The 30 Best Pieces of Advice for Entrepreneurs in 2013

The 30 Best Pieces of Advice for Entrepreneurs in 2013

Our 2013 roundup of the very best pieces of advice for entrepreneurs shared by experts and leaders across the tech industry.

It started with a gap in the market.

Technology writing comes in many forms. It can be long and lyrical a la The New Yorker. And it can be bite-size — just enough news to grab and go. What we spotted was a lack of tactical storytelling, a need for compelling, long-form writing that would equip readers with tools and hacks they can deploy immediately to build better businesses. Our response is First Round Review.

To date, we’ve featured CEOs from Jeff Weiner to Drew Houston to Aaron Levie, engineering leaders tackling the world's biggest technical challenges like Amazon's James Hamilton, bold thinkers like Medium’s Jason Stirman, and brilliant designers behind lovable products like Mint and Gmail. We did this with one goal in mind: To help incredible entrepreneurs share their insights and expertise so that the next wave of builders may succeed. What follows is a roundup of the 30 best pieces of advice we published this year. Take it with you into 2014, and you may just become the next unicorn.

As for us, we’re just getting started.

1) Check references for real.

Intuit Co-founder Scott Cook is very particular about who he hires. And after 30 years, he has it down to a science — including how to get the truth out of a reference check. The reality is that people want to be nice, so almost everyone will start out by saying how great the candidate is. Cook’s advice is to completely ignore this opening feedback. When they’re done, ask this: “Among all the people you’ve seen in this position, on a zero to 10 scale, where does this person rank?” If the person says seven, immediately ask why they aren’t a nine or a ten. “Then you’ll finally start learning what this person really thinks,” Cook says. He also ends every call by asking the person for other people who could speak to the candidate’s performance. The further you get away from provided references, the more valuable the data.

2) You don’t have to be first to market to win.

Dropbox Founder and CEO Drew Houston should know. By the time he applied to Y Combinator, cloud storage was already a crowded space. But he wasn’t deterred. While many entrepreneurs assume they have to be first to market to win in a category, this is almost never the case. Just look at how Google trounced Alta Vista, Yahoo, and Ask Jeeves. “The fact is that there’s a problem with being first,” Houston says. “You create a market, and if you’re too early, you essentially leave the door open behind you for someone else to do it better.” So he tuned out the naysayers, and 200 million users later, Dropbox is in the lead.

3) Use equity to create real loyalty.

Andy Rachleff is the founder and CEO of Wealthfront, and before that a co-founder and general partner at Benchmark Capital. Having observed years of varying strategies, he developed the Wealthfront Equity Plan to align equity with employees’ contributions to the success of their companies. The tenets of the plan: Avoid cliffs, peg equity to outstanding performance (not milestones), and invest in annual evergreen grants to tie long-term tenure and hard work to ownership stakes. “Encourage employees to think about increasing the value of their options through accomplishment rather than asking for more when they complete a task,” advises Rachleff. Evergreen grants smooth out the vesting process so employees never reach a cliff. “Cliffs cause people to raise their heads and consider their alternatives. It should be avoided at all costs.” Check out the SlideShare of the plan here.

4) Fight like you’re right. Listen like you’re wrong.

This is one of the keys to being a great boss according to Bob Sutton, professor and management expert at Stanford’s School of Engineering. But the most important thing is being aware of yourself and your actions. When you’re in power, people start watching everything you do very closely. At the same time, you start getting more credit and/or blame than you deserve for company performance. It’s called the “magnification effect” — and it’s so strong that while data shows that leaders tend to be responsible for about 15% of outcomes, they usually get 50% of the blame or credit. As Sutton says:

When you become successful is when you should be especially wary you are going to turn into an idiot.

5) To inspire a team, tell a good story.

“Then break it down into an execution plan,” says Todd Jackson, one of the lead product managers behind both Gmail and Facebook News Feed, and now co-founder of Android startup Cover. To rally his troops behind feature changes, he would make mockups showing what the future could look like, and use them to tell a narrative. To gain buy-in for a News Feed redesign, he made the product personal. “Your friends are posting so much awesome content,” he told them. “What if we made it look so good that people looked at twice as many stories a day? If that happened, people would spend twice as much time on the site. People would get twice as many likes, and we’d get twice the revenue. This is something users are going to love. This is something your friends and family are going to love.” If you get engineers excited about what could be, they’ll work hard to make it happen, Jackson says.

