I have been fielding a lot of questions from budding entrepreneurs in the Boston area. I thought I would put together this FAQ for first time founders to put some more tools in their arsenal and help save them some time.
This is an MVP. More content and better UX are on the way. Check back for new updates.
Got questions you would like this FAQ to address? Email us at firstname.lastname@example.org and we’ll do our best to answer your questions.
- Getting Started
- Startup Challenges
- Founder Dating
- Market sizing
- Primary Market Research
- Product Development
- Leadership and Team Building
- Perseverence versus Pivoting
- Confidentiality Issues
I am new to entrepreneurship. What are some good books to read / blogs to follow?
Check out our resources page here for good reads and other recommendations.
I am new to the Boston startup ecosystem. Where can I go to meet other founders or get access to local resources?
Check out Rob Go and Jay Acunzo’s Hitchhiker’s Guide to Boston Tech. It lists everything and the kitchen sink and is an unbelievable resource.
I am with a startup that needs help. What kind of support can I get from MIT?
If your startup has at least one founder who is a currently enrolled MIT student, you can come to the Martin Trust Center for MIT Entrepreneurship for coaching support. The Trust Center provides coaching to students as the need arises, stocks ramen noodles and serves free coffee, and is also home to a lot of resources available to enrolled students at MIT.
If you have no current students but at least one founder is affiliated with MIT, you can try the MIT Venture Mentorship Service (VMS) which serves all of the MIT community. This is a structured mentorship program in which VMS will assign a team of highly accomplished mentors, who will work with the startup over a period of several months (or longer if it makes sense) to help them build and grow their business over time.
If your startup does not have any affiliation with MIT, you can leverage the MIT Enterprise Forum of Cambridge, which serves the entire startup community in the area. The MIT Enterprise Forum runs a Mentor Smart program twice a year – applications are due by October 2, 2015 for the Fall 2015 cohort.
How do I incorporate / hire an accountant / get my legal house in order… etc?
Read Elaine Chen’s three-part post on Startup Administrivia.
I have lots of ideas – how do I pick one to run with?
First of all, a startup is about the team first and the idea is only part of the equation (and often not the most important part, counterintuitive as this might seem). Many startups fail not because they don’t have a great idea, but because of team issues (which leads to their inability to evolve and execute their really wonderful idea).
That said, there are various resources to help you sort out the ideas. The first thing you need to do is figure out a way to rank the ideas. What is important to you? What does it mean to succeed? If you can define your winning aspiration first, it will make the next stages much easier. Bill Aulet’s book “Disciplined Entrepreneurship” provides a structured way for an entrepreneur to take an idea, pick a beachhead market, define the customer and then brainstorm solutions and a corresponding business model and go to market strategy. A.G. Lafley’s book “Playing to Win” provides a simple 5-step process to help with picking a strategy to proceed with.
What are the biggest challenges with starting up a complex hardware based company?
Team, team, team. Because a complex hardware company always has complex software in it, the engineering team is much more diverse than, say, the development team at Kayak (all software on different platforms). It is critical to figure out a way to lead a highly cross functional team to work together collaboratively and communicate freely across silos.
What’s the most common mistake you see with new CEOs?
Getting fixated with the idea and failing to listen to what the market and customer has to say. Having stated a way forward, feeling compelled to stick with it regardless of data collected along the way.
What is the next step if I’m a technical person with an idea?
Meet folks who can become your co-founder and do a project with them to see if you are compatible. Ideally a founding team should have a hacker, a hustler and a hipster. Also consider taking an entrepreneurship class at a local university – fabulous for running through the process of starting a startup and thinking through biz model issues, and even more fabulous for efficiently meeting many like minded people who are all looking for co-founders.
How do I make sure I have good co-founders?
There are many sides to this question. First, let’s look at what makes a great startup team. Generally speaking, it is good to have more than one co-founder, because solo founders have a much harder time keeping the energy and the faith especially when things get rough. Second, multiple founders means you have an opportunity to put together a heterogeneous team with complimentary skills. A team with a hacker, a hustler and a hipster makes for a well balanced set of skills. It also guarantees some diversity in viewpoint which will protect you from group think (a fatal condition in a startup founding team).
