How To Make It as a
First-Time Entrepreneur

How to Make it as a First-Time Entrepreneur

Beginning-PHP-6-Apache-MySQL-6-Web-Development

Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

Back in 2006, I snuck out of my finance job and stood at a Midtown Manhattan Barnes and Noble wearing a full suit staring blankly at the “Computer Books” section.

Scanning through the shelf, I found “Learning HTML”, “Java in 24 hours”, “Javascript for Beginners” and other book titles of the format “crazy acronym you haven’t heard of” + “super welcoming phrase like ‘for beginners’, ‘in 24 hours’ or ‘step by step’”.

Unlike previous misguided adventures to the “Computer Books” section, I had done some research and knew that I was supposed to get the book about a “lamp”. I grabbed the closest one I could find “Apache+MySQL+PHP” (the “amp” part of “lamp”) and flipped through the first few pages. I excitedly rushed back to work. I was leaving my finance job in a year to build a tech company and I was going to learn to code.

I didn’t learn to code. I spent nights and weekends trying to teach myself. I took my programming books with me on vacation. But, despite going through all the exercises and writing a “to-do” list app and a “blog” app, I never really learned.

A year and half later (now summer of 2007), I did leave my finance job to start a tech company. But, instead of building it myself, we hired an outsourcer to build a prototype of our first big idea. We could focus on user acquisition and business development, the outsourcer would take care of the coding till we could recruit a CTO.

Nine months later, everything had gone wrong. It was clear the outsourcer wasn’t working out and, despite everything we tried, we couldn’t convince someone to join us as our CTO.

Our tech startup wasn’t going to happen unless I actually learned how to code.

So, in the beginning of 2008, I again found myself at the “Computer Books” section of that same Midtown Manhattan Barnes and Noble. I grabbed the “Learning Python” book and walked straight home.

This time, I wasn’t excited; I was terrified.

If I didn’t learn to code, we were done. I would have to crawl back into the world of finance. I’d have to tell all my friends and family that I had given up, that I had completely failed.

Three months later, not only did I finish the book, but I had re-built the prototype that our outsourcers had spent 6 months building. I was hosting it on a server I set up and we were pushing new features and iterations in hours instead of weeks. I had learned to code. 

I wasn’t ready to become a Google engineer but I could build any prototype we wanted. A few years later, we launched Yipit and we’re now a 25-person, venture-backed startup on the verge of profitability. It changed my life.

Why was this attempt to learn to code different from all the others?

Why did I learn to code? It’s simple. I had no other option.

Truly learning to code your own prototypes is incredibly hard and frustrating. I had to learn endless things including HTML/CSS, MySQL, Python/Django, Javascript, AJAX, nginx and more. I had to spend hours googling error messages praying that someone on StackOverflow had answered it and that I could understand their answer.

I found that there are two types of people that power through the frustration:

  1. Those that are really intellectually interested in learning to code. If you haven’t learned to code by now, it’s highly unlikely you’re one of them.
  2. Those that learn to code as means to an end. They don’t learn to code because it’s fun or because it’s interesting. They learn to code because they need to. They might enjoy it, almost everyone does. But, it’s different for them. They are learning to code because either their job requires it or because there’s something they need built and no one will build it for them.

So, if you’re looking to learn to code, don’t just buy a book or sign-up for a coding course.

If you really want to learn to code, you should do two things:

  1. Think of a project that you really want built and learn enough to build that project.
  2. Put yourself in a position where you have no other option other than to make sure that project gets built.

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

robot

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

It was February 2010. We were noticing that a company named Groupon was taking off and a whole new industry was booming along with it.

Our idea for Yipit was simple, aggregate all these daily deals being sold by different companies and put them in one email. Plus, you could specify categories so that your emails were personalized.

The only issue was that we were working on a different product. The idea of trying yet another concept was exhausting.

So, we compromised by giving ourselves 3 days to build it.

