10 essential reads for every early-stage entrepreneur
You are exceptional if you have had the courage to start up. It requires extreme perseverance and commitment to give up on comfort, safety, and take risks head-on. You can't do that for money. Most likely, you have a passion, drive, a devil-may-care attitude, and ready-fire-aim mentality. You want to bring your new idea to the world. Bravo! As an early-stage VC, we love all the above qualities in an entrepreneur and are always looking to find and fund such founders.
In the last decade, there has been a lot of literature on both the art and science of building startups. I have put on some recommendations for early-stage founders to read that should help them in their journey.
Those who don't know history are destined to repeat it. - Edmund Burke
Some of you might think, I am going to make my own path; and, really, who has the time? Well, you sure are going to create your own path else you wouldn't be an entrepreneur. However, as we mention to several early-stage entrepreneurs:
Company building takes time. You are going to be committing at least eight to 10 years of your life to do meaningful. To save you some time and effort, I've curated a shortlist of books and pieces that I recommend you read. Heck, you may even save several years of your time, not to mention lots of money, for a couple of days of your time now.
The Founder's Dilemmas by Noam Wasserman: If you are thinking of starting up, or have just started up, this book is god-sent. It is a collection of many interesting dilemmas.
Have questions on who to co-found your startup with? Should you split stock equally amongst the co-founders or not? Are you even ready to startup or should you continue in your cushy but high impact job?
The best part is that Wasserman has studied thousands of startups and startup founders. The book is a great combination of data along with the author’s deep insights on entrepreneurship.
Do you want to be King or do you want to be Rich? - Noam Wasserman
Picking the Right Idea
As an early-stage VC, we see amazing first-time entrepreneurs who are strong and driven. Unfortunately, many have chosen to do me-too ideas rather than trying to be category creators. Category creation does not mean it has to be niche or esoteric. Most big ideas start small. It just means you have a breakthrough approach to attacking a large problem. The breakthrough could be in technology and product (we at Prime Ventures prefer that!), go to market or finding an underserved part of the market. There are many more areas by which you can be unique.
Here are three of the best books to help you think through if you are building a category creator.
Peter Thiel is the co-founder of PayPal and the first outside investor in Facebook. He's the Don of the so-called PayPal Mafia. He's worked closely with folks like Max Levchin, Elon Musk, Reid Hoffman. Need I say more? His book - Zero to One is truly a bible for new-age, category-creating startups
Peter argues is it is better to risk being bold than being trivial. When it wasn't in vogue, he also argued about focussing on selling from day one and not just on building a product. In Blue Ocean Strategy, W. Chan Kim, a Professor at INSEAD, also argues to look for underserved or uncontested markets. Further, true to any B-school professor, he lays out a nice framework for product and value differentiation.
What is the one dimension that your company is going to be exceptional at?
Just as well, what are you going to choose to ignore in your offerings? Both Peter and Kim argue that competitive markets destroy profit. Create your "own" market of one and dominate that. You set the rules. You both create and capture the most value. VCs love that!
In Start with Why, Simon Senek speaks about the purpose behind your product. He suggests most people start with the what or the how. He argues you should start with WHY are you doing something! Why are you creating this startup? What is the purpose? Why will it make this world a better place? In the next section, you will see why it is imperative to have meaning and purpose.
Culture - the soul of your startup.
A startup’s culture gets formed in the first nine to 12 months of its existence and is hard to change. It is imperative to be deliberative and conscious about your culture. There are three main elements of culture in an early-stage startup.
The culture of a startup or any organisation starts with the founder(s). Companies are a strong reflection of their founders’ personalities. So, it's super important for the founders to know themselves well. There are two great essays I recommend you read:
- Managing Oneself by Peter Drucker. This piece makes you reflect on your own core strengths and your modus operandi. Before you can manage and lead a team, you need to know yourself cold.
- Manage your Energy and not your Time by Tony Schwartz and Catherine McCarthy. Startups are intense work and emotionally exhilarating and draining at the same time. That said, no one can do 100-hour weeks, non-stop for years to come and succeed. Tony and Catherine suggest you need to holistically manage your mental and physical health to maximise energy. Eventually, it's the impact that will count and not the number of hours at work.
These are two of the 10 articles in the HBR's Collection "Managing Yourself". If you are so inclined, there are several other gems in there.
Daniel Kahneman, a Nobel Prize winner, writes about decision-making biases in “Thinking Fast and Slow”.
He proposes there are two modes for making decisions – System 1 (unconscious, gut-based, fast) and System 2 (deliberate, analytical, slower). All entrepreneurs need to make decisions quickly and many rely on System 1. The great entrepreneurs rely as much and more on System 2 as they do on System 1. They will evaluate not just what they see, but also what they don’t. They will triangulate their decisions with other independent data and information, not just their gut. I am not suggesting it is about making perfect decisions; you will be wrong many a time. That’s totally fine. You want to be aware of your own decision-making biases.
Building the team
In the book, "Its not the How or the What, its the Who ...", Claudio Fernández-Aráoz, talks about the core competency required to really scale a company is "who" to hire and not what or how to do it.
Every startup starts with one person. In the early days of a startup you are doing everything. For the company to scale, you need to figure out how to get the best people on board. One good litmus test I personally use for the first 10 folks is, if the tables were reversed, would you be willing to work for them?
As the company starts scaling, you are beginning to figure out how to do things (think process, growth, etc.). Once you are hitting prime time, it's back to the "who" not the what or the how.
Interestingly, Claudio also cites Daniel Kahneman's work regarding overconfidence in predictions as a pervasive human bias. The author suggests that this is as true of people decisions as for other business decisions. In my opinion, two of the biggest mistakes early-stage founders make are :
- Not to hire people smarter than them. Eric Schmidt of Google used to say that it is often easier to solve bigger problems than smaller ones since the big ones attract the best people.
- To not have a rigorous interview process that eliminates bias.
If were to combine the learnings both from Kahneman and Claudio, you want to surround yourself with a great, diverse group. Not just in age, gender, background but in thinking and decision making styles. It can help mitigate the risk of System 1 biases. Not only that, complementary skill sets also help with execution ability!
The collection of people you have working for your startup define the eventual culture of the startups become. In closing, I would like to share two amazing cultures at two grown-up, successful companies - Google through the deck on "Work Rules" and another deck on the Netflix culture.
Running the startup
I'm a big fan of the lean startup movement led by pioneers such as Steve Blank, Eric Ries, and several others. The best book that I've liked is Ash Maurya's Running Lean. This talks about customer development, defining your minimum viable product, building and running iteratively to get to product/market fit. I strongly recommend this book for everyone, esp. the non-technical or business co-founders.
Last but not the least, High Output Management by Andy Grove is a treatise on how to build high-performance teams to deliver what you need to.
[This article first appeared on LinkedIn]