Balanced team aside, the team has to have really excellent chemistry. The best skilled team will not succeed if the team cannot work together harmoniously and cannot find a way to work through conflict. The best way to figure out if you are compatible with your potential co-founders is to work on a project with them. The project should be reasonably intense and should be hard enough and last long enough to generate some stress. If you work through that, get through tough moments and come out the other side still standing, then you have validated that you have compatible values and work styles. That gives you more confidence that you will be able to work with these co-founders in the next few years. Remember, you will see your co-founder for more hours per day than you will see your friends and family (even your own children, if you have any). It is critical to spend the time to prove that you will make a great team by working together as a team for a few months.
How should I divide my equity with my co-founders?
Let’s say you have two co-founders. Wouldn’t it make sense to do 50-50 split? Won’t that be the most equitable solution?
It turns out that 50-50 does not work out for most people. The issue is that while you and your co-founders are fully on board now, there will always come a time when you will disagree on something substantive. If you can’t get through the issue, and you are 50-50 split, then there is no tie breaking vote. The dynamic can get you stuck there until you end up dissolving the whole enterprise (this has happened before).
Conversely, if you are 51-49 then there is a clear tie break vote and you will not get stuck. Will this make the 49% co-founder feel badly and be less committed? In my opinion, if you and the co-founder don’t have a solid enough relationship and the trust and confidence to believe the other person will put in all they have regardless of the equity split, then perhaps you should hold off incorporation until you do get to that point. Co-founding should be taken at least as seriously as marriage, because you actually spend far more time with the co-founder than the spouse!
Regarding books and writings on this topic, we generally recommend students read and re-read Chapter 6 of Founders’ Dilemma by Noam Wasserman. That pretty much sums up what you need to think about.
Here are some other good reads on the topic.
- Inc magazine has a reader’s digest version of Noam Wasserman’s position
- Dan Shapiro has a good article on why “50-50 is the only wrong answer” together with a formula to calculate this.
- George Deeb of Red Rocket Ventures provides guidelines on how to have the difficult conversation to go from 50-50 to 60-40
- Lee Hower of NextView also has a great post on this topic
Market sizing and analysis
How do I size a market when I don’t have any budget to buy expensive analyst reports with?
Good news! Startups really don’t need to do a ton of secondary market research because 99% of the time, you are inventing a new product category, so existing segmentation by analysts for established product categories probably won’t help you all that much.
That said, you still need to do a back of the envelope estimation on your Total Addressable Market (TAM) to make sure you aren’t looking at a lifetime cumulative TAM of, oh, $5000. There are ways to do this.
- Count human beings who may become end users. If you are working in the US, there are two awesome resources: The US Census, and the US Bureau of Labor Statistics. Both provide really good numbers that can help you come up with an order of magnitude estimation.
- Find out which analysts cover your industry, then Google their names and report names to find press releases referencing new reports that just came out. A lot of times key numbers will be cited in these press releases.
- If you are a student with library access, you may have access to a lot of excellent reports via your school’s subscription with top tier analyst firms such as Gartner, IDC, IBISWorld and the like. For example the MIT Library System provides access to electronic resources which include some level of subscription to many of these analysts.
Primary market research
How do I conduct primary market research to validate my ideas?
There are many good resources but I would suggest starting with “Talking to Humans” by Giff Constable. This is a free PDF download (also available on Amazon) and does an excellent job of making the subject matter approachable to people who have never done primary market research before. Also see “UX for Lean Startups” by Laura Klein – despite the name, this book provides a really great overview of a variety of research techniques that we in the industry have been using for 25 years – adapted for the startup scenario.
What do I do if I want to work on a problem but don’t know the solution?
That’s the best way, much better than wanting to find a problem for a solution you already have baked! Get out of the building, talk to customers, figure out what their needs/wants are, then brainstorm solutions. Could be technical or not, could involve certain core techs or not. The sky’s the limit.