In the first two days, we quickly built an email capture, sign-up flow to collect preferences and a script that would send people an email with the deals that matched their preference.

But, how would we get the deals in our database and categorize them correctly as “restaurant” or “concert tickets”? We would have to build a crawler to parse the deals from HTML from various sites and write a classification algorithm. Not a daily task for us.

So, we took a shortcut. Instead of building a crawler, my co-founder and I would crawl out of bed at 3 am and manually enter the deals into our database. Plus, when you’re doing it yourself, classification was easy. We did it all manually.

Within 3 days, we released Yipit and it took off. We got press and became known as the leader in the industry. Three months later we raised $1.3 million and a year later another $6 million. Today, we’re 25 people, over a million people have signed-up and we’re on a path to profitability.

The funny thing is that within a few months of our launch, several competitors emerged and they all had crawlers. But, from our users’s perspective, we were more advanced since we had categorization which was definitely no easily automated task.

We didn’t actually build a real crawler for the first 9 months and just kept scaling manually by hiring more data entry professionals. Instead, we were able to focus our resources on improving the product and user acquisition.

It’s now clear to me that not building that crawling technology early on was one of the reasons our startup succeeded.

Taking this “manual-first” approach was our secret sauce.

Many Startups Take the “Manual-First” Startup Approach

We’re not alone in our “manual-first” approach:

  • AngelList started with Nivi and Naval manually collecting startup applications and manually matching them up with potential investors. I know because Yipit was one of the first startups to use AngelList to raise funding
  • ZeroCater, a Y Combinator company, started with just a big spreadsheet trying to connect companies with restaurants that would cater
  • Groupon started with just a WordPress blog and manually sending PDFs with the first vouchers
  • Grouper, another Y Combinator company, also started with just a spreadsheet trying to match groups of people on dates

Benefits of the “Manual-First” Startup Approach

There are many benefits to taking a “manual-first” approach to some of the trickier technology challenges including:

  • Fastest way to get to the “moment of truth”. Having your potential customer evaluate your product and see if it addresses their need is the moment every founder is trying to get to and doing things manually allow you to quickly get there.
  • Easy to change your solution if it doesn’t work. There’s no code to re-write, there’s no sunk cost. You just have to change how you’re manually doing something.
  • Will really understand what to automate with tech when you’ve been manually doing it. When you’ve been manually providing the solution, you’ll know exactly where the pain points are that you should be automating.
  • Can really wow your potential customers. When you do things manually, you can try different things that really wow the customer and see which ones are worth trying to scale.
  • Customer doesn’t know how your product works behind the scenes. They won’t judge you for your manual approach because they don’t know that’s how you’re doing it. All they will care about it is that your product works.
  • Your product will “just work”. Because you’re manually providing the solution, the product will just work. When trying to implement a solution with technology, it can be very hard to make sure that it just works.
  • Helps you focus your time on the problem, not the solution. It’s very tempting to fall in love with the technology behind your solution only to painfully realize that the problem you set out to solve isn’t a real problem.

Next time you’re building a new product, I hope you’ll consider a manual-first approach to some of the trickier aspects of your solution.

Reid Hoffman, founder of LinkedIn, once said: “If you’re not embarrassed by your first release, you probably spent too much time on it.”

I also think it’s true that: “If people don’t laugh at how you first implemented your product, you probably spent too much time on it.”

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

starups meme

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

After raising our $1.3 million seed round for Yipit, we raised $6 million a year later from Highland Capital, RRE, IA Ventures, DFJ Gotham and others.

It turns out that the process of raising a $1.3 million seed round and raising a $6 million round were different in a few key ways that we did not fully anticipate and we learned a lot.

Given the supposed “Series A Crunch”, I wanted to share some of those lessons as well as tips from other founders who have gone through the same process.

