Lessons learned in starting a startup.
Startups are hard. Really hard. They’re also exhilarating, fun, rewarding, and occasionally depressing. In 2011 I started Hyphos Inc, a web-based platform for connecting like-minded people offline. We ultimately launched At The Pool, went mobile, and pivoted into a local discovery app called Yeti. In the four years that we launched and grew these products, we touched members in more than 120 countries across 3,500 cities, raised capital from some pretty amazing investors, and had great press coverage without hiring a PR firm. We’re now in the process of getting acquired and I’ve been thinking a lot about what I would do different next time. In no particular order, here are the top 11 things I would do different next time:
- Business partner — I’ve worked with some incredible people, but it never felt like I had a business partner. In the early days we had 5 students all working part time. When I raised a small round we hired 2 full time, and over the years the team grew (and occasionally shrank). There were some incredibly tough times and our early advisors and investors helped tremendously, but next time I would definitely work with a business partner from the onset. This is someone you must trust absolutely. They should compliment your skills, push you to be better, and it’s imperative they go all in. Startups are hard, both technically as well as emotionally, and next time I’d like to have a partner in crime.
2. Recruiters — I don’t know how they find you, but when you launch a startup recruiters start calling. They’re relentless, expensive, and downright deceptive. In the beginning they’re easy to ignore (but trust me, they will keep coming). At some point, however, you’re going to be desperate to hire an engineer and you’ll say something like, “Ok, if you find someone who’s a really good fit I’ll agree to your fees”. Unless you’re sitting on $10M in funding (and even then, be careful), it’s a slippery slope towards draining the bank account. Fortunately we rarely took the bait, but when I did I always regretted it. Recruiters are a bad idea because (1) they’re downright expensive(about 20% of a hire’s first year salary), (2) the results and quality aren’t guaranteed, (3) as a founder you need to be selling, recruiters make you lazy, (4) once they get you they will keep calling, and (5) they will waste your time and energy.
3. Raise enough capital — Startups take capital. A lot more than you think. And there are only really a few times you can raise: friends and family when you start, a seed round when your product is just hitting the market, and a Series A when you have significant traction. Unfortunately most companies don’t make it to the traction step and are forced to raise a second seed round or go under. When we pivoted from At The Pool to Yeti we decided to hold off on raising more capital until we got traction. That meant building a world class app with pennies, cutting corners, and taking longer than would have been ideal. Sometimes this is necessary, but it’s certainly not fun and it puts you at a major disadvantage. Next time, I plan on doing this differently. I plan on raising enough capital to execute on the vision from the onset, understanding that fundraising is tough without serious traction and traction is hard without the resources to build an amazing product.
4. Simplify the Design — Beautiful design is more important than ever. That said, it’s easy to go overboard and get too creative with the UI and UX. Looking at the most successful products in the last 4–5 years, it’s amazing how simple and obvious most of them appear. Contrast that with the unnecessary complexity that plagues most bad products. Good design is easy to use and obvious to the user, and we weren’t always good at putting function before form. While I still believe in novelty and aesthetic beauty, next time I intend on reducing complexity and focusing on ease of use.
5. Build Something People Love — With startups we get caught up in the design, the legal work, the mission statement and the press releases. At the end of the day, none of that matters. The only thing that matters is building something people love. While there’s no simple way to guarantee this outcome, it’s certainly the first thing I will think about for the next product I work on.
6. Technology — There are an amazing number of “technology” companies today that don’t actually invent new technology. While this isn’t necessary for all companies (a pizza shop doesn’t need to invent new technology, per se), it’s important to me. I would argue we got caught up in the social media hype of creating new user experiences and design patterns to enable a slightly novel interaction on the web. While this could yield high dividends, in my next pursuit I plan on focusing more heavily on innovative technology.
7. Do less —no matter how many times we’ve heard it, we need to hear it again. It’s amazing how we start with a simple idea, then we add a little feature, then another, and next thing we know the product is bloated and convoluted. It’s hard keeping a product simple because it takes conviction in the few features we choose to leave in. I plan on being particularly careful of this in my next venture.
8. Forget about partnerships —The number of discussions we’ve had with huge Fortune 500 companies is staggering. These are exciting, the idea of partnering with Coke or Wal-Mart could catapult your business, but they rarely materialize and when they do, they are rarely worth the effort. It’s a huge distraction, and one that I’ve seen destroy startups. Large companies don’t move fast, don’t like to spend money, and don’t like to take risk. If you’re building a consumer product, my advice is to forget about partnerships until you have serious traction.
9. Don’t Chase Investors —The worst time to raise capital is when you need it. We wasted a lot of time going after investors we thought would be a fit. We justified their experience, background, portfolio, etc. The reality is, by focusing on our product and engagement, getting coverage and delivering a great service, we were able to get investors to come to us. If you want to raise capital, I highly recommend starting with a great product and getting people using it. Once that happens, investors will come.
10. Don’t Expect Much — I’m sorry to tell you this, but entrepreneurship is a lonely road. Having investors, advisors, employees, and other entrepreneurial friends is great, but be prepared to fight most battles on your own. If you expect hand holding, or you believe your investor when they say “Give me 2% more equity as an advisor and I’ll REALLY help out”, don’t believe them. It’s not that they don’t mean well, they do, but the reality is you have to make the business succeed. I know this and I understand this, but it doesn’t change the fact that I am working on a Sunday night well past midnight with a look that Johnny Depp depicts well.
11. Make Money — Snapchat, Facebook, Instagram, Twitter… The startup community is plagued with “successful” companies that took years to turn a profit (if they got there at all). The problem with this model is it relies on investor capital. The more success you have, the more capital you need. It’s a vicious cycle. Next time I plan on focusing more heavily on monetizing early in order to build a self-sustaining venture that won’t require outside capital.
All that said, we also did a lot right.
I am proud of what we accomplished and would definitely do a few things the same again. Here are 5 things I wouldn’t change:
- Sell the vision — The reality is, all this hard work isn’t worth it unless the vision is big and bold. More importantly, a big vision gets employees excited, gives the press a solid anchor, excites investors, and keeps you motivated. I feel we did this well and I certainly plan on doing the same moving forward.
2. Press —Some would argue the importance of getting good press, but I believe it’s invaluable. Besides users and new customers, press helps to tell your story and motivate your staff. It’s a great validator for social media, and adds legitimacy to your business. We were fortunate to get some great press coverage over the years and it’s definitely something I think we should continue to do in the future.
3. Work with Amazing Advisors — advisors make all the difference. They helped us think through technical and recruiting problems, business opportunities, investing and acquisition discussions, and so much more. I feel honored to have had a number of truly helpful advisors in this venture and hope to establish the same with future projects.
4. Build Beautiful Products —With this company, we always had design at the forefront of what we did. From business cards to apps to email newsletters. If your product isn’t emotionally captivating and delightful to use, it’s unlikely to make an impact. I am proud of how our products look and plan on making that a major focus on future endeavors.
5. Stay Scrappy — A single $50k investment lasted us 14 months. This wasn’t easy, and it certainly wasn’t fun, but it made all the difference. Operating lean and figuring out how to keep costs down was a major contribution in this venture and it will serve me well to do the same next time.
Entrepreneurship isn’t a battle. It’s not a war. It’s also not glamorous and it’s certainly one of the hardest things you can do. That said, it IS a community and through the help of those who have come before, we can avoid making the same mistakes and help each other build world changing innovations. If I can ever be of help, feel free to reach out at email@example.com or on twitter at @alexcapecelatro. Stay tuned to hear the exciting news about what’s coming next ☺
— Alex Capecelatro, CEO of Yeti