Is it a good idea to start a customer interview with an “on a scale of 1-10” question?
- No. To get the most learning out of an interview, use open ended questions to get open ended responses.
- Closed end questions requiring yes-no answers or multiple-choice answers will cut the conversation short and reduce the potential learnings from the interview.
- As a general rule of thumb, face to face conversations should involve open-ended responses, so the subject can tell you what you never would have thought to ask. On-line surveys should invove close-ended responses so you have a good way to tabulate responses.
What are some common conversation starters to help get an open-ended interview off the ground?
Try using words like these to run the interview.
- “Tell me about the last time…”
- “Tell me the story of…”
- “You said X. Tell me more…”
- “Why not?”
How do you build a discussion guide for a detailed interview?
- Think about what you want to have learned at the end of the conversation
- Back out the topics and questions to ask and write them down so they fit on one page. 3-5 topics will do.
- Memorize it. Then don’t bring it.
- At the interview, use open ended questions and active listening to let the subject lead while guiding them through any content they didn’t cover on their own.
What if the interview subject simply won’t talk?
- First, check your technique. Is everybody not talking to you or is it just one or two people?
- If it is just one or two people, perhaps they are shy or naturally reticent. Spend a little more time up front breaking the ice and building rapport. Give them a little more time to respond. Avoid filling in all their silences with words. Embrace pauses.
- If it’s everybody you need to check your technique. Role play with a friend then get some feedback.
- Sometimes if the subject is otherwise talkative but you can’t keep them talking about the subject matter it may mean they don’t have any pain points in that area. That is important data you should take into account.
How do you recruit subjects?
- If B2C and you and your friends can be buyers/users:
- Directly recruit friends of friends (so they don’t know you)
- Post the request on your social networks and your friends’ social networks
- Where applicable, put up signage with a landing page URL at the watering holes where your target users hang out (e.g. at a preschool if recruiting parents of young children)
- If B2B or you/your friends aren’t buyers/users:
- Reach out into your network to see if you know someone who knows someone
- Use LinkedIn to find suspects (and how you are connected)
- Tap into alumni networks of your affiliated universities
- You can also use a research service who can recruit subjects for you (works better for B2C). This costs money.
- Stopping people in the mall or putting up flyers in the local library is generally not a great way to recruit subjects.
How do you get a company to give you access to its people for a B2B project?
- #1 requirement is to have contact with a high ranking person who can get you time with others in the organization.
- First way is via old fashioned networking straight to the high ranking person
- Second way is via networking with someone else in that organization who may be able to introduce you to a next person, then a next person. It may take 4-5 introductions to get to the right person.
- In some cases you may have to violate good technique in discovery research and share what you are working on to get access. Do what you can with what access you have.
How do you gauge purchase intent in an interview?
- What you should NOT do is ask them “Would you buy it?” especially not “Would you buy it for $xxx?”
- What you can do is ask them what they have done to solve the problem you are talking about. For example, did they spend $$ in the past 12 months to buy some product or service that solves some aspect of this problem? That is a good indication that there is a real pain that they will pay money for.
- You should NEVER do pricing research in person. Always do it via one of the standard survey vehicles, quantitatively. See PMR primer for details.
How many interviews do you need to build a good persona?
- If you don’t know what a persona is: Read “Flat Stanley doesn’t live here” by Jennifer Doctor.
- If you don’t have a good first guess: Cast a wide net and have many short (15 minute) conversations with many more people (30-50) to help you come up with a tighter target.
- Once you have a tight target: Interview 20-30 for each unique persona
- For B2B you will need to interview many people with the same role per company as you will be able to get into many fewer companies than 20-30.
What if you keep hearing the same thing over and over?
- Congratulations! You have found your persona and each conversation is validating the knowledge you have built.
- If you have more than 10 or 15 interviews, you can stop now and build your persona.
- If you have only 2 or 3 down, don’t stop. This can be sampling error.
