How I wish I'd started my entrepreneurial journey - and how I suggest you start yours
I give myself a barely passing grade for the decisions we made when we started Day One. It was far from perfect, and in hindsight I would do a lot of things differently. We also got a few things right, and I’m not too hard on myself because in many cases we made the best call we could make in the moment. I would, of course, make a different/better call now, but that’s life.
As I’ve reflected back, it’s become clear to me where the important moments and decisions lie. And now when I talk to founders, I see them in these moments, facing these decisions - and it’s now my mission to help them make the right call.
So first off, before I get into 9 moments/decisions that define the journey for every early stage founder, I want to put out the offer: if you’re going through this phase, and facing these decisions, we want to help. You can grab time with my cofounder Rahul (here) or myself (here), and we’d love to be of service.
So without further ado, here are 9 pieces of advice that will set you up for success when you’re just starting your entrepreneurial journey.
#1 Don’t quit your day job
This is becoming more and more important to me, especially as venture capital undergoes a correction and becomes harder to get. There are always exceptions, but the vast majority of founders should start working on a new business while continuing to work and bring in a steady income. For many with families or other responsibilities, and without serious cash saved or other wealth, this is the only feasible way, and I want anyone considering this to know THIS IS THE SMART MOVE. You are not displaying a lack of dedication. You are not handcuffing your startup. You are setting yourself up for success by playing the long game.
This is one I didn’t do when starting Day One, but was one of those choices where I made the best decision at the time - but still I wish I had a separate source of income during the first year of building.
#2 Don’t swing for the fences with your first business
I’ll go ahead and say it. Most founders shouldn’t build a venture backed startup as their first business. To build a successful venture scale startup requires you to reach a literal billion dollar valuation, at least. And you have to get there within 10 years to make your investors happy. To achieve that, you’ll do things that turn your startup into a “go big or go home” exercise… and 9/10 you’ll go home. So if you want a real chance of making an impact that is sustainable, and achieve some level of financial outcome, don’t go down the VC route for your first startup.
This is one piece of advise we ultimately didn’t follow, although we started out bootstrapped and building a small business. Again the decision to raise VC was the right one in the moment for us, but perhaps if we had a separate source of income, we wouldn’t have felt the need as strongly.
#3 Build a business in an area with demonstrated demand
So how do you get a business off the ground without outside capital? You make money from the very start (and you keep your day job until that revenue replaces enough of your salary). And how do you make money from the very start? You solve problems that people are already paying to solve. You don’t create the next fancy social network. You lean into your strengths to offer a product or service that you know you can deliver, and you sell it to people who are already buying.
The easiest option is to go into a field that has a supply/demand imbalance. I can’t get a landscaping company to even come to my house to give me a quote. I want to give them money and they won’t take it. That’s a signal. Or in a more digital realm, so many businesses need marketing, sales, content, design, or development help, but find it either expensive or difficult to hire for these roles.
We largely got this one right, and to point #5 below, we sold seats into our first cohort before ever really building.
#4 Find a niche and get to know your customer really well
This is a mistake we made at Day One. We saw that most of the other founder fellowship programs were serving the upper tier of tech and startup people… so we built Day One for “everyone else”. On one hand that sounds great, serving an underserved group, but in reality it was too broad of a market. We knew it was broad and we still kept going.
To succeed, whether building a small business or a venture scale startup, you need to get narrow. You need to get uncomfortably narrow. It is much easier said than done, but it’s absolutely necessary.
#5 Don’t worry about your competitors
If you’ve already taken the advice to build a sustainable business, and to build where demand already exists, and to find a niche, then you don’t need to worry about competitors at all. If anything, competitors are a positive signal - look for competitors that are doing well, but not providing good service, or not serving your niche very well. Even if you find someone doing your exact thing in your exact niche… don’t worry. The world is big enough for two small/medium sized businesses.
At Day One, we weren’t scared of our competitors, but we did get distracted, as companies like On Deck and Launch House raised tens of millions of dollars. It’s much better to put on blinders and run your own race (which would have been easier if we had a narrowly defined niche).
#6 Sell before building
This is a build on point #3. One way to prove that you are building in an industry with existing demand is to sell before you build. For all small businesses, this is the way. There’s almost no reason to invest in building out a product or service before you sell it. That doesn’t mean you don’t refine your pitch, create sales collateral, etc. But to build a product or service before selling is a gamble and you’re almost certainly going to have to change what you’ve built (quite significantly) once you hear what the market actually wants. So just start by selling. Bluff a little. Figure out how to deliver after you’ve made a sale. This is one we got right at Day One.
#7 Don’t forget the business model
Even if you’ve selected a niche and have customers before building, you still need to put thought into how you’re going to capture value (i.e. pricing) as well as go to market. To skip these steps up front is a recipe for finding yourself in a trap - you might have a product or service people want, but a business model that you can’t grow or won’t make you money. You might realize too late that you need to raise your prices, which then might price out your initial niche.
This is one we got wrong, and we glossed over this because we saw other fellowship programs for founders growing so quickly. Ultimately, we found ourselves in a “dead zone” where we were too expensive for ads but not priced high enough for sales.
#8 Don’t worry about building on your own
If you think you need a cofounder to get started, you don’t. For a venture scale startup, you might need a cofounder, and it’s probably advantageous to have cofounders (two simple reasons - you can do more during the phase when you’re all earning sweat equity, and you can cover more skillsets). But for a small business, a cofounder is less advantageous, and it’s not worth the time to go out of your way to find one. And you definitely shouldn’t put off starting just to find one. If you have one, great, but even then, cofounders can make the small business journey harder (you need to hit a higher revenue number to support you both), which may outweigh the benefits (two sets of hands).
We largely got this one right. I launched Day One on my own, not waiting for a cofounder, only to join forces with Rahul as a result of launching. It’s been the right decision for us as we raised venture and we benefited greatly from our complementary skillsets.
#9 Just get started
Ultimately, action beats inaction every time. When making decisions, a good heuristic is that if the decision can be reversed easily, then make it quickly, learn if it was good or bad, adjust and move on. If the decision can’t be reversed, then take more time. Many decisions a founder has to make are of the former, and you’re operating in such ambiguity that waiting for full information makes no sense. But for big decisions like the ones I outlined here, to reverse course on quitting your job, taking VC, picking your market, picking the wrong business model… these are painful to reverse. So get started, AND put in the thinking to feel confident that you’re doing it right.
We also largely got this one right, albeit with a few more mistakes than I would have liked.