33 lessons from the trenches of building a million dollar company
I was putting together a talk this week and was feeling very reflective. I always love reading about what others have learned along their journeys.
Since we started Baremetrics, we’ve done about $1.5m in revenue (as of March 2017). We’ve fought hard for that as a team, going from nearly running out of money to becoming profitable and certainly have a few scars.
Listing out things I’ve learned is somewhat self-serving…I find it therapeutic to be reflective. But even if you just take 2–3 nuggets away from here and apply them to your business to positive affect, then job done!
If you take nothing else away, let it be this: business is a marathon, not a sprint. The all-night coding and binging caffeine may feel thrilling a few times, but it will quickly run you in to the ground. It’s imperative that you put some healthy habits in place now and properly take care of yourself so you can serve your team and your customers for many years to come.
Now, on with the show!
Hiring, firing, delegation, transparency
1. Hire a nerd immediately
Dave Ramsey talks about “nerds” and “free spirits” when it comes to finances in marriage. The “nerd” loves to manage the budget while the “free spirit” loves to forget there’s a budget to manage.
If, as a founder, you aren’t the “nerd”, please hire one. I recommend the folks at Flightpath. Money well spent.
2. Hire slowly & methodically
Resist the urge to hire. If you’ve raised any amount of money, the very first thing you’ll have a deep burning desire to go do is hire people. But resist it. If you cut back on superfluous things and hyper-focus on needle-moving tasks, you can do an unbelievable amount with a small team.
3. It’s your fault when someone is fired
Needing to fire someone is a failure on your part, not the person you had to let go. Yes, people on your team can do things that you never would have seen coming, but when you let someone go because they weren’t doing a good job or didn’t get along with the team or a host of other reasons…that falls on you for not realizing they’d be a bad fit or for not properly setting the tone or culture or any other expectations.
4. Fight the urge to spin more plates
“Busy” does not equal “productive”. You shouldn’t be doing 1,000 different things. Business isn’t that complicated. Very few things are urgent. Very few things actually even need to get done. As a founder, pick just 1 or 2 “must do” things each day and if you get those done, you’ll be ahead of the game.
Most pick 10–20 things and get none of them done.
5. Focus on your strengths, delegate your weaknesses
I’m a doer, a learner. I love learning new things. If I give myself enough time/space, I can generally learn just about anything on some level. The problem is that I arrogantly think I can make anything a “strength”.
And so I humbly submit to you today that I am, in fact, “strong” in very few things. It’s something I’ve become very aware of the past couple of years.
Instead of strengthening my weaknesses, I now focus on strengthening my strengths. It’s a much more efficient use of my time.
6. Don’t hide things from your team
Treat your team like the adults that they are. Keep them up to date with how the company is doing financially so they have skin in the game and can also keep you accountable.
Funding, competition, pricing, growth
7. Maintain the power to walk away
Negotiating some business deal? Thinking of raising money? Always maintain the power to walk away. If you ever are in a position to critically need something, you’ll come out on the very bad end of that deal.
8. Investors are great for company optimization & scaling, less so for product advice
Don’t assume investors have answers for everything. They’ve got a specific skill set around growing companies but are generally less useful when it comes to actual product decisions.
9. You’ll burn through all of your funding in a year
No matter how much you raise, you’ll burn through all the funding in 12–18 months.
10. Ignore data early on
If you’ve just launched your product, the phrase “A/B testing” should not be in your vocabulary. You simply will not have enough traffic or conversions for statistical significance.
Also, things like user churn will be downright misleading. “My churn is 30% OMGBBQ!!!!!” “Uh, yeah…you’ve only got 4 customers.”
11. Ignore your competition
It’s so easy to fall in to the habit of checking up on what your competition is doing. You start checking their blog regularly to see if they’ve released any new features, you add their name in Google Alerts, you follow them on Twitter…all so you don’t miss out on their next big move.
But here’s the problem: doing this puts you perpetually one step behind. It makes you reactive instead of proactive.
Solution? Ignore your competition.
12. Don’t build internal tools
The danger in building internal tools is not that it saves an insignificant amount of cash, but that it stifles future growth. Here’s how to blow $100,000 “saving” money.
