30 lessons on startups I’ve been taught and you should master too

Jonathan Berthet
Sep 4, 2018 · 7 min read

In my early career I had the amazing luck to be exposed to CEO’s, VC partners, and other great minds who stressed some truths I thoroughly noted to learn from them. Looking back at them today makes me nostalgic and above all grateful. I improved so much at their side I can’t imagine what would be my life without them. This article is my way to say thank you.

Don’t be surprise by the unsorted format, they directly come from my personnal notes and I felt like I must let them untouched as a souvenir. I hope you’ll appreciate and master them to become as great as they are.

  1. Launch your product right away; for the simple reason that this is the only way to fully understand customers’ problems and whether the product meets their needs. Surprisingly, launching a mediocre product as soon as possible, and then talking to customers and iterating, is much better than waiting to build the “perfect” product. This is true as long as the product contains a “quantum of utility” for customers whose value overwhelms problems any warts might present.
  2. Do things that don’t scale. Learn your customers’ needs by talking to them, do things manually and by yourself. Scale only when you’re perfectly aligned with the market.
  3. A 90% solution to a real customer problem which is available right away, is much better than a 100% solution that takes ages to build. Anyway, even if you disapoint 100 people, you still have the entire world to do better. And after all you have nothing to lose, because who knows your brand ?
  4. Stay focus. You’ll be invited to an extraordinary amount of events, challenges, etc. And it’s a pleasant trap you can spent hours in. This is what we can call “fake work”. Rule: if it doesn’t get you new clients, more turnover, or skills you must master, just skip it. Seriously.
  5. You choose your clients as much as they choose you. Some of them will make you lose time for few or no returns. Maybe only 10 will fall in love with what you do. Focus on them, they are your target. Study them and get viral. If you don’t have the chance to find out really early this subset try to reach diversified customer segments with small amounts and see who are the most enthousiastic then focus on them: that was Pinterest strategy.
  6. You should take extraordinary measures not just to acquire users, but also to make them happy. A very common trap founders fall into in the beginning: They want so much to seem big that they imitate even the flaws of big companies, like indifference to individual users. This seems to them more “professional.” Actually it’s better to embrace the fact that you’re small and use whatever advantages that brings.
  7. Moreover by doing it you’ll create from the begining a culture where taking care of your clients is a priority. And that’s a damn important thing when your business relies on churn rates.
  8. Talk to your users, build what they want, and iterate quickly. Growth is a natural result of doing these three things successfully.
  9. You either provide a better experience, a better product, or a better price. You can have sometimes 2 of these 3 pillars but that’s it. Chose which one you want to prioritize when you do your strategy plan.
  10. Best startups are those which prioritize customers ‘experience from day 1. You won’t have the best product or the best price at first, but if you focus on experience you can gain loyal customers and buy you time to do better. They even sometimes pay for you to do it.
  11. It is vital that very early a startup choose the one or two key metrics it will use to measure success, then founders should choose what to do based nearly exclusively on how the task will impact those metrics.
  12. Sometimes, not always, if you can raise money, raise money. Even with the wrong investors (in that case be sure to get rid of them at the next fundraise). Why ? Because you enter a club where somebody did look at you and it gives you credit to the person who just looks at your deck.
  13. Target a giant market but start small. It allows you to grow and show the world what you can do. Pay attention to detect a subset. Set this subset on fire and then add features to conquer the rest of the market.
  14. If you have to choose between the subset that will sign up quickest and those that will pay the most, it’s usually best to pick the first. You are a startup, you need cash now, not in a year when you’ll be dead. Now !
  15. Among companies, the best early adopters are usually other startups. They’re more open to new things both by nature and because, having just been started, they haven’t made all their choices yet. Plus when they succeed they grow fast, and you with them.
  16. When you present your TAM a very useful trick with VCs is to mention the possible extensions of your market. After all you’re here to break barriers, therefore you can pick up clients from adjacent markets. E.g Uber didn’t just adress the taxi market, new habits created made this market much bigger in reality.
  17. The go to market is getting shorter. You can’t spend too much time preparing. Execute because competition is fierce. Prioritize the project which is not afraid to rush with a cool head.
  18. You can’t avoid doing sales by hiring someone to do it for you. You have to do sales yourself initially. Later you can hire a real salesperson to replace you. Because at the beginning sales make you learn what your customer wants. And this is the kind of CEO you want to be even if you’re not comfortable with this.
  19. You don’t raise to buy you time to postpone your go to market (unless you are a biotech). You raise to strengthen an existing business with existing clients and because you want to dream bigger.
  20. If you raise, you must have a goal. A precise use of this money. In parallel don’t raise for less than 18 month of cash burn. 1 year to work as hell and produce results, the other 6 months to raise again.
  21. You can’t focus on pricing if you’re working on your product.
  22. Burn rates by themselves are not scary. Burn rates are scary when you scale the business up and the model doesn’t look any better.
  23. The best companies already planed the consequences of the second round when they raise the first one, and can be sure to reach it with a buffer. Don’t raise too much during your round even if it’s tempting, otherwise if you don’t match your business plan the only thing you’ll get is a maximum dilution at the next round (=downside round).
  24. If you hold yourself to the standard of making a product that is so good people spontaneously recommend it to their friends, and you have an easy-to-understand business model where you make more than you spend on each user, and it gets better not worse as you get bigger, you may not look like some of hottest companies of today, but you’ll look a lot like Google and Facebook.
  25. Usually, my answer to founder questions such as “how should I be spending my time?” is spectacularly simple. Choose a key metric to track and focus exclusively on making that metric grow. When deciding what to do, choose the activity that you believe will directly result in increased growth of your chosen metric.
  26. Fundraisings are exhausting. If you finally raised, congratulations ! Now take a week off or two. Really. We noticed a side effect called the “we made it” effect. CEOs are satisfied and being focused can become harder. Some of them never refocus because they go to dinners, talk to journalists,… So take a week off, celebrate, relax, and then return with full focus.
  27. Series A investors have a totally different attitude from seed investors. Seed investors are looking for promise. Series A investors are looking for performance. It’s much more difficult to raise money in Seria A than Seed.
  28. When you assess a project, ask yourself : “Imagine what could be this project in 5 or 10y if it works. Got it ? Now, is this person in front of you the good one to do this ?”. Many founders should take time to answer this question beforehand.
  29. Leave your ego at home and hire people better than you. Unlike what media tell a success is the result of many people working together, not just a Steve Job or an Elon Musk. As David Ogilvy put: If everybody hire people smaller than them, we’ll be a company of dwarfs. However if each employee hires somedoby taller than him, will become a company of giants.
  30. As most people say, it’s hard to make money unless you invest in great founders. This is the often the hardest factor for me to evaluate, because you have to make a judgment about trajectory — you are trying to predict where someone will be in five years.

Bonus for new entrepreneurs:

31. Idea is fine but execution is everything. Your idea is just 0.0001% of what you’ll live running your company, so don’t be afraid to share it. After all, are all companies with the same business identical ? Same idea, different trajectories. Idea is a thought, execution is real business.

Jonathan Berthet

Written by

Financial engineer specialized in innovation and start-ups / banker-investor @JohnBerthet on twitter

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