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When people imagine great founders, they usually imagine a talented superman or superwoman possessing a certain set of versatile and unique skills that make them so good at managing all tasks at once. The truth is that no one has supernatural abilities when it comes to business, although you must acquire some 'superpowers' - abilities that will help you solve all kinds of problems, powers that can help you gain an advantage in this race and set you apart from the rest. Let's turn to American internet entrepreneur and LinkedIn co-founder Reid Hoffman, who answers the most common questions on How to be a Great Founder.
How do I assemble a founding team?
Even the greatest founders have some weak spots. That’s why it’s beneficial to start projects in a team of two or three people, so there are diverse skills serving as a counterbalance. A composition of founders’ diverse strengths and a good startup idea significantly increases the chances of a company to succeed. Another essential thing to be discussed here is a high degree of trust between co-founders. The wrong choice of a founding team may turn out to be a fatal mistake for a startup involving long “divorce proceedings” between the sides.
Where should I locate my startup?
Once you get used to the role of a super person, you might think “I can do this anywhere. I can do this in Antarctica” – and that will show your lack of entrepreneurial competence. In order to be successful, you have to look out for the places where the strongest networks crucial for your startup are concentrated and be ready to move.
Why do so many aspiring soft-developers choose Silicon Valley as their location? You can create an immaculate consumer app in any country in the world, but San Francisco, where a whole ecosystem of journalists, venture capitalists and the startup founding community has developed, provides every opportunity for a tech startup to attract the necessary attention and funding. However, it would be absolutely irrational to launch a fashion company in San Francisco, as there are no networks to support such a project.
Should I be contrarian?
Being contrarian implies using your lateral thinking to create inventive strategies going against the current market trends.
When you consider being contrarian, the first thing you need to do is to talk to every smart person you know in order to receive their critique. Reflect on what's causing these smart people to disagree with you from a position of intelligence. After that, think about a significant thing that could be the ace up your sleeve by asking yourself “What do I know that others don't know?”. If an expert may think that your idea has some serious challenges then it actually isn't contrarian, it just needs to be refined.
There are lots of different ways to be contrarian. For example, LinkedIn never had its rocketship moment, it was compounded year by year. But in consumer internet, that becomes contrarian in the pattern. In other words, while most startups tend to be only successful with rocketships (rapid growth strategy), a steady approach may be valuable for your project.
Should I do the work or delegate?
The answer to this is that you actually need to do both. Sometimes you have to put all your effort into delegating, sometimes you need to dedicate yourself to doing the work and sometimes you should handle both. A thing that makes one a great founder is the ability to navigate within apparent paradoxes.
Should I be guided by a vision or stick to data?
There are two opposite approaches. One is to have a vision of how your project should be realized and stick to it until you eventually make it. The other piece of advice which is usually given with equal vigor is to be guided by data and customer feedback.
The truth is that data only exists in the framework of a vision that you are building, being a hypothesis of where you are moving to. You must always combine the vision and the data because some things you learn from statistics can change your vision. So, use the gathered information to reveal certain areas for adjustment but never abandon the vision you have for the project, keep it as an ideal to look up to.
Should I take risks or minimize risks?
In reality, you have to be both flexible and persistent. The key to being able to do that is to write an investment thesis. An investment thesis is a written analysis laying out the case for why your strategy should generate a compelling return. It can be used to look back and analyze why a particular decision was made in the first place - and if it was the right one.
Remember the “what do I know that others don't know?” question that we’ve mentioned above? Make sure to add all the non-obvious strengths of your strategy to the investment thesis.
After having the document formulated, keep asking yourself “Am I increasing confidence or decreasing value in my investment thesis?”. Use it as a tool helping you to minimize the possible risks. If you are increasing confidence – well done, try to maintain it, otherwise – brainstorm the immediate action plan in order to achieve the expected outcome.
Paypal, LinkedIn, Airbnb – and a good deal of other startups have had plenty of such “decrease in confidence” moments. For example, in August 2000, PayPal was bringing in twelve million and the expense curve was exponentiating – the project had no revenue. However, it served as a trigger to develop a pivot plan immediately and eventually climb into positive territory.
Should I focus on the long term or short term?
Again, the answer is both. You should always have a long-term vision in mind because if you completely lose your direction, eventually you will find yourself in a stalemate. But, at the same time, if you’re not focused on solving the problem that’s immediately in front of you, you're hosed.
Here is an example. Product distribution and financing are two fundamental things when it comes to a good strategy. So frequently when you’re raising money, you have to be thinking about the next fundraiser. You must be thinking about how you’re set up for it, you must be establishing relationships that would be key to that. But the thing you shouldn’t do is to concentrate solely on getting to the next fundraiser. The core strategy in terms of how you’re executing a project is to think about how to make your product distribution work in such a way that the financing works well.
How do I evaluate myself as a founder?
Well, you do need some superpowers. Generally speaking, it’s useful to be a good product person and a good leader, skilled in bringing networks in, persuading people, and, equally important, being able to recognize whether you are on track or not. And when you do that the right way, that's how you end up being a great founder.
Where do I acquire superpowers?
Being a rookie in the startup world, you have to deal with seemingly impossible tasks, discovering your superpowers through trial and error. The first entrepreneurial steps may appear rather challenging, especially when you’re a woman. Female entrepreneurship implies being twice ready for the awaiting difficulties in terms of both qualification and stamina. Using the trial-and-error method, a great many enthusiasts give up their ideas after running off the resources. With this in mind, we’ve created Fe/male Switch, a role-playing startup game for future female leaders that allows users to “fail up” by getting entrepreneurial experience and acquiring all the essential digital skills in a virtual environment. By imitating real-life challenges, our startup simulator enables users, aka gamepreneurs, to step into the shoes of a real businesswoman, and develop their inner entrepreneurial superpowers along the way.
Join our Startup School and study the Startup Playbook education module to learn more about how to be a great CEO and take care of your mental health. Apply for the launch of Fe/male Switch game to build your startup together with other female founders!
References:
- How to be a Great Founder- a lecture by Reid Hoffman.