13. Don’t wait to charge
You’re not running a charity. Charge from day one.
14. User action is much more relevant than user feedback
Feedback from users is great for understanding their line of thinking, but not great for understanding what they’ll actually do. Many times their actions don’t line up to their words. You need both to get the full picture.
15. A $9/mo customer is an entirely different customer than a $99/mo customer
All price points are not create equal. Low-ARPU customers are not only the most price-conscious, they’re almost universally the neediest. Support costs alone can run you in to the ground.
16. Don’t lower prices, raise value
Resist the urge to lower prices. If your gut feeling is that you’re priced too high, then raise the value of your product to make it worth it. There’s essentially no ceiling on raising prices, but you’ll quickly find yourself hitting the floor if you try to compete on pricing.
17. Inbound trumps outbound in any marketing & sales efforts
Content marketing, word of mouth, referrals…they’re all great ways to get inbound traffic and leads who, at the very least, have some tangential interest in you. Whereas outbound sales is a slog that, let’s be honest, very few people actually enjoy.
18. Sales solves all things
Not necessarily a “sales process” but just actually making sales. Making more money. Almost any business problem you’re having is solved by selling more of your product. Not by making product improvements or getting company t-shirts and stickers, but by going out and making sales happen.
19. Sell painkillers not vitamins
If you’re just a “nice-to-have” then the hole in the bucket will always leak faster than you can refill it.
Features, feedback, prioritization
20. Talk to your customers. With words. Out of your mouth.
I know, talking to humans is scary. But you’ll have to get past that. Get on the phone with every single customer who signs up, upgrades, downgrades and cancels. Actually talk to them as humans do. It’s important to have a conversation as it gives you more honest insights in to what they did. It’s the type of feedback that a form field and a checkbox can’t possibly give you.
21. The Next Feature Fallacy is real and will cloud your thinking dramatically
Like it or not, that next feature that you’re so excited about will categorically, as an individual unit, do nothing for your business. But man if we don’t like to think it will.
22. Don’t build solutions in search of a problem
Just because you had an idea doesn’t mean someone needs it. The mere existence of a solution doesn’t validate the existence of a problem.
23. You will never attain the perfect product
The effort required to “polish” a product has diminishing returns. Yes, the details matter. But “shipped” is better than “perfect”. Startup graveyards are littered with companies who never actually launched anything at all.
24. Constantly reevaluate every nook and cranny of your product
Track product and feature usage, iterate frequently and kill the things that aren’t providing value.
25. Many times you have a distribution problem, not a product problem
As makers we think we can build our way to success, but the reality is you have to sell and market your way to success.
Health, friends, personal well-being
26. Startups are like kids
No matter what you do to try and control for all the variables, at the end of the day your startup is going to do what it’s going to do. Don’t beat yourself up when you make mistakes.
27. Conferences & networking events are usually a waste of your time
If you do go to events, the real value is not in the talks or in the “happy hour” times, it’s when you’re able to break off from the crowd and go grab pizza somewhere or take a walk around the city you’re in. But you can (and should) also do those things outside of networking events.
28. Optimism is a crutch
Be a little doom ‘n gloom. Run through worst-case scenarios on a regular basis and understand how rough patches could play out.
29. Don’t play startup
Playing startup will leave you tired and burned out. Focus on building a business and not a startup.
30. Get friends who aren’t entrepreneurs
The startup echo chamber is real and dangerous and real dangerous. Surround yourself with people who are completely different than you.
31. Vacations are crucial
Taking time off not only helps you stay healthy, but it also makes you a better founder. It clears your head, helps you focus and snaps you out of your tendencies to over-focus on your business.
32. Don’t attach your own self-worth to your company
An unbelievable number of founders I know (myself included) have struggled with depression or anxiety. It’s very easy to think of yourself and your startup as a single entity, but you are so much more than your company. Please work hard to find worth in other things.
33. Everybody’s winging it
Every. Single. Person. Nobody actually knows what they’re doing. Sure, they may have hindsight on things that worked in the past, but right now? Nope. They have no idea.