When trying to navigate the process of raising that next round, here are some things to keep in mind:

  • It’s about the partnership, not just one partner. For most seed rounds, if you get a partner excited, that’s all you need. That’s not true for this round. You’ll need the whole partnership to be on board. Assuming you’ve gotten one partner excited about the investment, I’d ask to meet one-on-one with a few other partners and get them excited. That way, when you pitch the whole partnership, you already have several partners looking to do the deal. As you can imagine, partnerships are a complicated series of relationships and the more allies you have, the better.
  • Have a big vision. My experience was that raising the seed round is about credibility. It’s about showing that you and your co-founder were capable of building something real and recruiting a team. This next round is a big round. Whichever VC firms leads this investment will make you one of their 20 or so main portfolio companies. They want to believe you are going to build a $100 million plus company and not a probable $20 million company. Instead of leading with your traction, you might consider leading with your bold vision. For example, if you were  AirBnB, you might say something like: “Soon, more people will be renting rooms from AirBnB than from hotels.” And, instead, use your traction later to support your vision: “as you can see, we’ve had 10% growth in rooms booked for the last 5 months.”
  • Don’t sign a term sheet unless you are certain they’ll do the deal. In the seed round, it seemed like once you signed the term sheet, things were pretty much done. In this round, the firm will do much more due diligence on your company, your team, your customers and your space. If you sign the term sheet, you’ll get locked down for 30 to 60 business days (1.5 to 3 actual months!). That’s a long time for someone to come back to you and say no. Worse, other investors will know that a VC firm walked away from a signed term sheet after doing due diligence. That doesn’t look good. Make sure they do their diligence up front. Make sure you have heart-to-heart with the partner about their biggest concerns and try to address those before you sign the term sheet.
  • Know your investor’s target return. You want to know how much your investor is looking to return from their investment in your company so that you make sure you’re pitching the right firm with the right message.  For example, do they expect you to sell for $100 million or $1 billion? You can always ask them but there’s a rule of thumb I use. It’s very rough, but it’s in the ballpark. When a partner commits to your company, they’ll consider your investment a real success if they get back 1/3 of their fund. So, if you’re talking to an investor with a $100 million fund. They’ll want your company to return to them $30 million. If they’ll get 20% of your company for the doing the deal, that’s a $150 million target. If the fund is $300 million, then they are expecting $450 million. Again, this is a very rough estimate but it’s helpful. For more on this, see this excellent post by Tomasz Tunguz.
  • You might want to exclude strategics from the “no shop” provision. When word gets out that you are doing a funding round, strategics will start popping up and think about acquiring you for many reasons including that you’re about to become a much more expensive acquisition target and the social proof of a smart VC thinking your business is going to become really big. The “no shop” provision means that you’re not going to take the signed VC term sheet and try to get another VC to give you a better one. But, often, it also says that you won’t engage with any strategics about an acquisition. If getting acquired is something that interests you or your early investors, make sure to ask your lawyer to make it so that the “no shop” only applies to other VC’s.
  • Your industry will not always be this hot. If you’re having serious interest for your next round, it’s likely that your overall industry is very hot right now (e.g., 3D printing, virtual currencies, content marketing, google glass apps, etc.). Unfortunately, all industries have their ups and downs. Before long, your industry will become cold again. If you don’t raise your round before that happens, you might be left out in that cold. Raising a round when your industry starts to weaken and having a competitor or two already funded will make your job much, much harder.

Whether or not there’s a Series A crunch, I don’t really know. What I do know is that raising a round after your seed round is much harder. I hope these tips will help make it a little less hard.

If you have your own lessons raising another round after your seed, please comment below!

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

The spread of the internet will put people into two groups: “People who tell computers what to do, and people who are told by computers what to do.” - Marc Andreessen

Hello-WorldFive years ago, I was firmly in Andreessen’s second group: the non-coders.

We had written an 80-page spec for a prototype and, since we didn’t know how to implement any of it, we handed it to an outsourcer. Six painful months later, we knew the outsourcers weren’t working out.

We were up against the wall and we decided the only way forward was for me to learn how to tell computers what to do. I needed to be in Andreessen’s first group. I needed to learn to code.

