Y Combinator’s Paul Graham does a great job identifying the “tunnel full of monsters” that can kill a promising startup. The full article is great, and you should read it, but here are my quick-and-dirty takeaways:
You’ve got to be determined. Nobody else is going to believe in you, so you’ve got to do that yourself.
Pick your co-founders carefully, and most of all for your ability to work with them over the long haul.
Fundraising is slow and hard until it’s fast and easy.
But don’t get distracted by fundraising. Focus on building something great, listening to users, and exercising.
It’s hard to make something people want. Your first idea isn’t likely to be the product that works, so keep trying variations until you get it right.
Whatever happens, a startup is a rollercoaster. You’ve got to stay on the ride to get to the end.
Disruptive startups often have to cope with pre-disruption laws and regulations. It kind of goes with the territory when you are doing something so unexpected we can call it disruptive. “Rogue” taxi startup Uber is a great example of this. People love it, but Uber is wasting time and probably plenty of money fighting existing regulations it apparently thought it could simply ignore.
In business, we often say that it is easier to ask for forgiveness than for permission. But when it comes to the law, that’s not how it works. Even if everybody loves your product and agrees it should be legal, you will still be punished if you have broken the law. What Paul Carr calls the “Cult of Disruption” approach — “let us do whatever we want, otherwise we’ll bully you on the Internet until you do” — doesn’t get you off the hook. That doesn’t mean you should let the law get in the way of your disruptive innovation; it just means you might have to work to change the law before you dive into a market where your product is outlawed.
I don’t know whether Uber planned for those legal bills, but you should. If you think your startup will be disruptive, you need to consider — and budget for — potential legal (or political) work that might be necessary to clear the way for your startup to operate.
Many startups use a vesting schedule or other restricted stock arrangement as a way to give founders and other “sweat equity” investors an incentive to stick with the company through its first few years while nobody is making any money. For example, it is common to give founders 25% of their stock up front, and the rest over the next 3–4 years, either monthly or annually.
The purpose of a vesting schedule is to pay sweat equity investors with stock instead of cash. So, like a salary, a vesting schedule pays out stock over time instead of all at once.
The problem with restricted stock is that is creates multiple taxable events (each date on which more shares vest) for the investor, which is likely to result in painful tax consequences further on. The way to avoid this is to file an 83(b) election.
One of the many things that can bog down a startup is spending time on search engine optimization — getting found online. Your time is better spent building an awesome product that people want to use and link to, but you do need to take care of the basics. This 10-minute video from the Google Developers Blog is a quick SEO action plan for startups (and some warnings on what not to do).
If this is all you do, you can stop thinking about SEO for a while and focus on building an awesome product.
TinderDocs (now Docalytics) is a powerful and innovative alternative to the currently-clumsy combination of contact forms, PDF giveaways, and e-mail marketing. Tech.MN caught up with TinderDocs at the recent Minnesota Cup Semi-finalist Reception, and interviewed co-founders Evan Carothers and Ryan Morlok.