Quora blogging is back… Yesterday someone asked me how they could break into the startup game, so I tried to find a good post on Quora to send him. Turns out, there was almost exactly that question waiting for me (link to post) when I logged in, so I just answered that.

Short answer: In today’s world, you will most likely have to go ahead and build a product, even a very basic version, to show someone that you are worth investing in.

Long answer:

Here’s a potential list of you to go by, assuming that you are in jobs, and live a rather busy life. In case you are in college or freelancing, things will probably be a lot easier (because you have more time and flexibility to refocus on “the new thing”).

1. Define “the new thing”:

What do you want to do? Where do you want to end up with?
This is important for both of you to understand in the first place, and will hopefully be solved already: both of you had an idea together and you now want to turn it into a company/potential business. Even if you say “we just want to try”, you will have to see for yourselves how committed you are, and how far you want to take it (taking into account current jobs, future contracts, family, etc).

2. Start building.

(I assume) you both have the skills to build, so just go ahead and come up with a first iteration or version of it. It can be total crap, but you will find out

• what you need to improve
• what you need to teach yourself to make it better
• what works well and – gasp – other people like about it

3. Rinse and repeat, find time and energy by:

• taking small steps to have instant feedback and rewards
• agreeing on some days or hours you both work on it together
• not letting it slip off the radar – prioritising it
• talking about it – friends, early users, and lurkers will keep you on your toes with feedback and comments

4. Start getting into the startup game:

• READ ALL THE BOOKS (“The Lean Startup” will suffice)
• READ ALL THE BLOGS (Hackernews and Quora will give you a decent start on what’s relevant)
• Go to some events, and try to learn from them, get value and feedback. Don’t go back if you found it nice, but not valuable for your “New Thing”.

5. Try charging for what you have.

You will be surprised by how many people might pay you for it.

6. Start thinking about getting money again when:

• you have built something
• you want to/need to make this a full time gig
• your savings run out
• there is a lot of buzz and traction around your idea (i.e. people are passionate about using it)

Also, do NOT look for money to do one of the following:

• Architect your product to scale to facebook size (worry about users first)
• Legitimise doing a startup to your family, partner, or friends (you are the CEO, that’s totally legit)
• Build a marketing/biz dev/HR/legal/any team before people are actually using your product

7. Go talk to business angels and good accelerator programs to see who would be a good fit

• think about this earlier than when you actually need it (you will anyways)
• find out what they are looking for, and see if you are a good fit
• pitch them.

8. Go build that company

rinse and repeat above, and start dishing out advice on Quora

We spend a lot of time talking about mentoring, advising, and helping companies. Not just at Seedcamp – the whole startup ecosystem is trying to figure out what the best way to grow and support a startup is.

Obviously, there are a lot of people who want to get involved – be it for fame, money, or benevolent motives. In the end, and this is aimed more at you startups out there than anybody else, you need to find out who will do you good and will be good to work with.

With the help of Juan, the founder of Traitperception, I managed to come up with a very simple measurement that can be used to at least roughly figure out whether a person is someone you should or want to work with.

Traitperception is working on a methodology to compare people based on their traits, which might be used for evaluating various things like likeability, a fit for a given position, etc. One good example where it can be used effectively are 360 degree reviews – which by definition, are very relative in nature. You answer a couple of questions about your colleagues, they do so in return, and then everybody gets a rough idea where they stand.

The key about this is the relative nature of rankings. Too numerical or absolute rankings are usually difficult or at least controversial, so TP went a different route.

Intelligence

When you compare people you work with, their smarts are undoubtedly one of the key points you will think about. However, does it really impact you how intelligent someone is? Yes, it makes for insight and sometimes learning, but it doesn’t say much about how that will rub off to you (hint: not much). Not a good measure.

Helpfulness

People who help out most and are always available are the best advisors and mentors. Really? When someone is always there for you – will you learn things on your own? Will you still make your own decisions? Is any help good help? This last point is a sure no, and as anyone who went through a set of mentoring sessions can tell you – a good chunk of advice is not necessarily good for you or your company. Not a good measure.

Activity

Much like helpfulness, a lot of doing and making isn’t always the right thing. Intros, feedback, work, and opinions can sometimes be too much, and it’s hard to stop when you don’t want to stub someone’s toes. Not a good measure.

Likability

Being nice is, well, nice. Being treated nice is nice too. But too often people hide their real feelings or opinions because they want to be nice, and not too honest. Especially in the startup world, everybody is a winner, and everything is “awesome” most of the times. This is why a lot of feedback is watered down and not very straight forward, and why a lot of have to’s are disguised as should maybe’s. It’s easier to be nice, but not always right (I am quite a blunt person, so that’s just my own blunt opinion). Not a good measure.

You already know what’s next:

Impact

What you really want to measure is the impact of that raw smartness, niceness, and helpfulness on you and your project, company, or business. How can someone change the business for the better, and use all of the above measure to do one thing: improve the situation you’re in. In line with the 80-20 rule and the GTD and the PMinventssomeratio rule, impact is a pretty easily graspable concept that you can apply in many situations. Of course, it is again very relative to the situation you’re in, but that’s the beauty of it.

Empathy

While likability and helpfulness are great, they only measure a superfluous trait of a person, that is irrelevant of the situation. Also, both can often stand in the way of someone giving you good, or better, advice than when disregarding those factors, as I made the point above. A great measure, and a relative one at that, is empathy: The ability to understand and share another being’s feelings. In this context, the ability of a mentor to realize what will make a founder or team understand and appreciate his insights, is probably an apt explanation of the rather academic definition.