Since then, I started telling computers what to do. We went on to build Yipit and it changed our lives.

It’s abundantly obvious to me that teaching myself to code is the number one reason we’re here. Learning to code allowed us to build and iterate prototypes in days, not months.

It’s also one of the biggest pieces of advice I give struggling non-technical founders.

But, that’s actually something that has always bothered me at Yipit.

One of the core tenants at Yipit is that everyone should think and act like an entrepreneur.

But, how can they be successful as entrepreneurs without a basic technical background. I would not have been. If it’s the advice I give other entrepreneurs, shouldn’t I give it to people at Yipit?

So, we’re trying something new at Yipit. We want everyone to have the opportunity to learn to code. We want everyone to be able to tell computers what to do. We want to put everyone in the first group.

That might sound crazy and part of it is crazy. But, we’re not afraid to try things and, the further we get along with it, the more excited we’re getting.

What’s the practical benefit?

In finance, everyone learns accounting. It’s not because everyone is going to be an accountant but because it’s the language of finance. At a tech startup, code is that language. The idea isn’t for everyone to become a developer but for everyone to learn the language of tech startups.

It means everyone will start to get a better sense of what certain words mean: roll-outs, the build, breaking the build, commits, github, back-end, front-end, APIs, databases and more.

It means people will start to get a better sense of what’s hard and what’s not as hard.

It means that instead of people asking for things, they can start making those things happen. Anything from copy changes on the site, small bug fixes, writing their own reports, writing one off scripts to do their own analysis when excel just isn’t enough.

It could mean pairing with one of our more experienced developers on a new feature reducing the communication cost.

It could mean us moving our infrastructure into more of a service oriented architecture and having people work on their components without fear of bringing everything down.

It could mean hacking together quick tests and, when they work, bringing them back and having our more experienced developers build solid components.

But how exactly?

Several of our younger engineers came to Yipit with little to no technical background. And, during that time, our more experienced engineers have successfully been able to mentor them into becoming core contributors to our code base.

Along the way, we’ve built a curriculum. Each person gets paired with a more experienced developer and goes through the program:

  • We kick it off with a talk on the major components of the web stack largely based on the 6 things you need to learn to build your own prototype
  • We spend two weeks learning the basics of python via the excellent Learning Python the Hard Way
  • We then get a very basic understating of our web framework, Django, by working through the Django Tutorial
  • Everyone spends a day coming up with a super basic idea for a fun web app that they might use with their friends or family
  • We then spend the next two weeks getting practice building a web app by working through more Django tutorials including a todo, blog and calendar apps
  • Once done, they’ll spend two weeks building their own simple web app based on what they’ve learned
  • From there, we’ll spend some time learning the basics of systems work by getting their app deployed on Heroku, they can dive more into HTML/CSS and strengthen their knowledge of programming via Udacity’s course

The goal isn’t for everyone to become full developers but rather for everyone to learn the language of tech startups, to make better decisions, to become more self-sufficient, to truly become entrepreneurs within Yipit.

Interested?

If you’re smart, hard working and want to learn how to build things online, send an email to jobs at yipit dot com or go to our jobs page. We’re looking for new developers (no CS background necessary) and a data analyst for Yipit. In both positions, you’ll learn to code.

If you’re in finance and consulting and looking to break into tech startups, this could be a great opportunity to take the leap.

If other tech startups have tried this, we’d love to hear about your experiences. We’ll make sure to follow up a in a few months with the good and the bad that we’ve learned.

Think this is a terrible idea?

There’s definitely a chance that this isn’t a great idea. But, at Yipit, we are scientists and we try things. If it doesn’t work out like we hope, we’ll learn and iterate on the concept, just like we do our product.

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

Note: This post is loosely based on our experience 2 years ago when TechCrunch covered Yipit’s launch.

You wake up earlier than normal, grab your iPhone which you slept on top of and do a twitter search for your startup name.

