Startup Mixology Read online

  Table of Contents

  Title Page

  Copyright

  Dedication

  Foreword

  Introduction

  Part 1: Getting Started

  Chapter 1: Entrepreneurial Mind See Problems as Opportunities

  Vision

  Think Less; Act More

  Always Learning

  Risk

  Rule Breaker

  Optimism

  The Harsh Reality

  Celebrate: Enjoy the Journey

  Final Thoughts

  Chapter 2: Ideas Scratch Your Own Itch

  Go After an Industry

  Debate: Should You Build Painkillers or Vitamins?

  The Harsh Reality

  Celebrate: Enjoy the Journey

  Final Thoughts

  Chapter 3: Action Who Are Your Customers?

  What Would a Simple Prototype Look Like?

  How Much Personal Investment Do You Want to Make?

  Do You Want to Quit Your Job?

  What Would Your Dream Team Look Like?

  Who Else Can Help You?

  Starting Simple

  How Do You Find a Cofounder?

  The Harsh Reality

  Celebrate: Enjoy the Journey

  Final Thoughts

  Chapter 4: Formation Forming a Company

  Location

  Employee Agreements

  Intellectual Property

  Legal Advice

  Bookkeeping and Accounting

  The Harsh Reality

  Celebrate: Enjoy the Journey

  Final Thoughts

  Part 2: Product

  Chapter 5: Product-Market Fit Customer Development

  Customer Validation

  The Harsh Reality

  Celebrate: Enjoy the Journey

  Final Thoughts

  Chapter 6: Launch Strategy

  Launch Stages

  Build a Community

  Partners

  Public Relations

  Build Relationships with Press

  The Harsh Reality

  Celebrate: Enjoy the Journey

  Final Thoughts

  Chapter 7: Metrics Types of Metrics

  Which Metrics Matter?

  The Harsh Reality

  Celebrate: Enjoy the Journey

  Final Thoughts

  Part 3: Team and People

  Chapter 8: Team Who to Hire?

  Outsourcing

  The Harsh Reality

  Celebrate: Enjoy the Journey

  Final Thoughts

  Chapter 9: Culture Figuring Out Your Culture

  Living Your Culture

  The Harsh Reality

  Celebrate: Enjoy the Journey

  Final Thoughts

  Chapter 10: Celebration Company

  Brand

  Science

  How to Celebrate

  Moments of Celebration

  Celebrate in Moderation

  Final Thoughts

  Chapter 11: Relationships Social Media

  How Relationships Can Help You

  Tips for Relationship Building

  Relationships for the Long Term

  The Harsh Reality

  Celebrate: Enjoy the Journey

  Final Thoughts

  Part 4: Sales and Marketing

  Chapter 12: Marketing Marketing Strategy

  Types of Marketing

  Putting All Your Marketing Together

  The Harsh Reality

  Celebrate: Enjoy the Journey

  Final Thoughts

  Chapter 13: Sales Sales Process

  Sales Tips

  The Harsh Reality

  Celebrate: Enjoy the Journey

  Final Thoughts

  Part 5: Money

  Chapter 14: Bootstrapping Bootstrapping Tips

  What a Bootstrapped Startup Looks Like

  The Harsh Reality

  Celebrate: Enjoy the Journey

  Final Thoughts

  Chapter 15: Funding How to Pitch to Investors

  How Much Funding Should You Raise?

  Fund-raising Tips

  The Harsh Reality

  Celebrate: Enjoy the Journey

  Final Thoughts

  Part 6: Growth and Change

  Chapter 16: Failure When Do You Shut Down?

  The Harsh Reality

  How to Stay Positive

  How to Stay Positive When Your Startup Fails

  Final Thoughts

  Chapter 17: Success Scaling

  The Exit

  The Harsh Reality

  Celebrate: Enjoy the Journey

  Final Thoughts

  Conclusion

  Acknowledgments

  References

  Index

  End User License Agreement

  Startup Mixology

  Tech Cocktail's Guide to Building, Growing, and Celebrating Startup Success

  Frank Gruber

  Cover image: © Stock/Suzifoo © Stock/Pgiam

  Cover design: Wiley

  Copyright © 2014 by Tech Cocktail, LLC. All rights reserved.

  Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

  Published simultaneously in Canada.

  No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at www.wiley.com/go/permissions.

  Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with the respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor the author shall be liable for damages arising herefrom.

