain personal benefit”, = poison for a company.
- have a written policy about as many situations as possible, particularly around compensations, raises, and promotions.
Part IV – Infrastructure
Chapter 19 Company Folder system and Wiki
- wiki for documents, on-boarding process.
Chapter 20 Goal-Tracking Tools
- Commit to a systematic goal tracking system to maintain focus and prevent clutter.
- Individual: Keep it simple. Evernote or Omnifocus.
- Group: Asana, Trello, Betterworks, 15Five, Lattice.
- Never assign someone an action without them agreeing to it verbally or in writing.
- Separate tool for tracking individual actions. Group tracking tools more overhead.
Chapter 21 Areas of Responsibility (AORs)
- “Tragedy of the commons”. Shared responsibility doesn’t get done well, or at all.
- Group tasks into categories, and assign each category to one – and only one – person.
- AOR list – compancy directory, ensure no function falls through the cracks.
Chapter 22 No single point of failure
- write down all processes. firm-wide wiki.
- cross-train a second person for each role. have a backup.
Chapter 23 Key Performance Indicators (KPIs)
- You can only manage what you can measure. – KPIs
- Finance – Monthly cash burn; cash in the bank
- Sales – Monthly Recurring Revenue (MRR)
- Engineering – Percentage of tickets closed
- Recruiting – Percentage of offers accepted.
- Track them religiously, make them available company wide, daily.
- Track counter-metrics to provide context.
Part V – Collaboration
- Objectives and Key Results.
- 1. Setting vision and goals for the company, each department, each individual (quarterly)
- 2. Communicating that vision and those goals to every team member.
- 3. Tracking and reporting progress towards those goals (weekly)
- 4. Elicit feedback from all team members on what is right, (much more importantly) not right, ought to be changed.
- Hire a COO to implement and run the system.
- Hire a x-CEO to come in as “1 day a week CEO” to implement this system. 6-8 weeks. run yourself for 2 weeks, run it yourself going forward.
- System > individual superstars. (GS warriors>Cleveland, Facebook>twitter)
Chapter 24 Meetings
- Quarterly goals, weekly team, weekly one-on-one, company-wide, office hours.
- Overhead – 20% of standard work week.
- Submit issues, updates and feedback in writing prior to the meeting. Massively increases information flow, allows for consensus to be reached.
- Weekly Team Meeting
- – accomplishments, simple yes/no.
- -department updates.
- -issues, solutions.
- -feedback to team leader and other members.
- Weekly One-On-One Meetings
- Goals — Successes, setbacks, measures
- Updates — KPIs
- Issues — Tools needed
- Feedback — what did you like, propose change
- Manager, elicit negative feedback about your or company’s actions. resolve the issues
- If there is a serious issue to discuss, job dissatisfaction, then use your Office Hours to fully address the issue.
- Merge team and one-on-one if team is small, be careful about giving negative feedback in a group setting.
- Recommend moving to a culture of radical transparency. Timing saving.
- Radical transparency requires explicit buy-in from every team member, and training how to do it effectively.
- Company-Wide Meeting
- Contrarian Office Hour
- anyone can come introduce an issue
- Calendar Cadence
- Makers (engineers) need long stretches of uninterrupted time to be productive, whereas managers are most effective when meeting. Compromise to schedule days when no meetings are allowed.
- 1 day internal, 1 day external, 3 days no meetings.
- Conduct phone interviews, lower number of in-person interviews.
- Meeting Leads
- Ruthless, stick to the timeline. or resentment.
Chapter 25 Feedback
- Receiving – frequent, transparent feedback is critical for building a strong culture and a thriving business. Instrumental for building trust => communication.
- Critical feedback should be cherished. open up the the door to negative feedback, then your team will feel comfortable. (<- scary to criticize someone who has power over you)
- In the dark about company’s problems.
- Gossip => operations grind to a halt.
- best talent leave.