Boom. A tweet every 5 minutes.

People are re-tweeting the TechCrunch article covering your startup’s launch. TechCrunch just said you might be the next big thing. You even see a few random people recommending your startup to their followers.

You giddily open your email and you’ve got a bunch of messages from your friends at the co-working space congratulating you on the TechCrunch piece. One of your friends says “you’re famous!” Your parents respond with “Congratulations!” after they read the email where you explained to them that TechCrunch was a really big deal.

You crawl over to your laptop and pull up Google Analytics. You’ve never seen anything like this. Your previous traffic looks like a flat line next to yesterday’s huge 8,253 visits.

After months of toiling away in obscurity, you feel like you’ve finally made it. People know what you’re working on now. People all over the world are now using your product. Paul Graham should have never rejected you from YC.

You then you pull up your event log in SQLPro to see what all these new users are doing.

Hmm. That’s weird. Even though you had 8,000+ visits, you only signed up a little over 1,000 users. “Sounds like we need to do some work on that landing page”, you think.

You start looking at the emails of the users who signed-up and get annoyed with some of the fake emails: asdf@gmail.com, fu@gmail.com. “Ugh. Going to be hard to retain those users since they won’t be getting notification emails,” you mutter to yourself.

1,000 new users is still really good except a bunch of them didn’t really go through the full sign-up process. A bunch of people didn’t put in their interests. How are they supposed to have a good experience without customizing their interests? You run a quick SQL query and the number of users that made it through the sign-up flow: 200.

You send off a quick text to your co-founder asking if he was really sure that sign-up flow bug had been fixed.

And, while you don’t want to do it, you force yourself to see how many people came back today. The answer: 3. Really? Just 3. It’s still early, but can you really expect more than 50 to come back today?

You are happy to see people are still signing-up via the TechCrunch article but way less than yesterday. You do some quick math and then it hits you. When it’s all said and done, TechCrunch, best case scenario, will have given you a grand total of 200 active users.

Was that our big launch?

Why didn’t more people sign-up? Why didn’t people complete the sign-up flow? Why weren’t people coming back?

Now that people covered our startup, how are we supposed to get more press?

Why aren’t our users pushing their actions to Facebook and Twitter?

We got some users to invite their friends but why aren’t their friends accepting the invite?

How are we supposed to get a viral coefficient greater than 1.0 when people won’t share on Facebook or accept their friends’ invite?

Should we try SEO?

Chris Dixon said 10 million users is the new 1 million users. 10 million?! We have 400 active users.

Now what?

Welcome to startups.

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

After about 6 months of struggling to get something off the ground, I realized a sobering truth: I had no idea what I was doing.

My startup instincts were terrible.

So, I went on a mission to learn from others.

And while “saved our startup” may seem dramatic, it really isn’t. Each of these books has a significant impact on how we approached a key area of our startup.

I honestly don’t think Yipit would be where we are today had we not learned their lessons:

