When I first started out in entrepreneurship, I asked Mark Cuban what he had read or studied to learn how to start and build businesses. His response:
“Experience. It’s the only reliable teacher I’ve ever had. No book has ever captured what it’s really like. You just have to do it.”
Mark is smarter than me on most things, but on this one I think he’s wrong.
Yes, experience is crucial, of course. And yes, most of the reading on entrepreneurship is pretty useless.
BUT, after investing in over 80 companies and starting several of my own and reading just about everything there is on entrepreneurship, I believe that not only is there one clear method to doing entrepreneurship right, I believe that there are some things you can read that can teach you that method.
Reading NEVER replaces activity, but it can be the way to figure out where to start. I’m going to tell you what these entrepreneurship lessons are and where you can read them precisely.
Paul Graham sums it up perfectly:
You need three things to build a successful startup: start with good people, make something customers really want, and spend as little money as possible. Most startups that fail do so because they fail at one of these. A startup that does all three of these things will likely succeed.
I can’t sum it up any better than that. Let me break it down into three:
A lot of people overlook this, and I can see why: it’s hard to understand how important people are to business until you try to build one with bad people.
The difference between a good co-founder and an average co-founder is the difference between chicken salad and chicken shit. I’ve experienced this many times in my life – in fact, there have been times when I was the average (or bad) co-founder and screwed up a great idea.
So what are you looking for in a great co-founder (or founding team)? Basically, the core founding team should be people who can do things well.
Paul Graham likes to talk about it in terms of finding resourceful and determined people. It sounds simple to understand, and it is. But it’s not very easy to find such people. Most people say that’s how they are. The reality is that they WANT to be that way, but they’re not.
How do you know if someone is resourceful and determined? It’s actually pretty easy: just look at what they did in their life that demonstrated resourcefulness and determination. Past behavior is a great predictor of future behavior. No matter who you are and where you started in life, you can showcase those attributes. If you started out poor and disenfranchised, you have plenty of opportunities to show them; basically, your whole life is using determination to overcome obstacles with few resources.
If you start out rich and privileged, you can also display these attributes, just in different ways. For example, by learning lots of new things, taking advantage of the opportunities in front of you, and creating things from the resources you have.
People who have displayed these traits BEFORE working with you are the people you want to build things with.
Once the product-market fit has been achieved, then the emotional intelligence of the leaders, as much as the ingenuity of the team, is what impacts success.
The most common mistake I see founders make is that they think they need a big idea. This is completely wrong.
Ideas aren’t worth shit. And “great ideas” are often worth even less. Why? Because startups aren’t about ideas. They’re about solving problems.
Search this in your brain:
The sole purpose of a startup is to find a commercially viable solution to a real human problem.
This is what it really means to “make something people want.”
Paul Graham frames it like this:
“I like to find (a) simple solutions (b) to overlooked problems© that really need to be solved, and (d) deliver them as informally as possible, (e) starting with a very raw version 1, then (f) iterating rapidly.”
Marc Andreessen describes it most succinctly:
“The only thing that matters is adapting to the product market.”
What is product-market fit? Andreessen says:
“Product/market fit means being in a good market with a product that can satisfy that market… The life of any startup can be divided into two parts: before product/market fit and after product-market fit.
Do whatever it takes to achieve product/market fit. Including changing people, rewriting your product, moving to a different market, telling customers no when you don’t want to, telling customers yes when you don’t want to, raising that highly dilutive fourth round of venture capital — whatever it takes.
You don’t have a business until you have a sustainable, repeatable model for attracting users and converting them into active (paying) customers, and the only real way to do that is to make something people want.
Make sure you fall in love with solving a problem and not with your idea or your solution. Because if you care about solving the problem, you can keep trying things until… you get something that people want.
There has NEVER been a better time in history to start a business. You can’t make it more complicated than it is:
Start with a real problem first, then keep testing solutions until you’ve made something that people want, as evidenced by people using (and buying) it.
Now, ideas DO matter, of course. But it’s easy to think of ideas when you understand that they only matter when they are applied to solving real problems. And there are a LOT of problems to solve everywhere.
I would frame this as “avoiding mistakes,” but I understand why Paul Graham called it “spending as little money as possible.” He assumes that spending money faster than it is earned is the BIGGEST MISTAKE a startup can make, and he’s right.
Why? Because spending money too quickly (especially on venture-backed companies, which is almost exclusively the type of company Paul deals with) is a sign of bad mindset and poor decision making, which is virtually impossible to overcome. If you’re spending as little money as possible, it forces you to be resourceful and focus ONLY on the things that matter, which is first and foremost achieving product-market fit and then selling.