What if every conversation with a new interview subject is a whole new conversation?
- What this means is that your targeting isn’t tight enough. This often happens in the beginning of trying to identify the persona.
- Step back and ask yourself how else you can sub-segment your target market to tighten it up. See if you can have lots of short conversations with lots more people to help you sub-segment.
- You will probably end up having several tighter targets, each sharing more nuanced attributes with each other. Now you can recruit a few people per target and look for the sweet spot.
How do I do pricing research in a detailed interview?
- The short answer is, you don’t. Pricing is an emotion-laden topic and when confronted face to face, most people won’t give a straight answer. You will get bad data if you attempt to ask someone face to face, “How much would you pay for this?”
- Instead, read Elaine Chen’s “A primer on primary market research” on Slideshare – look up the section on quantitative research, in particular check out the monadic, multiple monadic and Van Westerndrop techniques. Those are some common ways you can do pricing research.
How important is it for a team to initially have a detailed plan?
Depends on what you mean by a detailed plan. To raise an institutional seed round you need a solid plan for the first 12 months and a beacon to the 5 year mark. The solid plan, if you lay it out in a project management software e.g. in Gantt chart form, should not have more than maybe 30 lines. Whoever is in charge of the task outlined in each line should be free to plan their own plan.
How rigidly should you adhere to that plan?
You should not adhere rigidly to this plan in the earliest stage of a product development process as you are in discovery mode. Once you get into development, if you are a hardware company then you will be bound by the due date of the product for things that are seasonal – e.g. for consumer electronics you do most of your business over the holiday season, so if you miss one you wait another year, so that, and manufacturing lead times, have to be taken into account. For software, you have a bit more flexibility but may still be bound by business-driven deadlines such as some giant trade show in which everyone announces things. But generally, in the beginning, you should make a top level plan and you should measure progress against milestones but you should leave yourself a lot of room to adapt to things that you don’t know.
What do I need to know to create a realistic project plan if the work is outside my area of expertise?
- Always make the project plan in collaboration with the people who will be doing the work
- Ask probing questions to understand the risks. Is there technical risk? Is there product definition risk? Is there a risk for workscope creep?
- Take the time and care to understand the approaches and estimates presented by developers, and make sure assumptions are aligned. Sometimes they aren’t – and there is a better and faster way just under the surface, if you ask good questions.
- Consult people who have done similar types of projects for a sanity check: “Are we crazy?”
How can we get better work estimates? My developers are constantly off by a factor of 2 or more.
- This is normal! No one can anticipate everything, and work estimtes are asking them to do that. This is why most people estimate too little time to get work done.
- The only way to improve is to measure and learn. Ask the person doing the work to offer an estimate. Then measure the actual time elapsed, and start building up data. You will be able to back out the “fudge factor” for each person.
- Now you can do two things: you can apply the fudge factor to future estimates, and you can also share this with the person and ask them to help move the fudge factor closer to 1 over time.
I have a business-driven deadline that cannot be moved and I need a deliverable by that date. My developers say it cannot be done. How do I proceed?
- First of all, back off on your personal definition of the deliverable. You may have assumptions that may overconstrain the solution without realizing it. It’s time to get creative in changing the deliverable to fit the date.
- Gather a cross functional team together with the objective of figuring out what can be done by the externally imposed date – be sure to include people who can think about the problem and the many ways it can be defined, and people who can come up with solutions for each variant of the problem statement.
- Now moderate a series of discussions where you challenge the team to look at the problem and define it in new ways. Most of the time, you can come up with an alternative definition of the problem that is aggressive but feasible.
I am constantly surprised by missed deadlines. How do I fix this?
- To head this off, never wait until the deadline to check on the deadline. Frequent check-in’s are key – how are they doing? Are they stuck? How can you help them succeed?
- Daily scrums are also a great way to prevent expectation mismatch – if things are slipping you will catch them early.
- If this keeps happening, you should sit down with the developers and discuss what is going on. Are the deadlines unrealistic? Are the goals not clearly articulated? Is there misunderstanding about the work scope? Find the root cause of the slippage, then collaboratively find a way to address the issue.