  • Never Eat Alone – I used to hole myself up in my apartment thinking that an hour spent working was always better than an hour spent meeting someone else. This book convinced me I was wrong. I started getting coffees, breakfast and dinners with other founders and potential investors and I was consistently amazed by how much a single 30-minute conversation could cause us to completely re-evaluate our strategies.
  • Influence: The Psychology of Persuasion - So much of startups is getting your users to take certain actions. Getting them to sign-up, share a link, try out a product, etc. Constantly improving the conversion rates of each of these actions is at the core of what most startups do. This book laid out 7 key principles that will help you increase those conversions. Once I read this, I started seeing how every successful company uses them. These principles don’t replace a good product, but they can make it so that more people give your product a chance.
  • Getting Real – Like most other first-time founders, I could get lost in all the potential problems and corner cases our product would struggle with. This book taught me to ignore that instinct. A passage that really struck home with me was that 37Signals launched BaseCamp without billing because they figured they had 30 days to get billing done. While it seemed insane, it both allowed them to focus on problems they currently had and forced them to build a very simple billing system.
  • The Lean Startup – I think of our startup’s journey as pre- and post- learning about the Lean Startup movement. It completely changed how we approached our startup and I owe much of our success to its teachings. Plus, not only did it help us when we were getting off the ground, it’s helping us today as we apply the strategy to new products at Yipit.
  • Don’t Make Me Think – This is an old book, even when I read it four years ago, but it really taught me to put myself in the shoes of our users. It taught me that if the user can’t figure something out, it’s my fault not their fault. It taught me about simplicity and calls to action and re-using existing user interface design patterns.
  • Django Book - I’m not sure this is still the best way to learn Django anymore. But, when I decided to teach myself to code, this online book showed me how easy it could be to build web prototypes. I couldn’t believe how powerful a framework Django was and, within months, we were building and launching our own prototypes. This was the single biggest step-function change for our startup.
  • Startup Metrics for Pirates – Lastly, while not a book (though it should be), Dave McClure’s framework for thinking about startup metrics is brilliant. I found a video of him online giving his talk. Despite it’s terrible recording, I watched it twice, back to back– it was that good.

And, while you may think that reading a whole book about these concepts may not be a good use of your time, keep in mind that the challenge isn’t just finding out about these concepts but absorbing them.

Sometimes you just have to read 100+ pages to finally stop stubbornly following your misguided instincts, I had to.

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

Since going down the startup path, I’ve made so many mistakes, struggled so many times, failed in almost every way you can.

But, we turned the corner after a few years of hard work. We’re now 25 people (we’re hiring!), raised $7.3 million, and just had our best month ever.

I often fantasize about going back in time and giving myself advice based on what I’ve learned over the last 5 years.

I probably wouldn’t have listened but here’s what I would have told myself:

  • Teach yourself to code. After a disastrous experience outsourcing, you’ll eventually make this decision. I just want you to make that decision today. Of all the things that will happen, this is the single biggest step function change you’ll experience. Also, I know your outsourcers used Perl but please do not teach yourself Perl. Teach yourself Python/Django or Ruby on Rails.
  • Stop holing yourself up in your apartment. You think that an hour spent working is more productive than grabbing coffee with another founder. The problem is that you don’t yet know what to do in that hour. Talking to other founders, you’ll get some valuable advice that will help you save weeks of time. Plus, those founders will eventually introduce you to new hires and investors.
  • Don’t be afraid to talk to potential investors. You keep avoiding it because you know you’re not yet ready to raise funding. While you’re right, you should still meet with them to get advice. Investors want to have a relationship with you and not just shotgun fund you. When you finally do raise a round of funding, it will have been with investors who had already gotten to know you.
  • Stop worrying about PR. You spend too much time thinking about it. Your startup won’t take off because you got great PR. It will take off because you built a great product. PR is a good way of getting some early test users. It’s not how your company will take off.
  • You’re not supposed to know what you’re doing. You keep trying to rely only on your instincts. The truth is, your instincts are terrible. You don’t know what your’e doing and it’s okay. You’ll realize this at some point and go out and get advice. You’ll eventually stumble into the Lean Startup movement. I just want you to do this sooner.
  • Celebrate the small victories. That feeling that you’re not quite where you want to be won’t go away. The way you feel now hoping to get your first 1,000 users, you’ll feel the same way when you’ve raised $7.3 million and have 25 people working on the team. You’ll never be satisfied with your progress so take time to celebrate the milestones.
  • Don’t worry about all the problems you don’t have yet. Focus on the one big problem in front of you. There’s a good chance the other problems you’re worried about either will get solved on their own or won’t be as a big deal as you think.
  • Build your prototype in weeks, not months. You’re going to get lots of ideas. Don’t spend months trying to build a prototype. Build something simple to test out the core assumptions of your idea. In a few years, your prototypes will be built in days.
  • Your first few prototypes are going to fail. You’re going to work really hard on your first few prototypes only to find out that they don’t work. That’s okay because you’ll learn so much that it will make you more likely to succeed with your next prototype. But, what’s not okay, is spending months and months building those prototypes.
  • Lastly, I have an idea for you. When the iphone comes out, build a photo sharing app where you help your users make their photos look better by adding filters. Call it “Instagram”. Trust me.

