Thoughts about “Who”

Finished reading “Who” this week. I found it an interesting approach to hiring. I’d read it if I were looking for a job as well to prepare for interviews, though it’s not designed for that.
Takeaways:

  • Take hiring seriously, this should be obvious but it’s easy to let it get lost in all the other work.
  • Manage the task of hiring as your would any other project with a clearly defined role, and process in advance.
  • Don’t hesitate to walk through every aspect of their career with them, ask about anything ambiguous. Everyone has things they sweep under the carpet, so it’s important to understand this when you are evaluating a candidate, but you also want to make sure you don’t miss things you need to know first.

Things I would change: 

  • I found the tone of the book somewhat annoying. It talks itself up a lot. It backs up it’s self-promotion, but there could have been a better way to do it.
  • This makes the process even more intimidating, something that’s already difficult to do.

Part II: The Founder Institute, Lessons Learned

Some of you are familiar with Inkwell—I founded it as part of the curriculum for the Founder Institute (FI). I had come to FI to see what I could do with the idea, and that idea carried me through to graduation.

What I got from the Founder Institute

I came to the Founder Institute wanting two things:

  1. An overview of what I would need to know to run a company.
  2. A network of professionals, both going through what I am, and mentors who have already succeeded and can help me succeed as well.

I got both.

The curriculum was excellent. There is only so much material you can fit into a weekly meeting, even if it spans three months. Nonetheless each class was well thought out, and delivered by professionals with deep knowledge of what they were presenting, as they had learned about it through experience.

This network of mentors is phenomenal. Most of the mentors were receptive to helping and those who were, were generous with their time.

The founders who made it through the program were all of high calibre and given their diverse backgrounds, each gave tremendous insights and suggestions into each other’s startups.

What I didn’t get

One aspect of FI that I didn’t know going in, that I felt was somewhat deceptive, was the costs. FI is very upfront about the requirement to incorporate in order to graduate. Going in, if you research a little, it looks like it will put you back only a few hundred dollars. But due to special requirements by FI of how you need to incorporate, it will actually put you back several thousand dollars unless you have legal savvy. In addition, the tax requirements of running a startup costs over a grand a year, if you find the right accountant. There are other assignments throughout the program that cost money, all of which add up.

I went in expecting to put out a significant amount of money—as cheap as it’s become to get a startup up and running, it’s not free, more so when you bring legalities into the mix.

I saw, and still do see, my participation in FI as an alternative to doing an MBA, and ultimately it was cheaper. Moreover, I received a hands-on overview of what it means to launch and run a company, and got to have late night beers with some of the top minds in the startup community.

My critique

Adeo explains that the idea behind the incorporation requirement is that it pushes founders to action. It forces them to have skin in the game, and as I understand him, is akin to throwing someone in the pool to teach them to swim.

While I think this concept is important, I am not sure that incorporation is the most effective way to achieve that goal. A startup does not need to legally be a corporation to prove its viability. The rest of the program, though, pushes founders to show viability of concept and proof of concept. As an early stage incubator, this is what budding companies should focus on.

I think that, instead of incorporation as a requirement for graduation, a better requirement would be another metric of proof of viability, like creating $X/month of revenue, or a user growth of X month over month. There are ways of launching a product without a fully developed prototype. Both the Lean Movement and the Four Hour Workweek discuss this in depth as well as many others. These metrics are far more important to potential investors than whether the startup has incorporated yet.

Landing pages cost pennies to set up, yet can provide powerful metrics to prove the viability of an idea. I think a focus towards actual metrics and proof of concept, rather than who is fortunate enough to be able to afford a lawyer, would give FI a higher success rate of graduates and be better overall for their community.

Conclusion

I’m proud to be a Founder Institute graduate. I think it’s a great program. I met high calibre people and learned a lot, but I think that the program is flawed. But not by much, a small tweak to the model would make it significantly more successful and facilitate much more viable startups.

Letterpress

Part I: Inkwell Inc, Post Mortem

Some of you are familiar with Inkwell—I founded it as part of the curriculum for the Founder Institute. I had come to FI to see what I could do with the idea, and that idea carried me through to graduation.

The Idea

Inkwell was going to be a crowdfunding platform specifically for authors.

With the rise of self-publishing platforms, it’s hard to get noticed. Inkwell would provide tools for authors to raise the funds from their fans directly for the purpose of investing in the preproduction of their book to increase the chances of their success. It would also provide a trusted network of professionals to help them with production.

Where Inkwell went wrong

While at the Founder Institute, in the week in which we built our financial projections, I discovered that the numbers weren’t looking good. I delayed for a bit, hoping that I could find a way to make it work, but ultimately I was not positioned to make it happen.

One of the stories we hear about crowdfunding platforms is that it’s somewhat of a crapshoot. I can’t think of a single project I have backed that has delivered on time. Costs always go over, things always take longer than expected.

The only way to avoid this is to have deep domain expertise in the product which is being produced. By nature, this is not the case with most crowdfunding projects. The power of these platforms is that someone with minimal background can break into a market with the help of popular demand.

Not providing expertise in the market to support the authors would mean not providing anything meaningful beyond what established platforms are already providing. However, providing that expertise, via a network of professionals, really meant that Inkwell would be more of a publishing house with a technical side than a technological platform helping authors — not my domain expertise.

However the numbers did start to look interesting if I played with specific variables:

More authors. Unfortunately, this isn’t very practical, or interesting. If you look at the Kickstarter Stats page, of all time, there have been 27k publishing projects launched with a total of $66.27m successfully raised. Kickstarter takes a 5% fee that’s $3m in revenue from publishing.

But that’s over the past six years, and they’re at the top of the game. Even if Inkwell could replace them in the publishing market completely, that’s not a very high ceiling for an expected growth. It’s not bad money, but remember, that’s revenue before expenses. For a one- or two-man team, numbers like that can be nice. But to make something like that happen would take a team. With a ceiling of $1m per year in revenue that’s not all that interesting for investors, and could only be considered a labor of love project if bootstrapped.

Successful books. This is the model upon which publishing houses are built. Invest in a slew of books, some break even, a few make it big, the successful books support the publishing of speculations. This is not unlike how VCs and other investors work.

Sadly, now that sales stats are more accessible than ever, publishers are leaning towards supporting the more popular books, which tend not to be the books with staying artistic power.

Implementing this model in Inkwell would mean retaining some of the rights of the book once it was published. I, however, wanted Inkwell to be a launch platform for authors to get picked up and published from, empowering them. Dipping into the dwindling pot of revenue from books would be just another way authors were getting screwed—a fundamental principle I was building Inkwell to prevent.

The way around that would be to publish the books entirely myself. Basically, I was looking at starting another publishing house, while I was interested in creating a technology platform that happened to deal with authors. A classic founder/startup mismatch.

How it could work

I’m not saying that the model is impossible to get right. It would be very wise for a publisher to create such a platform as a discovery engine for them and a support engine for their authors. Authors would benefit from being able to raise money to produce their books, even if they are only self-publishing. If done right, it could break even, and provide a good way to get first dibs on talented authors finding their voice and fanbase.

But as a standalone project, it would be difficult to make viable due to the naturally small margins. Increasing those margins would dig into the author’s needs, which went against the whole reason I wanted to start Inkwell in the first place.

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