(Note: much of the content in this article is a summation of a Podcast on 7/5/17 from Masters of Scale)
Building a successful startup
In a July episode of Masters of Scale, which itself is an episode of The Tim Ferriss Show, Reid explores the central tenets of building a successful startup. They range from advice on devising a culture of constructive cooperation and competition all the way to accepting a measure of failure––or, at least, the specter of failure. The Commandments are facilitated by each other and yet also require independent virtues, like a knack for a good idea.
Commandment 1: embrace rejection and learn
The first Commandment is ‘expecting rejection,’ yet learning from every no. If you’re getting a lot of no’s, look around for another sign you’re on your way. A lot of the best ideas are initially laughable––even for investors, they aren’t always obviously excellent. The better ones are contrarian, which is why big companies aren’t doing them already. Look for a “squirmy no,” where the reaction is polarized and never a universal ‘yay’ or ‘nay,’ but both all at once.
Commandment 2: hire the people you would want hiring you
Commandment number two is hiring as if your life or else livelihood depend on it. Hiring the right employee is essential insofar as everyone you’re hiring is, eventually, you. They’ll interview any newer candidate and so on. Look for individuals who demonstrate qualities useful in a relevant field instead of merely obvious experience as well as curiosity and persistence. Hire to work for you the candidates you would willingly work for yourself.
Commandment 3: scale without scaling
The next Commandment is more of a maxim: in order to scale, you often do things that will not scale. Perfect a prototype before expanding your business. Investigate the specific needs and issues of your early customers, who give you an instance of intimacy you’ll never find again. Build a product good enough everyone will tell their friends. You’ll end up scaling anyway, but as a byproduct of demand for the item instead of having to generate demand later.
Commandment 4: raise more money than you ‘need’
The fourth one involves money: raise more of it––a lot more––than you think you’ll need. Although many agree the most important steps are before the fundraising, you’ll need a lot of money to be ready for “a minefield of problems and expenses.” On the other hand, you’ll also need the money for unexpected opportunities and being ready to exploit any of them. Take money whenever you can as you never know for sure when you’ll run out.
Commandment 5: release early and be embarrassed
Commandment five is the subject of our article on Peter Thiel and PayPal. As Reid says, “If you’re not embarrassed by your first product release, you’ve released it too late.” Imperfect is perfect and you can iterate any issues into oblivion. Make a provisional decision then seek out information needed to revise it instead of waiting on enlightenment. It’s okay for a few mistakes every once in awhile as innovation is built on experimentation, which may fail.
Commandment 6: be wrong instead of nothing
The sixth Commandment is the necessity of decision: in many cases, you’ll be better off for making an incorrect decision as opposed to none at all. A mistake is often correctable, while inaction is a nonstarter. As in aviation, you make a rapid decision and accept the consequences. The key is discipline––for surviving and thriving. Some of the greatest things happen very quickly, so always observe, orient, decide, and act...like a fighter pilot.
Commandment 7: be ready to make or break a plan
Seven is being prepared to make and break plans. A leader must be ready for a pivot, yet not in the sense ‘a pivot’ is often used as a coverup for an error. Because the market is always changing and you’ll always have new competitors and difficulties, you’ll need to be flexible. Anticipate the scale of your company in the future and embed the features now. When a company expands by an order of three or ten, it usually needs to be revamped. Keep your team unified.
Commandment 8: manage the chaos
Commandment eight: don’t inform your employees of how they must innovate––that is, specifying how you innovate may get in the way of an impulse to do so. This may mean less of your ideas and more facilitation of employees’ ones. Embrace humility––ideas may come from others––and uncertainty––you usually cannot schedule innovation. This is why Google allots 20% of a work week for employees to work on whatever they want.
Commandment 9: everyone owns the company culture
The ninth is ensuring everyone owns the company’s culture. To succeed as you scale, you need to leverage everyone in the company. It’s easier for everyone to change the business model if they’re all involved in facilitating it. Netflix, for example, views itself as an athletic team instead of a family. Everyone assists each other, but value is about performance. The competition is everyone else, as opposed to everyone in the company. People make each other successful.
Commandment 10: have grit, stick with your hero’s journey
The final Commandment is having grit and sticking with your hero’s journey. This one enables every other Commandment. Grit is not persistence, or, doing the same thing over and over––even if you aren’t succeeding. Instead, it’s determination, ingenuity, and laziness––that’s right: conserve energy and minimize friction as you go. Your company might end, but if you succeed, you’re a hero. Grit is deciding to be a hero in spite of the possibility you’ll fail.
Bonus: pay it forward
There’s an additional bonus Commandment, which is ‘pay it forward.’ In this case, ‘pay it forward’ means invest in ‘the little guy,’ or, companies in earlier phases as you were. A place like Silicon Valley couldn’t exist if the successes didn’t go back and become mentors and angel investors. And it also applies to employees: everyone will need to believe in the philosophy and exercise of the ethos in order for its continuity.
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Justin is a writing intern for AbilitySEO with a passion for words and a love of both consuming and creating content. He studied philosophy and, outside of marketing, enjoys volunteering and pop culture. Contact him at firstname.lastname@example.org