Joey Flores on YC Rehearsal Day (photo by Garry Tan)

There is a fine line between being open and honest in your willingness to publish stories about startup life, and saying things that burn bridges or aren’t good for your company’s image. I have admired founders who aren’t afraid to share battle stories while they’re still at war, so I’d like to be one of them. Hopefully I’m not shooting myself in the foot.

 

Here are 8 startup lessons I’ve learned from things I’ve fucked up over the past 2.5 years.

1. Fundraising incorrectly or at the wrong time

This is the second biggest mistake I have made (I saved the worst for last).

Raising money is an incredible time suck and there is no shortage of great information out there about when and how to raise money. For all of the information I attempted to arm myself with, it wasn’t enough. There are some very clear pieces of advice that I was either ignorant to, or ignored. I should have read more, documented a plan, and consulted more advisors. Failing to do so caused me to waste a massive amount of time and energy, and probably reduced credibility with some investors.

The primary takeaways I learned are:

  • Do not fundraise too early. Outside of founders with incredible pedigrees or getting into startup accelerators, no first time founder is raising money these days without a product built and customers using it.
  • “Lines not dots” is mostly horseshit. Some investors say that they invest in lines, not dots – meaning they want to get to know you over time before they invest. I find this to be mostly bullshit. We’ve kept in touch with a lot of investors over time. All it does is diminish a sense of urgency. We continue to close new prospects all of the time while the number of people who have come around and said yes months later has been a total of one person.
  • Time your fundraise just after the start of a lasting upswing in user growth. Fundraising takes several months. At no point during that time do you want to be raising money with slides of declining usage or engagement. This means you need product/market fit and a reliable user growth plan, and you need to start raising aggressively just after the beginning of that plan or at some other lasting moment of awesomeness. Some investors might argue with me, but even if you have to throttle your growth in order to force an up-and-to-the-right dynamic, you’ll be better off than coming out of the gate strong and then hitting a lull during fundraising.
  • Raise on the terms that you can complete your round with. You should know in advance how much you want to raise and you should go with the terms that are going to get the entire round done. Super favorable terms for half the money you need is going to fuck you in the long run.

2. The best advisors are in it, above all, to help you

We have the most amazing team of advisors. Some of them have a stake in Earbits. Some do it to pay it forward. Some because they just care about our success. Every one of them has provided value but the ones that started helping us right away with advice and connections, without caring about whether they were going to have equity or compensation, have proven time and time again to be the most valuable.

3. If you have a choice of press outlets for your launch, pick the one that will drive customers

Having been a YC company, it wasn’t difficult for us to get press for our official launch. It’s tempting when you have that opportunity to give your story to the biggest brand name outlet. We took our story to the outlet that we thought carried the most brand power and clout with investors. The article, rightfully so, focused more on our business model and likelihood of startup success than on our product or what we offer general consumers. It did not drive traffic. While it may have had some small impact on the impression of investors, having a lot more users on our website would have mattered more. If you have exclusive news for your fledgling startup that will be of interest to multiple journalists, pick the one that caters to your target customer.

4. Unpaid interns are almost always a waste of time

If you’re running an exciting startup, you will almost definitely be contacted by eager students or new professionals interested in interning for you, even unpaid. While it’s enticing as a cash-strapped startup to bring on free help, unpaid interns will, more often than not, take up more time and energy than they give back. It stands to reason that, if the best contributors to a startup are people who can wear many hats and contribute without being managed, a fresh-out-of-school intern is almost never going to fit that description.

5. Getting customers is the hardest thing you will have to do, and you need a plan

When we started, lots of people (particularly investors) told us they didn’t think we’d be able to get users. Because they said it in the same breath as a lot of misguided statements that we knew were incorrect, we assumed that concern was misguided, too. It was not.

While getting customers has not proven impossible by any stretch, it turned out to be every bit as hard as people said it was. Build it and they will come is a pipe dream. You need a viable, sustainable customer acquisition plan, and you need to execute it effectively, constantly optimizing it over time. Do not assume that you will get customers just by building something cool.

6. Do not bet against your gut

Running a startup involves making decisions with limited information, often based on gut instinct. If you have poor judgment, you’re going to be unsuccessful running a company. Only if you have good judgment do you have the potential to be successful. Betting against your bad judgment won’t save you in the long run, and betting against your good judgment ruins the impact of having great gut instinct. It stands to reason that the only way to succeed is to follow your gut. So, if an investor seems shady, a partner seems flaky, or you are forced with a decision that comes down to making a judgment call, don’t doubt or bet against yourself.

7. Forget your future plans. Build something people want.

I know that sounds cliche, given the YC mantra, but I have a greater point.

Unlike many startups in this day and age, Earbits has always had a business model. We started with a concept for selling airtime on a pay-per-stream basis, and we are still executing on that model. But over the past 2.5 years we have frequently put our business model plans ahead of our product roadmap. When faced with the choice between building something that users definitely wanted and had asked for but wasn’t ideal in terms of our plans for revenue creation, or building something that was less certain in terms of creating demand from users but fit into the confines of our plans for the future, we have, unfortunately, gone with the second one more times than I care to admit.

The simple fact is, if you don’t build something that a shit load of users want, you won’t have a business.

Every good entrepreneur has a vision for the future, and sometimes that vision is months or years ahead of where you are now. Aiming for that goal is great, but if you’re making short term decisions that are prohibiting your growth in order to stay true to a target that is way off in the distance, you may not make it that far.  You must build the best possible experience for your users as quickly as possible. Failing to listen to your users because you’re convinced that you know where you want to be two years from now is a recipe for death. Build something people want. Worry about your future plans when you get to the future.

8. Dear God, above all else, learn from your mistakes

I don’t regret making mistakes building our company. It’s impossible to avoid. The #1 regret I have, period, is making the same mistake more than once. When you fuck up, figure out why and how you fucked up and don’t do it again. I know that sounds like common sense, but I have a fair amount of common sense and I have repeatedly made similar or the same mistakes without realizing it. Making mistakes is par for the course in startups. It is learning from your mistakes that is going to get you across the finish line. Failure to do so has got to be the leading cause of startup failure. Learn from your mistakes.

If you found this helpful, do me a favor and try Earbits.  If you really liked it, tell a few friends about Earbits.  😉

Joey Flores
CEO, earbits.com
[email protected]
Listen at www.earbits.com
Connect with us on Facebook: www.facebook.com/earbits
Twitter: @earbits

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