  For general information about our other products and services, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002.

  Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com. For more information about Wiley products, visit www.wiley.com.

  ISBN: 978-1-118-84438-0 (cloth); ISBN: 978-1-118-89873-4 (ebk); ISBN: 978-1-118-89877-2 (ebk)

  To everyone out there living with an idea and a dream, big or small. I'm hopeful you'll find the courage to start, and thankful if this book can contribute to your journey and success in some way.

  Foreword

  I'm a big believer in the 10,000 hours of practice theory.

  If you want to become an amazing guitar player, you need 10,000 hours of practice. If you want to become a great golfer, you need 10,000 hours of practice. And if you want to become a successful entrepreneur, you need 10,000 hour
s of practice.

  However, the other thing you need is to make sure that you're practicing the right things. If you spend your 10,000 hours doing nothing, except playing the basic chords, you will not magically turn into the amazing guitar player you imagined at the end of that journey.

  Generally, my advice to entrepreneurs boils down to a few simple things:

  Make sure that whatever you're doing, you're doing it for the passion, and money isn't your primary motivator. Chase the vision, not the money. If you do so, the chances of making more money are much more likely to happen.

  Be unapologetically true to yourself, both in business and in life. This principle will help you build a unique brand as well as a strong company culture.

  Trust your gut. Sometimes your gut will be wrong, but that's part of what the 10,000 hours of practice of being an entrepreneur is all about. It's about training your gut.

  In my entrepreneurial experience with LinkExchange, Zappos, Delivering Happiness, and now Downtown Project, I've found that there's a lot you can learn from books as well as other entrepreneurs. I wish that the book that you are now holding in your hands had existed when I was just starting out. It contains a lot of great lessons and stories that would have saved me a lot of trial and error throughout my own entrepreneurial journey.

  If you're in the midst of starting your own startup, this book can serve as a great guide and roadmap for things you should be thinking about, and ultimately things that you should be practicing as you form and grow your startup.

  I've known Frank and Jen from Tech Cocktail for several years now. Not only have they been on their own entrepreneurial journey, they are also in the business of being exposed to and learning from literally hundreds and hundreds of startups. You'll find tons of great advice in this book from lots of different entrepreneurs.

  My advice to you is to take it all in, and then chart your own path. There will be a lot of ups and downs, but just remember that it's all part of the journey.

  —Tony Hsieh

  CEO, Zappos.com;

  Author of Delivering Happiness;

  Appreciator of llamas

  PS: The time you spend reading this book will count towards your 10,000 hours of practice.

  Introduction

  In 2005, just weeks before Hurricane Katrina hit New Orleans, I found myself attending the WebmasterWorld's Search Conference in the Big Easy. At a loss for which sessions to attend, I randomly sat in on a session called Blogging for Fun and Profit. I had never really understood blogging. It was an unusual word, it seemed nerdy, and I didn't get its appeal, but I reluctantly stayed—vowing that I would listen but never blog.

  What I didn't know was that this session and what I learned that hour from Yahoo!'s Jeremy Zawodny and PhD Amanda Watlington would be pivotal in my life's trajectory. An interesting convergence of my skills, interests, and new opportunities arose: my computer technology background from Purdue and Northwestern, my inner passion to be the captain of my own ship, my love of writing, and the knowledge that I could launch something online and grow an audience without the help of a large company. Little did I know at the time that attending this blogging session would be the aha moment I needed to launch Tech Cocktail, a tech startup-focused news and events organization, the following spring.

  The next few years included jobs for large Fortune 500 companies, as well as numerous projects I “started up” during nights and weekends. From building a spam-blog-fighting tool to building a college-targeted social network that never quite got off the ground to even building a gratitude journal community app before finally creating a media company focused on startups and entrepreneurs, I can't say I've taken the path of least resistance. It's been long, hard, and frustrating but also exciting, gratifying, and fun. I have new gray hairs (or they could be summer blondes) popping up daily that I now attribute to this journey. And along the way, I've taken lots of notes.

  I've observed that there are thousands of people with ideas who want to create something but don't know where to start. At the same time, I've observed massive shifts in technology and business that have reduced the costs and other barriers to starting a new venture. I've noticed that the media has a love affair with successful startup founders and has glamorized tech startups. I've also noticed that many of those who are jumping into the startup game have very high expectations and are ill equipped to handle the realities of the journey, which can have devastating consequences.