6) Get rid of luck.

“When you get lucky, it’s because you didn’t know what was going to happen. The corollary is, if you know what’s going to happen then there is no luck. There is no uncertainty and there is no risk.” David Friedberg, founder and CEO of The Climate Corporation, always favored certainty over luck — and this year he sold his company for $1 billion. Of course every business comes with a degree of risk. You don’t know where your market is headed, what your competitors are planning, even whether people will buy your product. But the more of these uncertainties you can identify, the easier it is to take them off the table. “Identify the unknown, mitigate the unknown,” Friedberg says. “Only then can you enable the outcomes you want and increase the value of your company.”

7) Pay attention to people not problems.

Traditional management never quite agreed with Jason Stirman. In fact, at blogging platform Medium, he’s helping invent a culture without managers. But before that, he ran his own engineering team at Twitter and discovered some leadership hacks of his own. “I’d hear that someone on my team had a problem with someone on another team that brought everything to a standstill — just because they didn’t like each other. I thought, what if I just got them in a room together and we all talked about everything except the problem at hand? When we did, we got some casual conversation going, they discovered some similarities, and by the end of the hour they were talking about how to solve their issues. This was a conflict that literally kept me up at night, and as soon as there was space for them to connect as people, it was fixed. I thought, holy crap, this is a super power.”

8) Dig deep in technical interviews.

Great interview questions focus on specific examples of candidates’ contributions, actions, decisions and impact, says Neil Roseman, former technology VP for both Amazon and Zynga. He suggests the following questions for every project or accomplishment a candidate mentions:

  • What was the background of what you were working on?
  • What tasks were you given?
  • What actions did you take?
  • What results did you measure?

For the best results, only bring people in who worked on projects and products that were significant to their prior companies, even if they didn’t succeed. “You want the employees that worked on important teams,” Roseman says. “Companies like Microsoft make sure to get the best people on the highest profile products.”

9) You are your message and your message is everything.

Brooke Hammerling, founder of Brew Media Relations, has become the go-to startup whisperer when it comes to getting press. And if she has one piece of advice it’s this: Find your company’s story and stick with it. To help her clients nail down their message, she separates the stakeholders and fires questions at them about the product: “What are you? Why are you? Who are you? What problem are you soling and why should people care right now?” What does each person say? Where are the differences? Where are the overlaps? This is how a narrative comes together. But a startup can run this strategy without an agency or communications team. “Come up with your own ideas, compare notes, develop it together,” says Hammerling. “You might end up somewhere you didn’t predict.”

Brooke Hammerling, Founder, Brew Media Relations.

10) Share everything. Hide nothing.

Jonathan Rosenberg defined Google’s product strategy for nearly 10 years. He has a lot of rules for great managers, but the underpinning of leadership needs to be transparency. “At Google, our default mode was to share all information,” he says. “We strived to empower everyone equally. In the internet age, power comes from sharing information, not hoarding it.” Employees like being trusted and hate being surprised. A policy of complete transparency feeds these needs. Rosenberg's rule of thumb:

Back up your position with data. You don't win arguments by saying, 'I think.' You win by saying, 'Let me show you.

11) Beware complexity cost.

“Good engineering is about finding the most cost-effective solution to a problem, whether it’s measured in dollars, hours, morale or lost opportunities,” says Kris Gale, VP of engineering at Yammer. “But some costs are less obvious than others. Among the most dangerously unconsidered costs is complexity cost — the debt you accrue by complicating features or technology in order to solve problems.” An app that does 20 things will always be more difficult to refactor than an app that does one thing, so changes to its code will take longer. In software engineering, complexity cost is introduced in both product design and implementation, but PMs, QA and developers should all be ready to bust it when they see it. If they don’t, that cost is passed along to users, who you may end up losing simply by adding too much.

12) Hire to create the culture you want.

