Advice for Starting a Business

We could have gotten my 7 figure activewear business, Paragon, to where it is now in a fraction of the time. The problem was that we, like most first time entrepreneurs, didn’t really know what we were doing. Maybe our case was more severe than most. We had no mentors, no industry insiders, no peers, and generally speaking, no clue. If I could go back and talk to myself, here’s some bits of advice I would give.

🧪 It’s not a business.

When you’re starting, it’s not a business. It’s a series of experiments. This is an important distinction. I got this idea from Steve Blank, years after we’d started to find success. "A startup is a temporary organization formed to search for a repeatable and scalable business model.” You need to build the engine before the rest of the car. Product:market fit is your engine. You want to have the mindset of a hacker, experimenter, figure out how to get things done with no budget. Gumption.

🚦 Don’t make stuff unless you have overwhelming proof people want it.

The single biggest mistake you can make is to invest a bunch of time into making something that people don’t want. Knowing this does not stop it from happening. I read The Lean Startup. Then I made a bunch of stuff people didn’t want. It’s definitely possible to delude yourself into thinking something is going to work. You need to have clinical detachment and to question your plans, which is hard to do because it’s easy to become emotionally invested. Just going into bulk production or extensive development with your idea feels like forward movement, so it’s tempting. You may also be unsure of how to test your idea on a smaller scale. That’s the skill you want to develop: figuring out how to get a very shitty but functional version of your product/service in contact with the market as fast as possible, so that you can find out if people really want to buy it. A well designed experiment would get you feedback in days, rather than months or years. This is creating a minimum viable product. Assume that whatever you’re making is probably wrong in some important way. 

Speed is your friend. I can’t emphasize this enough. The faster you can iterate and get feedback, the more likely you are to have life changing results. Uncertainty kills speed. Uncertainty is the ever present element for all entrepreneurs, in any stage of business. You must figure out how to act in spite of it, and act quickly. Err on the side of action.

The best proof is people opening their wallets. It isn’t email signups, it isn’t verbal commitments or praise for your idea. It’s money changing hands.

🤝 Start by helping one person.

If you can’t add value to one person, you can’t add value at scale. I’d follow Sahil Lavingia & Derek Sivers’ advice to focus on helping very small numbers of individual people first. Your goal is to create a manual valuable process, then turn that into a minimum viable product. 

🗣️ Talk to your target customers. A lot. 

Even better if you are one. Being disconnected from their wants/needs is the source of a lot of wasted time and failed businesses. You need to understand what their life is like and what they care about, intimately. When you’re talking to them, don’t ask for feedback on your business idea. Don’t tell them have one. It warps conversations. They try to be encouraging and end up giving you bad data. Instead, ask them questions about their past behavior with how they’ve tried to solve the problem you’re interested in solving. Or maybe they don’t even see it as a problem worth solving - that'd be a great finding. For more on this, check out The Mom Test by Rob Fitzpatrick.

🧠 Choosing your product & market is the highest leverage decision you’ll make.

The amount of difficulty and opportunity for success varies wildly across markets. It is flat out easier to make money in some spaces than in others. Look at your competition. How saturated is the space? How big is the market? Is the market growing? How disruptive would your product be, really? What is the lifetime value of a customer? How often do they buy? What will your gross margin be like? How difficult is production, or development? What are lead times like? How easy is it to scale? What are your exit options?

Your failure or success will have a lot more to do with the answers to these questions than your overall intelligence or determination. I talk later about product:market fit, but that's a commonly discussed topic & this isn't. It matters a lot. Casper had great product:market fit & sold at huge scale, but their customer buys once a decade. The result has been a flopped IPO, years of net losses, and now a PE buyback at half the price. Oof.

💵 Riches are in the niches.

If your product is for everyone, it’s probably for no one. The easiest way to succeed is to find a niche and let them carry you to greater markets over time. One way to know you’ve struck niche gold is when you’ve found a crowd of people so ravenous to solve your problem, they’ve jerry rigged their own solutions at great time or money cost to themselves. 