How do I know if a developer isn’t goofing off if I’m not watching them all the time?
- If that is how you feel, why did you bring that person on board?
- You should vigorously screen for culture fit when interviewing candidates. This should not be a problem if you bring on the right people.
- That said, sometimes people become disengaged over time if they are not feeling tightly engaged. Engage them by sharing the broader business context so they always know how their own work ties in to the big picture.
How can you get developers to do more faster?
- DO share business context and engage developers in dialog about the state of the business and its complex needs – the more the developers feel they own the problem, the more creative they will become in looking for alternative ways to solve the problem that will get to the end goal faster
- DON’T order people to work longer / work more, especially if you aren’t working longer with them. Work smarter – in a group.
- Be aggressive, but be realistic – don’t believe in magic when it comes to resource allocation. If it doesn’t fit, find another way either by cutting scope (best) or extending time (less good), never by telling the team to do more faster without being constructive with suggestions on how to morph the work to fit the available time.
My developers don’t like the tools I chose for managing development. How do I bring them around?
- Unfortunately, this is the one place where compliance is a condition of employment. Gently tell the developers that while you hear their concerns, you have chosen the tools and they need to be used (and share why).
- If there is excessive pushback, you may be running into a confusion of roles and responsibilities – the developer may be laboring under the belief that they have equal say in every decision. You will need to have a difficult conversation with the developer to help them understand they need to agree to disagree, and move on. You may need to revisit your on-boarding practices to make sure this will not happen with future team members.
How can I get things done when everyone is a part-time contractor?
- Prioritize, prioritize, prioritize – figure out what the main thing is for each person, and help each person manage against their priorities
- In some cases you will need dedicated resources – you will need to clear their plates of other work to make room
How do I balance the prioritization between features and bugs when doing demos?
- As long as it is just demos, prioritize bug fixes solely around the demo path – other bugs may need to wait
- If the demo is to be left behind to be used by users not working on the project, then when the features are at MVP level, bugs must be taken care of.
Are there books I can read about product development processes?
- For software teams practicing Agile, I recommend “Agile Excellence for Product Managers: A Guide to Creating Winning Products with Agile Development Teams” by Greg Cohen. Unlike most other Agile writings, which are very development-centric, this book takes a holistic view of how four separate constituencies (product managers, UX designers, developers, software quality assurance engineers) must work together to build a great software product.
- For hardware teams developing a mass produced product, try my free e-book: “Bringing a hardware product to market: Navigating the Wild Ride from Concept to Mass Production”. Also available on Amazon.
- For teams developing a medical device, check out the Appendix section of the paper “Mapping the Medical Device Development Process” by Scott Ham of California Polytechnic University.
Leadership and team building
How do I find people to join my team?
First choice: Referrals from your own network. Second choice: Recruiters. Third choice: Directly post job specs on your own website and on linked in. Last choice: Craig’s List.
How do I make sure I am hiring the right people?
Consider applying Jim Baum’s E. I. E. I. O. hiring test outlined in this article.
I am a first time founder straight out of college and don’t have industry experience. How can I learn to build a great team?
The skills you will need to acquire to build a great company are all on the people side – you will need to learn to delegate, to trust your folks, while providing context and direction. Great communication skills is key. Read Elaine Chen’s article “Learning to lead as a founder” for more practical suggestions.
How do I get my team to work together well?
A collection of people working together does not automatically constitute a team. Linda Hill of Harvard University has a really great paper titled “A note on team process”. Highly recommended. Alternatively, you can see a reader’s digest version of the key points in that article together with some other thoughts in Elaine Chen’s “Team Process for Startups” presentation on Slideshare.
When do I bring on senior folks like a VP of Engineering?
What you don’t want to do is confuse the CTO role with the VP of Engineering role. The CTO role typically shows up earlier – in technology startups, the CTO is frequently one of the co-founders. By contrast, the VP of Engineering is a special role that makes sense as the technical team starts to scale. Read this article for a thorough analysis of the two very different roles and when each role makes sense as a startup grows and scales.