“There is no better way to enforce culture and values than by who you hire,” says Brett Hurt, co-founder and former CEO of BazaarVoice. The individuals you choose to bring onto the team speak volumes, highlighting the traits perceived to be the most valuable for the organization. The same is applicable to firing. “If you fire brilliant jerks, it says to everybody, ‘That’s not going to be condoned.’ If you hire people who have real passion and who love your calling, it’s going to feed on itself,” he says.

13) Make decisions fast and early. Especially when it comes to people.

“The longer someone works for you, the harder it is to change their behavior,” says Michael Lopp, head of People Ops at Palantir. “The longer you don’t deal with something, the less likely you can fix it.” Known to the blogosphere as Rands, Lopp has become somewhat of an expert on managing performance and knowing when to cut people loose. His number one recommendation: “Fix situations as soon as you see them going wrong.” In the end, poor performers end up costing you three to five times more than you think — including your credibility as a leader.

If you're leading a team, your job is your people.
Michael Lopp speaking at First Round's 2013 CTO Summit.

14) Diversity of thought isn’t an absolute good.

Max Levchin is known for many things, among them building one of the best engineering teams in tech history at PayPal. His counter-intuitive contention: Diversity of thought can slow startups down right when speed is their most valuable weapon. “Working solo is the most efficient way to operate,” he says. So when you start to grow, it only makes sense to hold on to this ethos by keeping teams small and on the same page. “The moment a software team wastes time debating which version of Python to use, it’s lost its nimble edge.” To build this early, like-minded team, Levchin took some advice from co-founder Peter Thiel: He wrote down every brilliant person he knew in college. “It turned out to be a list of about 30, and we ended up hiring about 24 of those,” he says. “Then that team was forced to write down everybody smart they knew that they were absolutely confident we could never hire. We went after them like banshees and they would eventually crack.”

15) Avoid assholes, heroes and zealots.

“A lot of people say don’t fire great engineers, but they’re wrong,” says Joe Stump, lead architect at Digg and co-founder of SimpleGeo. “It only takes one asshole to destroy an entire team.” You should fire them immediately, he says. And after that, take on the employees with hero syndrome. “You know, that guy who leaves on Friday and comes back on Monday exclaiming, ‘Hey! I re-wrote the whole site!’” Heroes burn out or they crush team dynamics when they go off and do their own things. Stump prescribes mandatory vacations. Lastly, you have the technical zealots. “The ones who think every screw needs to be tightened with Rails. If you allow your engineers to become zealots, it will force you down a path of only hiring specialists. You don’t want to get into arguments around technical religion. You want to use the best tool for any given problem.” Keep an eye out for zealotry and require flexibility.

16) It’s okay to do things that don’t scale.

Airbnb almost wasn’t. Early on, they had a bunch of listings up but no one was biting, growth stalled, and they didn’t know why. That’s when Co-founder Joe Gebbia spied a pattern: the photos all sucked. “You couldn’t even really see what you would be paying for,” he said. The solution (courtesy of advisor Paul Graham): Go to New York, rent a fancy camera, and replace the amateur photography. There was no data backing this decision. They just did it, and a week later the results were in: improving the pictures doubled the company’s weekly revenue — the first improvement they had seen in almost a year. Initially, Gebbia says the team thought everything they did had to be scalable. It was only when they gave themselves permission to experiment with something non-scaleable that they hit a turning point.

17) You need a mission and a vision.

Most use these terms interchangeably and fail to implement them beyond executive lip service. But LinkedIn CEO Jeff Weiner is convinced that clearly defining both and living by them every day was key to the company surpassing 200 million users. “Vision is the dream, a company’s true north. It’s what you constantly need to be aspiring to,” he says. He defines LinkedIn’s as “Creating economic opportunity for every professional.” Mission, on the other hand, needs to be expressed in terms of concrete objectives, and a company can and should measure how well it achieves them. Along these lines, LinkedIn’s mission is “Connecting the world’s professionals to make them more productive and successful.” Many startups only have one or the other, but a vision without reference to what the company actually does is unmoored from reality, and will fail to inspire and organize the people who work there.

18) To discover great talent, give rookies a chance.

