25 things a first-time founder should know

• Do it seriously. Most people lack the guts and financial freedom to work for low pay, a high probability of failure, a complete lack of guardrails, and an atrocious time-adjusted rate of return. If you can, you’re a rare breed. You can go for it all.
• Seek professional help. It’s extremely difficult, even with great co-founders, service providers and collaborators. Without them, it’s almost impossible.
• It’s a full time jobPart-time founders don’t succeed; businesses are not hobbies.
• Failure is guaranteed. Every successful startup suffers several near-death experiences, such as running out of money, a massive lawsuit, losing a key client, a PR disaster, or an employee uprising.
• Relationships suffer. You may lose a friend, your partner, or the goodwill of your siblings. Your dog will feel neglected. The shared struggle forges new friendships.
• Respect is earned. Attract co-founders, investors, employees, competitors and customers to your way of seeing things through leadership and persuasion. Having more votes, money or points on your resume will not convince anyone.
• Ideas are not enough. Wishing a startup into existence won’t make it happen. Your job is to create a company out of nothing, one that makes something people want to buy, a product or service that you can replicate, distribute, and sell at scale for profit.
• Great employees are priceless. No matter how motivated a candidate is, how much you pay them, or how good they look on paper, you can’t turn a businessperson into a great employee if they don’t have an entrepreneurial spirit.
• Organize things well. Organize your corporate structure and stock grants through a competent lawyer or a startup-specific incorporation service. Put it all in writing, sign it, and save it.
• Know the labor laws. People have the right to a minimum wage and a respectful, harassment-free workplace. You cannot use “volunteers,” unpaid interns, or full-time on-site workers who are not treated as employees. Use appropriate employment and intellectual property agreements, and hire a solid payroll and benefits provider.
• There is a right way to fundraise. There are regulatory and business rules surrounding fundraising, and there is a lot to learn and practice before you get it right. Don’t deal with middlemen, searchers, or anyone who promises to help you without putting in their own money or work. Get legal advice.
• Keep receipts. Never run a business without an accounting system from day one. Keep meticulous records of everything.
• Acquisition of rights is not an option. But options are vested. Even the founder’s own shares vest over time. If you don’t know these terms, learn them. Plan for the departures of the founder and key employees in advance, not at the time of dismissal or resignation.
• Study, study, study. Know your market, customers, competition, technology and trends. Read voraciously, network and keep up with the news.
• The invention is based on the past. Everything worth trying has been tried before, and the few new approaches that actually work already exist. If you think you have no peers, predecessors, or competition, you are either wrong or doing something pointless.
• Imitation is flattery. There is no shame in copying others. Anything you do can be copied. Be the best, not the first or the smartest.
• Play your own gameYou can’t beat the best in the world on their own terms, so you invent a different game and rules that they can’t play by. Serve your customers ten times better, cheaper and with something more attractive – that’s the edge you need to beat an incumbent.
• Failure is a symptom, not the cause. Startups die when they run out of money, but that’s not the real reason. The underlying failure is bad decisions, systemic flaws that persist without resolution, and a lack of preparation and proactive planning for when things go wrong.
• Avoid what is dangerous and illegal. Some products, services, and practices are regulated at the state and national level. Others are banned outright. Know all the ways your product could go wrong or be pirated or misused and harm people. Think before you try to sell something that’s too good to be true.
• Innovate in moderation. Take only the risks that are necessary, such as a great brand, a marketing plan, a design aesthetic, or a technological innovation. Don’t compound the risks unnecessarily by trying to invent a new corporate structure, management strategy, or sales commission chart.
• No dead wood. From the start, everyone who gets a salary, has shares or just shows up must be indispensable and at the top level. A four-person canoe won’t go anywhere if only two can paddle.
• Make everyone replaceable. Later on, things turn upside down. Every single person in the company, including yourself, can leave tomorrow without ruining the company. This transformation from the seed phase to the growth phase is one of the biggest challenges of running a startup.
• 90% of success is not failing. As you become a more mature company (say, 20 to 500 employees), success and increasing valuation are as much about eliminating existential risks one by one as they are about market penetration and profits.
• There is no way back. Be careful what you ask for. Once you taste the dew of freedom that comes from working for yourself, it’s impossible to go back to working for a boss.
• I can’t teach you these things. No amount of education or awareness will teach you how to run a new business. The only way to learn is by doing.

For those just starting out, I highly recommend David S. Rose’s book, The Startup Checklist, a step-by-step guide to the things needed to launch a company, geared toward high-growth tech startups. David and I designed a popular program, Gust Mission Control, that walks founders through the process, including incorporation, issuing stock, and maintaining corporate records.