Reflecting on my First Startup Attempt

How it changed my own thoughts on entrepreneurship and investing in the startups of others.

“Would you rather be a founder or an investor?”

An interesting icebreaker at the most recent networking event I went to, but of course a false binary; especially given anyone can invest in private companies via equity crowdfunding.

I have both run my own business before as well as maintain my own startup investment portfolio.

In college, I made more money tutoring than I did my first year in “the real world” at a full-time job, but when I then tried to scale my side hustle tutoring business and started using words like “ed-tech” and “start-up", it became a self-funded money pit that needed to be ceased. How could I go from making money over the internet with ease while a college student to bleeding money just 2 years later post graduation? 

Now, being only a couple weeks away from a soon to be released Beta Launch of a new, retail investor focused startup research platform that I’m co-founding, I’ve spent significant time reflecting on my past business venture to hopefully improve with this go around.

Here are bullet point takeaways for how that experience shaped my own thoughts on entrepreneurship, sprinkled in with how I now think about investing in other startups.

• It might be hard to get the ball rolling, but that’s better than trying to push it uphill - when you find something that works, keep that momentum going. It was really easy to obtain tutoring clients when I was tapped into a consistent rhythm of clients providing happy referrals, but once I tried to tap back into that it felt like I was starting over, even with the same skill set and improved technical product. 

• Brands that have good customer satisfaction scores and a loyal community are tougher to replicate than brands with just good technology. Most technical solutions on the market aren’t revolutionary at all - your ip is probably worth less than you think it is. What could be more valuable is the community built around it. 

• The customer is the North Star and happy customers provide guard down referrals. Not only do organic referrals cost no money or time to obtain, but they expect to have a positive experience with you - these initial expectations help relieve natural buyer hesitation. 

• Unless you’re seeking to build something extremely complicated (say self-driving cars) you already know the product can probably be built. Most businesses fail not because they can’t build the product, but because their customer acquisition costs are too high to successfully sell it - and in the worst cases, when no one even wants the product if it’s being given away. Getting a product out is a big milestone and accomplishment, but only the very beginning and by no means a measure of business success.

• Resist the ego urge to scale - have the unit economics down before even thinking about it. 

• Don’t build for potential investors in mind. Build for your customer. And you should know your target customer better than any investor. Unless you accept investor money, it is a waste of time to worry about what someone else thinks who isn’t your target customer.

• Don’t compare yourself to anyone else because you don’t know their full story and circumstances. I often remind myself of the Morgan Housel quote “Someone driving a $100,000 car might be wealthy. But the only data point you have about their wealth is that they have $100,000 less than they did before they bought the car (or $100,000 more in debt). That’s all you know about them.” I think it’s easy as a younger founder to be consumed by comparisons from outside pressure and media such as the Forbes 30 under 30. If I don’t make the Forbes 30 under 30, I’ll be damned if I don’t keep at it for the 60 under 60 or 90 under 90, but regardless, I am at peace knowing I am doing the best I can with kindness and integrity while learning along the way. 

• Assuming you invest and get equity in an early stage company, you’re very most likely relying on the company to either get acquired or go public to ever see your money again. Not all companies are meant to get acquired or go public. Not all founders want to get acquired or go public. Having alignment here is crucial.

• You need to be in control of your own product. Think about what you want to build and learn to build it; if you fail, at least you learned something.

• Don’t rely on building a cheaper solution as an obvious selling point when you don’t have customers, companies losing money are aggressively marketing to try and claim those customers before they even hear of you anyway. 

• Don’t worry about how 5 clicks into your product looks if too few make it past the first.

• Having a co-founder has more benefits than skill and idea complementation - it helps with the increased uncertainty and range of emotions starting a company brings compared to the safety net of stable employment. Co-founded companies also have at least 2 people believe in the vision from the start vs maybe just 1.

What are some lessons you’ve learned / insights you’ve had by either founding or investing in early stage companies? It would be great to hear from you in the comments.