silicon philly 7 founder tips

7TIPSFORFOUNDERS

BrendanOHaraTech/Business

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KatKlasnicBusiness/Tech

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7TIPSFORFOUNDERS

TIP#1

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Ifyourideaisanygood…

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…it’sprobablynotoriginal

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Don’tthinkitis

Seriously…

Allofyou.

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Soifitisn'toriginal

Stopworryingaboutpeoplestealingit

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Ifyouridea’sthatgood,it’sprobablynotthatrare.Ihatetobetheonetopointitout,butprotectingyourideaingeneralisafool’serrand — goodexecutionishardtofind,but

goodideasarecheap. — 

—  Anil Dash

Thismindsetisstillcommonamongmanyearlystagefounders

Myideaiswhollyoriginalandbyitself

hastremendousvalue.

Butitdoesn't

Iliketheconfidencethisexudesbutitoftenleadstofoundersspendingtoomuchoftheirmentalenergyonprotectingtheir“idea”.

Thisisenergythatneedstobefocusedonexecutionandbuildingateamofco-founderswhocanexecute

Otherwise

Itwillmakeitseemlikeyouovervalue

ideasandundervalueexecution

Nooneinvestsingoodideas

Theyinvestinpeople

Whocanexecute

Don’tworryaboutpeoplestealingyourideas.Ifyourideasareanygood,you’llhavetoramthemdown

people’sthroats. 

— Howard Aiken

TIP#2

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Don’taskpeopletosignanNDA

IfyouthinkyouneedanNDAbecauseyourideaissogoodthatanyonecandoit

Thenyoushouldassumethat

someonealreadyhas

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EveryAngelorVentureCapitalisthasbeenaskedtosignanNDAbyanentrepreneur

whoeventuallytellsthemanywayaftertheyrefusetosignit.

Ifthathappensandyougetthechancetopitchyouramazingideaforabusiness

Makesurethatitdoesn’talready

exist.

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Thishappensmorethanyouwouldbelieve.

TIP#3

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Youneedtoobjectivelyevaluate

your“idea”

Todetermineifitisanopportunity

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Beforeyoustart

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Andasyougrow

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Ifthereisn'tagroupofpeoplewhowillbuyit

AMarket

Thennoonewillinvestinit

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TIP#4

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Havinganideaisn’tthesameashavingastartup

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Andyourstartupisn’tyourbaby.

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Youneedtoobjectivelyevaluate

your“idea”

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NooneisgoingtoevaluatetheROIontheirbaby

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Doacostcalculationtodeterminewhethertofeeditorburpit.

Soifyouidentifytoomuchwithyourideaorstartup…

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…youpreventyourselffromdoingthis

incrediblyimportantactivity.

Youneedtoobjectivelyevaluate

your“idea”

Objectivityisthehardpart!

Weknowwecannotrelysolelyonourintuitionindecidingtogoforward

withastartup

Evaluate,validateandtestallhypotheses

aboutourideaandthebusinessopportunitywe

wanttobuild

Thisisaminefieldofbiasesandlogicalfallaciesthatweneedtoavoidorattempttomitigate.

TIP#5

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Mitigateyourbiases

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ConfirmationBias

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Basicallysomeoneonlybelievingorseekingout

informationthatconfirmsorreaffirmswhattheyalreadybelieveorwanttobelieve.

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Thisseesusundervaluefactsthatsayweare

wrongandovervaluefactsthatsayweareright.

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Youseeitfrequentlyinthenewssources

peopletrustbasedontheirpoliticalleanings.

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Itisalmostimpossibletoavoidconfirmationbiassoweneedtomitigateitinstead.

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Youneedtolistentodissentingopinions

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Reallylisten

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Thefirstprincipleisthatyoumustnotfool

yourselfandyouaretheeasiestpersontofool. 

— Richard Feynman

Whatareyoulisteningfor?

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Weknowweneedtoknow

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Whatweknowwedon’tknow

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Butwealsoneedtoknow

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Whatwedon’tknowwedon’t

know…

TIP#6

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CalculateyourOpportunityCosts

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OpportunityCost:thelossofpotentialgainfromotheralternativeswhenonealternativeis

chosen.

OpportunityCost:NumberofPartners*

AverageSalary*Time

OpportunityCost:Let’sassumeyouand2

partnersaregoingtoneedworkwithoutpayforaminimumof12months.

OpportunityCost:Pluseachwillinvest$25,000ofyourown

moneytocoverbusinessexpenses

OpportunityCost:Beforeyourstartupeitherisbreakingevenorhas

enoughtractiontowarrantinvestment.

OpportunityCost:Nowlet’ssaytheaveragesalaryofyouandyourpartnersis$120,000per

yearor$10,000permonth.

OpportunityCost:NumberofPartners(3)*AverageSalary($10K)*

Time(12)

Sotheopportunitycostofyouandyourpartners

doingthisstartupis$360,000plusthe

$75,000youinvested.

Sothiswouldseemtosaythatifyoucansomehowaccuratelyprojectthatthevalueofyourstartupafter12monthswillbeover$435,000thenthisseemslikeitisaworthwhileendeavor.

Nowlet’ssaywethinkthereisan75%chanceoffailure(totalloss)anda25%chance

thecompanyisworth$2,000,000afterthe12

months.

Thatisanaveragereturnof$500,000againstthecostof

$435,000.

Thatisapositivenumberbutalotofriskfor$65K.Hereisthecalculation:

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Butwhatifyouknewthe75%oftimesit

wasgoingtofailafter4monthsinsteadof12

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Thatwouldstillbeanaveragereturnof$500,000but

againstamuchloweraveragecostof$217,500=($435,000*.25)+($145,000*.75).

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Thatisobviouslyabetterpotentialinvestmentbutitputsadditionalpressureonyouandyourpartnersto

ensureifyoufail,whichyouprobablywill,thatyoufailfast.

TIP#7

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AvoidFalsePositives

Succeed or Fail Fast

Whenyoutestoutyouridea

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Negativeresponses

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Someofwhicharefalse

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Positiveresponses

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Someofwhicharefalse

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Falsenegatives

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Incorrectlytellsusanideaisnotworth

pursuingbutatleasttheyallowustofailfast.

Falsenegatives

Thatmeansthatwemaygiveuponagoodopportunityonceina

while.Falsenegatives

Because“failingfast”meanstheopportunitycostismuchlower.

Falsenegatives

FalsePositives

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Thiscausesfounderstostickwithastart-uplongafteritisviable.

FalsePositives

Itshouldbeclearitdoesn’thavearealisticchanceofsuccess.

FalsePositives

Thatmeansforfoundersthe

opportunitycostisextremelyhigh.FalsePositives

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Because“failingfast”meanstheopportunitycostismuchlower.

Whattoremember