  Although I'm still very much on the journey myself—and probably always will be—I've learned a lot from my own experiences and those of others. So my goal is to offer a step-by-step guide, filled with my own stories, lessons, and observations, as well as many insights shared with me by fellow startup founders, partners, and industry leaders I've met along the way. Whether you're just out of school and starting to code a feature you think could catch on or have been around the block and need some inspiration or additional knowledge to fuel your endeavor, this book will help you along your own entrepreneurial adventure. No one can do it alone—we all need help and advice. Consider this book part of your extended network, where you can reach in and find nuggets of information whenever you need.

  Each chapter starts with essential lessons and advice, followed by a section on the harsh reality of starting up. I want you to be as prepared as possible for the challenges of the journey—and it's a huge challenge. So I'll share stories about those worst-case scenarios and what-can-go-wrong-will-go-wrong situations. I've experienced working all-nighters, taking red-eye flights, running out of money, vacation-skipping, bootstrapping, negotiating, hiring and firing employees, and succumbing to stress-induced illness. Although these are real startup life realities, they are seldom discussed.

  On the bright side, each chapter also has a section on celebrating and enjoying the journey. We'll cover how to celebrate the startup life and all of your advantages and successes, big and small. I'm a firm believer that the incredible difficulty of starting up is all the more reason to stop, exhale, share, thank, and appreciate all the positive moments along the way.

  The purpose of this book is to inspire and give you an overview of the journey you're embarking on. If you have questions along the way, we've designed an online companion at http://tech.co/book to help guide you and provide more resources and tools.

  Maybe you'll be the next [insert today's most famous startup founder here] or maybe you'll turn your idea into a product or service that can become a solid business, earning you steady revenue. We all have different goals. My goal is to help you navigate and enjoy the startup journey, staying healthy and optimistic as you pursue your passion. So let's get started!

  Part 1

  Getting Started

  Chapter 1

  Entrepreneurial Mind

  Fortune favors the bold.

  —Virgil

  My 10-year journey from college to starting up taught me how to think like an entrepreneur and embrace the startup life, a life that I am firmly planted in and thankful for every day. My story may be different from yours, but you'll probably recognize some elements and be able to learn from my mistakes and my observations.

  After growing up in the cornfields of northern Illinois dreaming of a baseball career, I realized in college that it wasn't meant to be, so I decided to jump into computer technology. My computer technology degree from Purdue University landed me a summer internship my junior year with a consulting company in what was then the Sears Tower in downtown Chicago. I was getting paid $20 an hour for the summer, which at the time was a lot for a college student who looked more like a 15-year-old.

  The internship turned into a full-time opportunity and I took it. It wasn't the Chicago Cubs, but the Internet boom was still young and I was close to home and my favorite sports teams. I learned a number of things working at a fast-paced, scrappy technology consulting business. The first was that you don't have to actually have a product to sell it. We sold work that was not yet created off the idea that we could create i
t in just a short time. This was a new concept to me and one that has helped me sell our Tech Cocktail vision not based on where we've been but on where we're going.

  It wasn't until the spring after September 11, 2001, that I learned the hardest lesson. The company wasn't doing as well as it previously had, and there was a cash-flow shortage, so they had to lay off nearly the entire team, including me and many of the colleagues I had helped hire. It was a sad day. I remember walking home in the cold Chicago rain. Getting laid off from my first job out of college taught me a very important lesson: there is no security in working for someone else. I had been raised believing that if you go out and work really hard, you can get a good job, build a career, and everything will fall into place. What they don't tell you is that some of the companies you work for may also need to make changes to survive, at your expense. You might not get a shot at building the career you imagined no matter how hard you work.

  But I still wasn't a rebel yet, so I went to work for a larger corporation, the Tribune Company, with the sense that it would be more secure. It had been around almost a hundred years, and I had grown up visiting the iconic Tribune Tower across from the Wrigley Building on Michigan Avenue. It was a Chicago media icon. So when I landed a job with the Tribune, I was sure I had found the place I was going to build a career—not to mention, they owned the Chicago Cubs. This meant I could see more Cubs games than ever before. I loved working at the Tribune and walking into the tower every day. It was a dream come true for me. But even though Tribune Company adapted early to get newspapers online, I started to realize that they were not aggressive enough—startups like Yahoo! and AOL were land-grabbing for niche industry news eyeballs online, and companies such as Craigslist and Google devastated the online classified and display advertising space.