Every December I reflect on the year passing by. This year, I thought my reflections might be useful to others starting a startup. Heck, I wish someone shared these with me a year ago.
Before we begin, quick context so you know where the lessons are coming from. I’m a Co-Founder at OpenPhone. We make it very easy for entrepreneurs and professionals to own a supercharged business phone number on top of their existing devices.
Mahyar and I started working on OpenPhone in 2017. We joined Y Combinator in June 2018.
So, here we go.
Lesson #1 —Focus on customers who “have their hair on fire”
In the early days of OpenPhone, we gave out the product for free in exchange for feedback. This gave us a chance to iron out the bugs and get some early validation. Yet, a lot of feedback was coming from people who didn’t experience the problem the product solved and would ultimately not pay for the service, even if we built the features they asked for.
Once we started charging for the service, we were able to see who had the biggest need for what we’re building. Those people ended up paying.
In one of the conversations with our group partner Michael Seibel, he advised us to find customers who desperately need a business phone and willing try an early stage solution. Then, find more people like them.
Michael talks about this in his “The Real Product Market Fit” essay.
I found these customers share the following characteristics:
- Strongly motivated to solve the problem (“have their hair on fire”)
- Dissatisfied with alternative solutions to the problem
- Stick with you despite the imperfections of your product
- Send you product feedback and feature requests
- Tell their friends about your product without being asked
- Would be very disappointed if they could no longer use your product
When you get to know these people and understand what problem your product solves for them, you can make your product appeal to them even more. And then, find thousands more people like them.
Why this lesson is unexpected: When you’re focusing on growing your customer base, it’s tempting to go broad and get any paying customers. They make you feel great and add to your revenue graph. After all, isn’t that what everyone is working towards? A graph that goes up and to the right? 📈
It’s so much easier (and cheaper) to acquire customers who are motivated to solve the problem your product solves. They’re the ones who reply to your cold emails, use the product more and share feedback happily. They will also stick around longer and refer their friends.
As you grow the product and your team, you can move on to the harder task of acquiring customers who are less motivated. In the early days it can be exhausting and expensive, so start off with folks who “have their hair on fire”. They’re out there. Looking for you.
Lesson #2 — Get to the point
One of the first things we worked on at YC was our 1-line pitch. The purpose of the 1-liner is to describe what you do and get investors excited to learn more.
Here’s the evolution of our 1-liner.
Pre-YC: This was my opener at a pitch competition earlier this year. My deck had 23 slides and 3 minutes to go through them. I remember timing every word I said and rushing through those slides.
At the end of the day, I wonder if people understood what we do. Probably not. Don’t do what I did.
Post-YC: This was our first slide on Demo Day. It tells you exactly what we do. We had just 10 slides to go through in 3 minutes. One point per slide.
As I’ve learned from our YC partners, it’s important to make sure what we do is very clear and we get to the point right away. How could someone understand the potential of what you’re building before they know what you’re actually doing?
We apply this principle to everything we do now — website copy, email subject lines, help articles. This post you’re reading had 5 lessons originally. 🙂
Why this lesson is unexpected: When you talk about your company, it’s very tempting to say everything that’s great about it. Mention every impressive metric.
In reality, when you say a lot, nothing stands out.
It’s much better to focus on a few key points (or “vertebrae”, as we’ve learned at YC) and make sure they come across in the pitch.
Lesson 3 — Learn to have hard (level 3) conversations
During one of the weekly YC dinners, our Batch Director Amy Buechler led a session on co-founder communication.
Amy has worked with many founders over the years and has helped them overcome conflict.
One of my biggest takeaways was the concept of the 3 levels of conversation.
Small talk is level 1 — casual chat that doesn’t carry feelings.
Talking about day-to-day work, your goals and plans is a level 2 conversation. It also doesn’t carry feelings, which makes it comfortable and safe.
A level 3 conversation is the hardest one you can have. This is when you talk openly about your feelings, your roles and company direction.
Without level 3 conversations, relationships can’t recover from conflict and ultimately fail.
Why this lesson is unexpected: It’s easy to mistake the quantity of conversations with the quality of conversations. Very often the most important things remain unsaid and relationship debt accumulates.
Lesson #4 — When you take time off, actually use it.
Throughout YC, we took Sundays off every 2 weeks or so. We went on hikes, bike rides, played soccer. My phone was on do not disturb and I was present.
Those breaks were essential. They allowed me to recharge, reflect and come back with a fresh perspective.
I’ve realized that working from the couch with Netflix on TV doesn’t count as rest. It doesn’t let me produce my best work, creates a false perception of rest, and doesn’t let me fully enjoy what I’m watching.
Going forward, I plan on taking my time off more seriously. Hiking, anyone?
Why this lesson is unexpected: When you love what you’re working on and are pushing to get your company off the ground, it’s very easy to forget to take care of yourself.
As you celebrate the holidays and go into 2019, give yourself a gift of rest. Disconnect and recharge. I know I will.