When most people approach hiring, they look for the equivalent of a third baseman who bats .320, hits 40 home runs, 120 RBIs and who’s won a Golden Glove, says former Square COO Keith Rabois. “If you think you’re going to hire someone like that at the early stage, you’re just kidding yourself. This means you need to hire people who are a little less proven. If you think someone could one day bat .320 but hasn’t had the chance, hire them. Because once they do bat .320, you probably won’t be able to.” Rabois put this in action by pulling in a large first intern class at Square. Of the 17 interns recruited, he says four were probably on par with the top 10 to 20% of full-time employees. The whole program was worth it just to have access to that talent.

Keith Rabois (left) in conversation with Rob Hayes at First Round's CEO Summit.

19) Field a team with complementary skills.

As the founder of IdeaLab, Bill Gross has backed and advised 100+ companies and overseen 35 successful IPOs and acquisitions. To make it to the promised land, he says, you need to build a team with four types of people with varying strengths, ideally in large doses:

  • Entrepreneurs: The idea people who explore what it takes to get ideas of the ground.
  • Producers: The doers who push projects forward and get them done. They make the product, sell it, and answer customers’ questions.
  • Administrators: The process builders who plan, organize, devise protocol. They keep your organization running smoothly as you grow.
  • Integrators: The emotional centers who help everyone get along even when they view the world differently.

You want all four people in the room during big decisions, and all four on your management team. At the very least, you want each of these characteristics represented at your company, Gross says.

20) Know how to weather a storm.

By the end of its first year, Pandora was already running out of money. Founder Tim Westergren went from pitch meeting to pitch meeting with no luck, and the company’s core team of 50 ended up going over two years without a regular salary. Looking back, Westergren credits this fortitude to several things: everyone’s pure love of the product; total transparency with his team no matter how bad things got; hiring carefully for people who would come together in a crisis rather than break apart; and knowing, as a leader, that he needed to be the first one in and the last one to leave every day. This didn’t just mean long hours — he went as far as paying salaries with his own credit cards. If you’re a struggling founder, you have the opportunity to put a positive spin on sacrifice.

21) You need to set the example for work-life balance.

Promoting work-life balance has its benefits, including driving down recruiting and operational costs — and opening your company up to a larger, often more experienced talent pool, says SurveyMonkey CEO Dave Goldberg. It guards against burnout and poaching, and makes it much easier to hire brilliant, seasoned executives who have families when you get to that point. In order to make this a reality, Goldberg had to walk his talk. Today, he leaves work at 5:30 p.m. “If you want to shape a culture and build a workplace with a diverse team, you need to prove it with your actions.”

22) Let good be good enough.

“Remember, ‘good for now’ earns opportunities for ‘great’ later on,” says Jeffrey Kalmikoff, lead designer at Betable. Founders, designers and product leaders are all primed to strive for perfection, but this attitude can get in the way. To keep moving forward, teams need to get in the habit of taking on ‘design debt’ — that queue of tweaks and to-dos that could make existing features better eventually. When you’re moving at startup speed, the important thing is having the features out there at all.

Done is better than perfect. There does not exist a time when no product is better than product.

23) Keep hiring standards high in hyper-growth.

Aaron Levie has defied the odds in many ways — he’s a young founder who managed to scale Box 10x into a billion dollar business without compromising culture. He attributes much of this success to keeping the bar high on hiring, no matter how pressing the need to fill a role. To limit “desperation hires” at all costs, Levie’s instituted what he calls the 10-person test. “For anyone you hire, would you want them to be in the first 10 people at your company?” he asks. “If you’re hiring the 400th employee, you would still want that person to be in your original 10. There’s no reason you ever have to relax your standards. People do because of the need for speed and the need for growth, but you don’t have to if you put the right processes in place.”

Aaron Levie speaking at GigaOm's annual conference.

24) To hire women, hire differently.