- Ask for it (cherished), listen to it (don’t interrupt), act on it (louder than words).
- Giving (in person > video > audio, watch reaction, mollify anger)
- DO NOT use 1-way communication method (email, text, voicemail) to give feedback, unless it is 100% positive.
- Ask for permission.
- State the trigger behavior or event.
- State feelings (hard).
- Strive for an agreement on a new way to behave or interact.
- Painful at first. Noticeably happier and more productive.
Chapter 26 Organizational Structure
- To scale, CEO, Head of Product, Engineering, Sales/Marketing, Customer Success, Operations (HR, Finance, Legal and Office)
Part VI Processes
- dealing with outside world – investors, recruits, and customers
- processes – fundraising, recruiting and sales, only differs in content of exchange.
- Fundraising – selling equity and debt for capital.
- Recruiting – selling employment opportunity for time and effort.
- Sales – selling solution for money.
- build trusting relationships with decision-makers.
Chapter 27 Fundraising
- Pick a partner, not a firm
- add value, good to work with.
- Introductions, use the Triangulation Method
- Find 3 to 5 people in your network to recommend. Stack them within a week.
- Traditional Method (Pitch and investment firm with your story.) and the Relationship Method. (build a trusting, friendly relationship before discussing what your company does, emotionally driven)
- Build trust and like (ask them about themselves, genuine curiosity about their lives, prove that you are listening, and remember, appreciate them). Create a bond -> willing investor.
- Try the relationship method to see if it is more effective than the traditional approach.
Strengthening the Relationship
- 3 to 5 rounds of contact will solidify the relationship.
- make it a practice to regularly go through your contact list and send out messages of appreciation. => massive goodwill.
Sell Yourself, not your company
- gain investors for life – follow through every pivot, company.
- Credit (others), Hard Work, Vulnerability (most difficult), Duty (noble motive), Gratitude (proud and thankful)
- Inflection points include
- hiring a capable engineering team
- first 3 paying customers
- exceed $1M in annual recurring revenue (product market fit)
- hiring a capable sales team
- exceed $5M in ARR
- Hiring senior managers for all departments.
Simple Agreements for Future Equity (SAFEs) vs. Priced Equity
- SAFE (convertible note, legal fee 10,000) used when priced equity (total > $2M, preferably $5M, institutional investors) rounds not possible (legal fee $100,000)
- When you start your company, you would raise your initial money of $2-5M in a SAFE.
- When you hit product-market fit, you raise an additional $2-10M in a Series A priced round and the SAFE converts into this round.
- You then immediately open up a second SAFE, and leave it open until you have raised another $5-10M.
- Once you hit $5M in annual recurring revenue, you raise a Series B priced round of an additional $5-20M and the second SAFE converts into this round.
- You then open a third SAFE. And so on.
- Retain control, prior to having equity investors.
- Founder Friendly. Prior to equity investors. Pay themselves low salaries, but get enough liquidity to not worry about long term commitment
Carta (formerly eShares)
- Carta or just spreadsheet.
- determine the correct exercise price of any options that you issue.
- 10-20% unallocated option pool AFTER the equity investment. 40% dilution. Just be aware.
Chapter 28 Recruiting
- Efficiency is key. Spend as little time as possible with candidates you don’t hire (quick evaluation)
- Spend as much time as possible with the candidates you want to hire (building a relationship, onboarding/training)
- Before Recruiting
- 90 day roadmap. Goals for onboarding. Brings excitement.
- Build a Relationship
- Use the same fundraising techniques.
- Cash Equity Mix.
- 1. Discover the market compensation for the position (role and seniority)
- 2. Discover the amount of cash that the new team member would need to live comfortably (housing, food, transportation, child expense)
- No need to match market, not in cash as the larger companies, but lesser cash, plus equity to bridge the difference.
- Making the Offer
- Let the candidate state their requirements.
- Pre-agree in full detail. The response will be resoundingly positive.