My functional teams aren’t talking or coordinating with each other. How do we deal with silo thinking?
- At a small scale this should not be happening – there is probably some team dynamic thing going on. The team leads may not know each other well enough or they may be operating from different assumptions – it is up to you to help them develop the trust and confidence that will move the team towards increased effectiveness.
- The best way to do this is to go one-on-one with the leader of each sub-team to hear their concerns – make it safe for them to share their thoughts, and figure out the root cause of this behavior.
- Once you have a good handle on the personal dynamics and some ideas on how to proceed, you can bring them all together in a moderated discussion to discuss concerns and come up with solutions to improve communications and coordination.
- You may have to instigate a “scrum of scrums” – a regular gathering of the sub-team leaders – to kill two birds with one stone: accelerate coordination, and accelerate relationship building.
How do I manage remote employees effectively?
- See my post on managing geographically distributed teams.
What are good meeting cadences?
- See my suggestions for meeting cadences in this post.
Perseverence versus pivoting
How do you know when to give up or change course?
Regarding when to perservere versus change course, you have to constantly be collecting data, and periodically stepping back and ask yourself: Does it all make sense? If by gut things start feeling wrong you will need to make a change. When you have to make this choice you rarely have all the data in place – as founders you will always be making decisions with incomplete data. You will need to learn to balance data with gut.
When should I come out of stealth mode?
As Dharmesh Shah of Hubspot once famously said at an MIT class, “Stealthy is Unhealthy for a startup”. People go into stealth mode for a variety of reasons, most frequently because they are worried their idea will be stolen. The reality is, if the idea can be stolen over a coffee conversation, perhaps it deserve to be. Startup success is 1% inspiration and 99% perspiration and it is the team who can execute and adapt to changing market conditions who will win in the end. So, my suggestion is, don’t enter stealth mode in the beginning.
There is one nuance to this conversation, and that is talking to investors. You don’t need to be in stealth mode, however, you should also not casually chat to investors about your idea during the early stages. Talk to customers, talk to potential end users, talk to mentors, but hold off selling your idea to investors until you really are ready to fund-raise. Then focus 100% on your round of financing. The reason is that investors form an opinion of the viability of the venture in their first impression, and you want to save that impression for the time you are ready to pitch, and you know how much you need to raise and what you are using it for. You don’t want to be a story they have heard before (and was unimpressed with) several months ago when you are in the throes of idea selection and market segmentation.
How can I carefully talk about my startup without letting people steal my idea?
As the answer above shows, I don’t think worrying about your idea being stolen is the right worry in the earliest stages of a new venture. Instead, you should worry about understanding the target market and customer’s needs and wants. Besides, anyone who has tried to drive awareness of anything new will know it is easier said than done to get people to pay attention to you. If you can’t even get a few people to click a call to action on your landing page test, why do you think you idea is so hot that it will become the next unicorn?
If you are truly worried about people stealing your idea, the good news is that early in the startup journey, you are doing problem research, not solution research. You are trying to understand the people who will buy and use the product or service. To do this research you actually should not mention the product or service idea at all. So you can run very successful research projects without giving people more than a vague idea of what you are interested in. But I still say you are worrying about the wrong thing.
When should I fund-raise?
For a software company you will need to show initial traction before you can even raise a seed round. Initial traction means you need to have acquired customers and perhaps have started taking in a revenue stream. For a hardware company you will need to have enough progress to indicate technical feasibility and also have primary and secondary market research backing your claims that there is a good market and this is a good solution. You will need to raise sooner and it will be more difficult but that’s the way hardware startups have to go due to the prototyping cost. Generally the longer you can bootstrap the better off you are. You should never recreationally fund raise, you get to the point where you are ready to pitch then you just pitch. It is very time consuming.
Who are the people who invest in startups in Boston?
Check out the “Get funded” section of the Hitchhiker’s Guide to Boston Tech.