A number of studies have shown that people perform better at math and science activities if 50% of the participants are women, making gender distribution a key priority. This is definitely true at Etsy, a company that increased its female engineering staff by 500% in one year. Its primary strategy: Providing grants for women to enroll in Hacker School, a three-month intensive training program. Immediately, applications from women skyrocketed, and the company ended up hiring eight last year alone. Etsy CTO Kellan Elliott-McCrea says the grants went a long way toward making the company more welcoming for women. If you’re interested in creating a more gender-balanced workforce he has the following advice:

  • Be serious but inviting. Make it clear the standards are still high.
  • Take a chance on more junior engineers with a wide range of skills; senior women engineers are hard to find.
  • Make it clear the interview process is about building things together, not just proving how smart you are.

25) Give people the “Sunday Test.”

Stripe won’t hire even the most outstanding candidates if they don’t fit the company’s engineering culture. To cut to chase on this question, CTO Greg Brockman uses the Sunday Test: “If this person were alone in the office on a Sunday, would that make you more or less likely to come in and want to work with them? If the answer is not a clear yes, then don’t make the hire. In the short-term, you might miss out on some really great people, but you have to play the long game.”

Hiring bad eggs can impact your ability to hire top talent in the future.

26) Scale your security efforts with your company.

A tiny startup has much different needs than a company like Square or Dropbox. To right-size security strategy, Evernote CTO Dave Engberg refers to the rule of tripling. Basically, when your company goes from 3 to 10 employees, or 30 to 100, the entire tenor changes and there are many new considerations. There are smart ways to approach securing your company’s data at every phase, but there’s one rule in particular Engberg recommends to make sure your efforts are on-point: “Only do something when the cost to implement a security measure is less than the risk you’re protecting against.” Otherwise, it’s easy to misuse valuable resources that you should be funneling into product development.

27) Use these simple tricks for rapid mobile testing.

In the last year, Sincerely launched five successful products, made possible because it actually released closer to 15 — some were just behind the scenes. High-velocity development has allowed the company to learn more about what customers want and how to deliver at lower cost. But, as CEO Matt Brezina advises, achieving this speed requires a few hacks. First, he recommends testing off-brand. Create a separate developer account and ship product. You’ll see how people use an app without an official launch. Sincerely even tested in Canada to flesh out ideas before bringing products to its major market. Second, test on Android before building for iOS. “It takes quite a bit longer for an iOS app to get approved, and that’s a damper,” Brezina says. “With Android, you can have something in the Play Store within a few hours. So it’s worth testing small changes in your Android app and then implementing them on iOS if they’re working.”

28) Don’t shy away from short-term hiring.

Former RockMelt CEO (and current Yahoo Product VP) Eric Vishria has realistic expectations. He knows it’s virtually impossible to find candidates who are perfect and amazing across the board. Even if you do, hiring them is a long-shot. “Instead, you should hire for strength in a couple of areas that matter most to your business right now — someone who’s world-class in the area that is most impactful for you,” he says. “When you search for people, consider your short-term needs. Don’t think about what you’ll need two years from now. After 12 months, the person may scale, your business could change, you may have to replace them. These are all facts of life, but you’re not going to even get to 12 months if you don’t do this.”

29) Remember, your board works for you.

2013 was a big year for Jeff Bonforte, the veteran company-builder who just sold his latest, Xobni, to Yahoo. His board helped a lot, but it took him years to learn how to use board members and meetings effectively. His number one takeaway: Don’t waste time feeling intimidated, put your board to work for you. “Once I learned the board was there to help and not judge, I became better at asking for things.” He started giving board members homework — everything from introductions to funders to recruiting top employees. To his surprise, they actually embraced the opportunity to be useful. Be bold, Bonforte says. “You can tell your board the talent you need and assign them to go get it for you.”

30) Celebrate your wins.

“Make sure you and your team celebrate the wins even when they are small,” says SinglePlatform Founder and CEO Wiley Cerilli. “I know it’s stressful being a CEO, but you have to celebrate with your team. Set goals earlier on that you can hit to build the team’s confidence in their ability to achieve them and your ability to properly set them.” With this in mind, Cerilli sends out a weekly email to the entire company detailing every department's goals. If they’ve been met, the team celebrates. They go go-karting. They ring a gong in the office. There’s ceremony around it. To drive this point home, he quotes Magic Johnson:

It's not whether you can be successful, it's how many people you can help become successful.