- Make it ceremonial, fun and memorable.
- Give onboarding even more attention, time and energy. Focus your energy there.
- checklist to be fully effective. assign a buddy.
- Morale-killer, financial drain cannot afford.
- Create a written PIP (Performance Improvement Plan) that states objective milestones and dates over a 7, 30, 60 and 90 day period.
- Meet weekly to check progress against the written milestones.
- At 30 days, missing one milestone, let him go, same for 60, 90 days.
- If do fire, put yourself in their shoes, it is a devastating event emotionally. A real setback financially.
- Help the person find their next job, and quickly. Give them a severance package. 1 month minimum, realistically 2 – 3 months.
- Question yourself “what can I do to make sure this doesn’t happen again?”
Chapter 29 Sales
- Build trust; identify customer’s specific pain; sell results, not features.
- Be explicit about not talking about your company.
- Ask for a very limited amount of time, so that the burden is low.
- invite them to a purely social event.
- Customer Development
- 1. know what the customer is looking for, present your solution in those terms.
- 2. the customer know that your proposed solution is tailored.
- 3. weed out customers that aren’t a good fit for your product and save time to focus on those who are.
- goals, challenges, solutions to obstacles.
- Guide the conversation towards the specific pain you are solving.
- Ask open-ended questions.
- Sell results, not features
- only care about business results. Focus on the why, not how.
- DocuSign, enabling virtual signatures, changed their pitch to “… in under half the time that they currently take”.
- Integrity & The Dangers of Overselling
- Do not oversell. Ethically wrong. Be honest about what you can and cannot do.
- Development team. stress as result of overselling.
- Culture, of overselling is hard to go back.
- Overselling is a form of laziness, instead, take time to build trust.
- Building a sales team & pipeline
- only when initial version of product market fit. renewing contracts.
- You have figured out what you are selling and who you are selling to.
- grow onboarding process, customer support.
- Structure of a sales team
- Qualifiers (Sales Development reps). Generating leads -> Closers. (Outbound, Inbound Reps)
- Closers (Account Executives)
- Farmers (Customer Success) tending to existing customers, renew, increase spend. Qualifiers and farmers first.
- Common misconceptions
- overlooking integrity and culture fit. (not heartless mercenaries)
- not investing in traning
- must hire senior AEs with a track record.
- Solo contributor (AE) vs. manager (VP Sales)
- Lead generation
- Seeds (word of mouth). Pro: close fast, high win rates, best customers: Cons: really hard to proactively grow them.
- Nets (marketing). Pro: scalable and cost effective. Cons: serious costs and time maintaining this channel.
- Spears (outbound reps): email or linkedin mining. Hyper targeted. “quality over quantity”. Pro: predictable, immediate results. Cons: requires full time rep and not profitable if average annual deal size < $10,000.
- Qualifying leads & handoff
- A qualified lead is one which
- feels the pain point that your product is solving.
- has the desire to solve that pain point.
- has the power to purchase your product.
- AEs mark the lead as “Qualified” in the CRM, not the qualifier.
- Average deal size, new revenue per month, average sales cycle length, number of SQLs per month, cost per lead, CAC (customer acquisition cost), Churn rate.
- Remember to create counter-metrics as well.
Chapter 30 Marketing
- Defined as understanding the problems of customers. (Strategic Marketing)
- Solutions offered in the marketplace (Competitive Analysis) -> Choosing Target Beachhead
- Create a solution that more effectively the the problem (Product Management) -> Product Market Fit
- Letting customers know that your solution exists (Tactical Marketing) -> Growing Sales.
- Strategic Marketing (Segment, Target, Promote)
- disrupt a massive legacy market.
- greatest risk of a startup is not moving too slowly in dominating the entire marketplace, but rather they spread their scarce resources too thin and ended up securing few or no customers at all.
- Needs to be 10x better than legacy solutions to switch.