While I have yet to figure out how to go back in time, I hope others who are just starting out can benefit from the advice above.

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

When we quit our jobs to start a new company, the first question we always got: “So, what are you working on?”

It’s actually a question I hated getting.

It puts you on the spot. You feel like you’re getting sized up. You have to justify to this person why you thought your idea was good enough to quit your job. Why this was going to be the next big thing and you’re the one that thought of it, not them.

Luckily, I had a quick answer: ”Actually, we can’t really tell you. We’re in stealth mode.”

Why were we in “stealth mode”?

We had the same reason almost everyone else had, we didn’t want to awaken competitors or other entrepreneurs to our great new idea.

But, in retrospect, I know that, at least for me, it wasn’t the only reason.

We were in stealth mode not for fear of competition but of finding out our idea wasn’t very good.

You’ve quit your job. Your friends and family are behind you. Everyone’s waiting for what brilliant thing you’ve come up with. I mean, you quit your job, so it must be a really good idea. But, the truth is you’re not so sure it’s that brilliant. Somedays you think it’s great. Somedays you think it’s doomed.

So, instead of facing those fears, we could just say we were in “stealth mode”.

But, that fear sadly prevented us from having many important conversations with potential customers, investors, journalists, and other founders.

When we finally overcame those fears and started talking about our ideas, it was shocking how much a single conversation could impact the direction of our startup.

Letting go of “stealth mode” was one of the best decisions we made.

Overcoming the Fear

I’ve put the various fears of failure into buckets and how we overcame them:

  • Fear of family, friends not liking our idea. We started thinking about our ideas as experiments and expressed them as such. While they were supportive of us, they were quick to give honest feedback on our ideas which became a valuable source of input. Especially valuable were other founders who gave us great advice on product and market.
  • Fear of strangers not liking our idea. As we started thinking of our ideas as experiments, strangers became an excellent opportunity to practice our startup pitch and collect some feedback. You’d also be really surprised how random strangers may happen to know someone or something that can dramatically help your startup.
  • Fear of potential customers not liking our idea. This is by far the worst fear. We quickly learned that customer feedback was an essential part of product development. A customer not liking our idea was a great source of learnings so that we could iterate to a better product instead of guessing for a year what people might want.
  • Fear of an investor not liking our idea. We realized that talking to investors about our early ideas was a great way to develop a relationship. To be clear, it’s not about pitching them for money but for getting feedback. By the time our product started taking off, they already knew us and were impressed with our progress.
  • Fear of a journalist not liking our idea. Journalists have way more stuff to do then find a bad product from a first-time founder and write about how no one should use it. It’s hard enough getting journalists to cover your startup when it’s good. Good luck trying to get them to write about it when it’s bad.
  • Fear of competition. While this was more of a superficial fear, we realized that any good idea had many teams working on it at the same time. We were going to succeed because of our team and our approach and not because no one else was trying. We also became followers of the lean startup movement and our idea to prototype cycles went from months to days.

Unless you have an unbelievably good reason to be in “stealth mode” and it’s very unlikely you do, get out of it. You’re missing out, we did.

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

You can put all of today’s apps into two user acquisition buckets.

There are the apps where people push their actions to Facebook and their Facebook friends sign-up for the app (e.g. Instagram, Foursquare, Socialcam, Pinterest) and then there’s everyone else.

Not being one of those “viral” apps is okay; but, if one of your competitors is doing it, you may be in some trouble.

So, how do you evaluate whether you could be one of those “viral” apps? You should consider if you’re app is capable of “many-to-many” sharing.

The First Many

The first many refers to people using your app many times a month.