The ratio: Impact and Empathy

Here we go, with a simple ratio as the outcome of all this thinking: When you measure people around you on the scale of their positive impact, and their ability to show empathy towards your situation, you will hopefully be able to identify those that are both able to help you get to your goals more efficiently by being impactful, and more effectively, because they are able to aptly connect to you and your team.

Tell me what you think, and how you think about people you work with in a relationship that warrants measuring impact and empathy. I am sure this can be applied to all kinds of situations, like coworkers, personal trainers, and much more.

Traction is what entrepreneurs need to show to get investors interested. Simple as that. However, it’s a concept that doesn’t just mean “bigger numbers”, it is something more intricate.

In my world, the word “traction” depicts a clear direction you see from the users active on your site. Think about it from the root of the word: a tire that is slowly gaining traction in the desert sand is about the right metaphor. Forget about F1, and think about Granada-Dakar.

Where to identify traction without huge growth numbers:

• Is there a specific, identifiable group of people on your site who use it in a particular way? If you can find that group, communicate clearly about their activity and the value they get from the product.
• Are there some metrics that you can reliably track that make usage or signups grow? This can be a viral coefficient for sharing activities, a traceable growth rate that isn’t just a vanity metric, but something tangible (prolonged use, ideally), or a metric that influences said growth/usage rate.
• Are some specific users coming to your product from a specific source? See how Checkthis grew their early user base in the creative space, see how Soundcloud enabled DJs to share sets better than other sites, or how pinboard is attracting a very specific type of user from places like delicious.

This is the traction that shows your company is going into a specific direction, and that shows where the product, user base, and therefore company, is going to be in the future.

The above mentioned insights are something that you will most probably see if you are already very clear about the value set you provide. If not, trying to identify them will most often give you a clear view of who you should focus on or what features you should actually build to cater to that group.

Besides a clearer focus, this can bring forth a very deep understanding of the USP you provide – not in your own words and understanding, but much more so from the perspective of your users, underlined by the evidence of their actions.

“Progress comes in two flavors: horizontal/extensive and vertical/intensive. Horizontal or extensive progress basically means copying things that work. In one word, it means simply “globalization.” Consider what China will be like in 50 years. The safe bet is it will be a lot like the United States is now. Cities will be copied, cars will be copied, and rail systems will be copied. Maybe some steps will be skipped. But it’s copying all the same. Vertical or intensive progress, by contrast, means doing new things. The single word for this is “technology.” Intensive progress involves going from 0 to 1 (not simply the 1 to n of globalization). We see much of our vertical progress come from places like California, and specifically Silicon Valley. But there is every reason to question whether we have enough of it.”

—

From Blake Masters’ excellent notes on Peter Thiel’s Entrepreneurship class

This was one of the most powerful notions I learned about in my earlier innovation and futurism classes. Reading up about it reminded me of the strong concepts vertical vs horizontal thinking bring with it. Here are some VC/Entrepreneurship oriented examples:

1) Think about the decrying of the Samwers and their copying of existing business models – it is simply horizontal expansion of vertical innovation. What makes it so difficult? The tight margins and operational difficulties that other globalisation and “horizontalization” efforts bring with themselves.

2) Think about Venture Capital in emerging markets: funds in developing VC usually take bigger stakes, give less money, provide less value add than established firms can. Bringing the VC model to new places still carries tons of risks like market, growth, and exit uncertainties (not to mention legal issues).

3) The fact that lean startups focus on innovating very vertically around a minimum viable product is another good analogy. Find one feature that sticks, and build the neighbouring features to scale the product and company to wider appeal.

During a conversation today, Sander also made a very good point: the underlying technology, namely programming, is also divided into horizontal and vertical advances. Scaling is structured in either one of these concepts. And so on…

What’s the point? The point is, you should read all the class notes on Blake’s blog, because they are very insightful.

Venture Village asked me to share some insights on what to look out for when pitch investors. These points apply both for Seedcamp and other opportunities to present – from elevator pitches to partner meetings.

Who are you pitching to and what are they interested in – know your audience

Very often, startups under-prepare pitch sessions. You need to put enough thought and consideration into who you are going to talk to and what that audience wants to understand. Investors want to know a lot about the market and business model, entrepreneurs want to hear about anecdotes and insights they can apply, engineers and designers want to hear about the product. Make sure you understand who you will be talking to to make your talk most interesting – and think about what you want people to remember.

Have your messaging and core communication set in stone – find your mantra

Knowing what the core of your offering is, and delivering that one-sentence pitch without flaw is the single most important thing to get right. It should be like a mantra that you repeat again and again – the rest of the pitch should support every part of that message. For example, you might be the premier international platform for entrepreneurs looking for capital, mentors, and network (this is our mantra) – use the presentation to show how you deliver on these points.

People want data, not superlatives, as proof – use numbers

When you want to impress your audience, you can best do that by supplying them with measurable outcomes that show your progress. Traction does not mean huge user numbers or massive revenue, it only means that the line is moving in the right direction. Do you have customers that use and love your application? Are they using it in critical situations? Are referrals through the roof? Were you able to prove a viral coefficient, a cheap way of sourcing traffic? All these may be different for your own startup, but from day one you should collect data points that show anyone outside that you are moving in the right direction.

Bonus point – Demos fail. Use screenshots

I have yet to see a pitch session where all technology works right. Don’t use fancy fonts, avoid video and sound like the plague, and rely on screencasts or screenshots to present your product. Demos are good for longer sessions, but anything under five minutes should not have you clicking through a product. And when you do demo live – make sure you have a good demo account with interesting data and a well rehearsed click through story ready.

TL; DR: Key point: context awareness.