- Focus, find lowest hanging fruit. Get a few customers. Then upwards.
- Disciplined Entrepreneurship
- Segment the market into customer types
- Target one of these segments
- Promote awareness (find where the eyeballs are)
- Who would benefit, who would pay for access.
- low cost of acquiring, lifetime value high, total addressable customers is large.
- for each segment
- – what is the estimated cost of acquiring a customer from this market (CAC) (F500 > SMBs, offline > online)
- – how do customer pay, lifetime value (LTV)
- – TAM (Total Addressable Market) of this segment
- – Aligned with your values? Similar to hiring an employee.
- ideal market LTV > CAC, TAM -> $10 – $100M in ARR.
- Primary market research.
- Gain context, uncover regular problems.
- Encourage flow of ideas, not pre-existing idea.
- Document market research.
- Stay away from largest TAM for a while.
- 1. sell to everyone that comes through the door.
- 2. Be blinded by TAM without considering CAC, LTV. “China Syndrome”
- 3. Customize your product for every individual customer. Engineers stretched thin, growth rate slow.
- Customer buying unit.
- User Persona
- User Life Cycle/User Journey
- “fake it until you make it”
- All of your promote decisions should be based on your Segment and Target analysis. Customer focus is key.
- Tie marketing spend back to quantitative results. ROI.
- Industry conferences, influencer marketing.
- Your competitors have a lot to teach you. Respect and learn.
- Use their product. Note down everything that they do better than you and add those things to your product roadmap.
- Talk to their customers. same as above.
- Understand their pricing model.
Product Market Fit
- Customers will vote with their wallet.
- Business has budget set aside to test new products, until full long-term contract.
- Go not go beyond 6 until PM fit.
- Don’t hire a PR agency.
- Think like the journalist.
- Get 3 articles in a week
- PR hack reply.io
- contribute to relevant publications.
- PR on a paid basis. Discover where your target customer eyeballs are.
Part VII Departments
Chapter 31 Executive
- Hire chief of staff, smart, organized, machine-like, non-technical person.
- At least 2 years out of college, trained at top tier consulting firm or investment bank.
- Take tasks off the CEO’s next action list. (except her zone of genius)
- transition to COO.
- Product manager most important. Most unicorns started by technical founders where at least one has the ability to play the role of PM.
- has social skills, technical enough to know what can (not) be done.
- Technical knowledge is very helpful, not a deal breaker (especially if good relationship with the technical lead)
- 1. get to know actual customers
- 2. lead the product meeting, bring together engineering, sales and marketing to determine feature list. high value low cost > high value high cost > low value low cost > low value high cost.
- 3. map out wire frames and specifications. Engineering has a visual and functional picture of what they need to build. Specific only the end point.
- Product must have final authority in the discussion and feature prioritization. Report to CEO. (if for some strange reason, not possible, report to sales and marketing)
- Complete the End User Profile, show in writing how this feature will solve a significant problem for the customer.
- A good engineer is often not a good engineering manager.
- Architect, Project Manager and Individual Contributor.
- Management is a rare skill, learned by observing others who do it well. It’s worth it.
- Coordination challenges -> net drag on productivity.
- Use tracking tool, JIRA or a light weight tool.
Sales, Marketing, outlined in the Process section
People, Human Resources
- learn the HR laws (not recommended) or outsource.
- 1. Online broker zenefits
- 2. Use a PEO (e.g. Sequoia One), until company reaches 100-150 people in size. (Far better pricing on benefits (insurance), PEO is also expert in compliance)
- Start with PEO when benefit is highest, the beginning.
- Track revenue, expense, asset, liability. Quickbooks Online.
- Like legal, best done onsite.
- A outsourced CFO. (1 day per month) accounting + CFO.
- Negotiating and documenting investments.
- Establish hiring and firing procedures.
- Negotiating and signing customer contracts. (NDA and commercial)
- Find specialist boutiques and solo practitioner.