For example:

  • People walk around with their phones and have reason to takes lots of pictures on Instagram
  • People browse lots of recipe sites, fashion blogs, e-commerce sites and thus pin on Pinterest
  • People go out a bunch of times during a month and have reason to check in on Foursquare

There are many great apps people use that don’t have this first many like TaskRabbit, Groupon and Uber. Those are services you may use every once in a while but most will users won’t use them frequently enough to satisfy the first many.

However, you can do things to encourage your users to take more actions on your app. For example:

  • Instagram gave people tools to take nicer pictures causing them to take more pictures
  • Foursquare has done lots of work to make checking-in as fast as possible to encourage more check-ins
  • Socialcam realizes that people may not have many videos to take and share a month and have thus been seeding their content with YouTube videos like the Dark Knight trailer

The Second Many

The second many referes to a user wanting to share the action they take on your service with not just one friend but many friends (i.e, push to Facebook).

For example:

  • People broadcast their Instagram pictures to their friends on Facebook
  • People push their Pinterest pins to all their friends on Facebook
  • People share their Foursquare check-ins on Facebook

As with the first many, there are lots of successful apps where users don’t share their actions with many friends. For example, most people don’t share their TaskRabbit tasks, Groupon deals or Uber rides with all their friends but may coordinate with a specific friend or spouse.

There are ways to get users to push their actions more consistently to Facebook. Services like Socialcam and Spotify have been very aggressive on this front. They don’t ask users to specify, for each action, whether it will get pushed to Facebook (like Instagram and Foursquare do). Instead, they default to having all actions posted to Facebook. While questionably aggressive, it clearly helps them satisfy the second “many”.

Many-to-Many Sharing

When both sides of the expression get into the “many” territory, assuming it’s not a niche product, you may experience “viral” growth.

This growth is very powerful and it may be worth re-working how your product works to encourage the “many” on both sides of the equation. Clearly, Socialcam and Spotify have done so.

As a word of caution, while it will may help you get to millions of users, this doesn’t speak to retention. It’s likely that the users signing-up because they saw something on a friend’s Facebook feed are much less likely to turn into real long-term users. Also, the more aggressive you are with pushing their actions to Facebook, the more angry you may make your users.

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

A few days ago, Facebook Co-Founder Dustin Moskovitz said that Y-Combinator’s “No Idea” round for entrepreneurs is “really wrong”.

He further says “the only reason you should become an entrepreneur is because that’s the only way the idea will come into the world.”

What’s funny is that had a young Mark Zuckerberg taken his advice, Dustin might not be a billionaire right now.

It’s not like Mark Zuckerberg dreamed up the idea for Facebook and then turned himself into an entrepreneur to make it happen. Facebook wasn’t Mark’s first project.

He had worked on a bunch of projects from building an algorithm that suggested the next song to play in your mp3 player to a site that compared pictures of people.

It’s not like these were unbelievable ideas that Mark simply had to put into the world. What he had was a passion for solving problems, creating interesting solutions. The skills he learned working on those projects prepared him for Facebook.

And, while some people take the jump into startups because they have an idea that they really want built, the idea itself rarely works.

What keeps them going is that they realize they have a passion for spotting large unsolved problems, creating crafty initial solutions to those problems, building things from scratch, defying the odds, refusing to fail, proving wrong those that doubted them, convincing talented people to help them, fighting off competitors, seeing millions of people use their solution, rewarding those that believed in them and ultimately changing how the world works.

It’s not about that one brilliant idea. Ideas come and go and often don’t seem very magical at first. It’s about your passion for taking an idea, running with it and building off of your progress.

And, so I thank Y-Combinator for helping to dispel the myth that to become an entrepreneur you need a moment of brilliance.

The last thing we need is people convincing smart and talented potential entrepreneurs that they should be waiting around for that brilliant idea.

Those ideas rarely come until someone starts walking down the startup path. And, even when an idea for the next big thing does come, it rarely looks like it.

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.