If you spend as little money as possible, you’ll probably be fine, because it gives you time to work out all the other mistakes you inevitably make.
If you spend as little as possible, you have time to fix numbers 1 and 2.
These are the only three fundamental lessons you need to start a startup:
1. Start with great people: resourceful and determined
2.Do something people want by solving their problems.
3. Spend as little money as possible, so you have time to find solutions and fix mistakes
That is.
Once you know these fundamentals and use them to guide your decision making, there is nothing left to do except do exactly what Mark Cuban said: start building.
If you feel the need to read more about startups, don’t. Start building.
If you really want to read more, read this quote, also from Paul Graham:
“The way to be successful in a startup is not to be an expert on startups, but to be an expert on your users and the problem you are solving for them.”
People want to make this complicated, so they can avoid doing the emotionally hard work of taking the risk of building something that might fail. There is no way to avoid that risk, except by not starting a company.
Either go build something people want or work for someone who has, but don’t waste any more time “learning” how to be an entrepreneur. Learning is great, but spend that time learning about the problem you’re trying to solve and then you’ll actually build something.
I see a lot of lists of books about entrepreneurship that are total bullshit, so I’m going to post a DON’T READ list as well. All of the books on this list are commonly recommended to entrepreneurs, and I’ve read them all, and most of them should be avoided:
From Good to Great: Why Some Companies Make the Leap…and Others Don’t (Jim Collins): Possibly the worst business book you could ever read. Collins studied big companies and then created a narrative to explain them, except it was all made up. As if he were telling you that since everyone who eats carrots dies, carrots are mortal. Total bullshit. Ignore it.
The Innovators’ Dilemma (Clayton Christensen): An interesting book and a business school classic, which should be a MAJOR red flag for anyone trying to START a business. If you are interested in disruption theory (which this book explains first and foremost), I would recommend reading Ben Thompson’s material on aggregation theory. Personally, I think he is right and Clayton is wrong. But again, NONE of that matters to a startup founder in the trenches.
Creativity, Inc (Ed Catmull): I love Pixar, but Ed is really bad at storytelling (ironically) and understanding what is really relevant and important. I really wanted to love this book, but it’s not very good for entrepreneurs.
48 Laws of Power (Robert Greene): I love this book, but I don’t think it’s that helpful for building a business. Ultimately, building a business is about creating value. 48 Laws is about taking things, not creating them. It’s great for learning how to navigate office politics, though.
Delivering Happiness: How to Make Your Employees Happy and Double Your Profits (Tony Hsieh): It’s solid, Tony’s a smart guy, but light on actual tactics and not really relevant to most startups. More for a corporate audience, I think.
Steve Jobs (Walter Isaacson): You are not Steve Jobs. You should not try to copy him. This book will not help you become who you need to be to succeed.
The art of war (Sun Tzu): I LOVE this book, but again, it’s not relevant to the day-to-day for most entrepreneurs.
The E-Myth (and its variants) (Michael Gerber): This is about small businesses and contains a lot of incomplete advice. Please ignore.
The Fountainhead: Or Atlas shrugged. Or any Ayn Rand book: I’m not even going to comment on their philosophy, I don’t care. But I promise you that there’s nothing here that will help you start or build a business. It will help you fantasize… which doesn’t help build. And it’s no mistake that the largest concentration of radians is in politics and finance – two industries built on destruction and taking, not building.
Thinking, fast and slow (Daniel Kahnemann): A great book. Totally unnecessary reading to start and run a business.
Outliers (Or anything by Malcolm Gladwell): I don’t want to start a debate about Gladwell, but I see his writing as fast food; fun while he’s making it, he doesn’t do anything to improve it.
Losing My Virginity (or actually any of Richard Branson’s books): He’s a great guy and has done some amazing things, but he’s TERRIBLE at actually explaining what he does. He’s a great example of an entrepreneur who doesn’t know how to tell you how he does it, he just does it naturally.
Anything by Gary VaynerchuckGary is a really nice guy and very smart, but I feel like most of his stuff is inspiration and energy blah-blah. It’s for people who haven’t started or are trying to find that value. Not entirely, but 80% of it is geared towards those people, not directly operating entrepreneurs.
Anything by Guy Kawasakii: Skip it. I’ve never met anyone seriously who reads his stuff, and the only people I’ve ever heard of him talking about are eager entrepreneurs. He takes other people’s best ideas, dumbs them down, and pretends he came up with the idea.
For most entrepreneurs, a book is the best all-purpose marketing tool they can have. All that’s left is to start the process.