🌙 Choose something you’ll actually work on.

If you’re starting on nights/weekends, choose something you’re excited and confident enough about to work on consistently. It doesn’t matter if you have the best opportunity in the world if you never work on it because it doesn’t pull you in. Your ability to put hours in consistently is the foundation of the pyramid. A key reason I chose this blog as another venture is because I am able to do it consistently on nights and weekends. Writing doesn't tire me out. You’re looking for an idea with some gravity to it, where it keeps you in orbit.

☝️ Stick to one idea until you grow it or kill it.

Choose an idea to create experiments for, then focus on that. Set a moratorium on other ideas for some period of time. Don’t get sucked into shiny object syndrome. If you’re trying to create an app, a consumer product, and figure out investment real estate all at once, you’re going to progress like an inchworm. Just pick one. 

😰 You’ll reach an inflection point.

Everything is easier in theory than in real life. You’ll discover a bunch of assumptions you made were wrong and there are fundamental problems with your idea. Again, you want to be clinical about how serious they are. There will reach a point where the excitement fades, problems crop up, or you experience a series of setbacks. It starts to feel more like work Maybe a lot of work. More push, less pull. This is when ventures die. Pivot, persist or, if you’ve gotten enough feedback that it really is just a bad idea, give up & choose something else.

👍 Hearing “not interested” is a good thing.

Develop the view that it's a good thing when someone says they don't want to buy the experimental product you're selling. It’s real world feedback, and that’s what you need to guide you. Obviously you’d rather hear the opposite. But it’d suck a lot more to sink a year in, invest your life savings, only to find that out at scale. View this negative feedback as valuable bumper rails, redirecting your ball back towards the pins at the end of the lane. You can also view your own feelings of butthurt here as a potential sign that your minimum viable product is not truly minimum. If you spend a few days making something & find there’s no need, you’re going to be a lot less upset than if you spent 6 months making something to discover there’s no need.

🦄 You don’t need a unicorn or venture capital to become wealthy.

You don’t need to make the next Facebook to make a ton of dough. You don’t need venture capital either. It’s important to understand what VC does. They’re looking for unicorn or bust. Your business turning a 10% profit with solid, steady growth & making you a great living would be regarded as a failure. VC is setup to make businesses to explode or die. I never tried to raise VC and I’m glad I didn’t (though I doubt anyone would’ve been dumb enough to give me money).

🎚️ You’re going for product:market fit.

This is an often discussed topic. Describing it in detail is out of scope for this post, but you’ll want to become an expert on what this means. This goes hand in hand with my advice earlier about choosing your product & market. I’ll add in a comment I don’t see discussed elsewhere very much: P:M fit is a spectrum, it’s not binary. People talk a lot about the extreme ends of the spectrum (no fit, or amazing fit). You can build a profitable business off a decent product:market fit and scale it to millions. We recently updated our flagship product with a new feature and sales increased dramatically. We improved our fit.

🧾 Financial fluency from the start

Take the time to learn how to read a P&L. Pay yourself the wage it would cost to have someone else do similar work as quickly as your business allows. And if it takes forever, that’s a bad sign about your business fundamentals. Note that if you aren’t paying yourself a market wage, your “profit” is bullshit. Free or discounted labor masks problems. It’s fine to do this in the beginning while you’re testing things out, but if you’re 1.5 years into trying to get a particular idea off the ground and it still isn’t paying you, I’ve got some bad news. And once you’re up and running, don’t tolerate a lack of profitability. Be a demanding shareholder. Cut costs. Squeeze your suppliers & vendors. Raise prices, if you can. Profitable businesses don’t go away.

💡 Hold your ideas lightly.

Low on ego, high on open-mindedness. You want your thinking to be nimble and pliable, easily updated to reflect your findings about how things actually work. If you’re open to the idea that you’re wrong, you’ll move faster.

Starting a business is hard because there’s no map. The best we can do is advice. Hopefully this helps!