In startupland, which is full of Hackers and Hustlers, the Hacker spends their effort on excluding potential issues, features, product paths, partners, technologies, etc., while the Hustler focuses on including, well, everyone.
Its in the DNA of the Hustler to work towards getting a ‘yes.’ Its what drives them. Getting users, investors, partners and the like to say yes to their vision and passion is the penultimate effort for a Hustler.
For most, it creates the appearance of a lack of focus (for some) and a complete lack of focus (for others).
This is the primary rub between Hackers and Hustlers and the #1 reason that founders divorce. Hackers demand focus. Hustlers demand ‘yeses,’ which, by definition, require a high level of flexibility which leads to a lack of focus.
I am a Hustler. Yes, a Hustler with a capital H. And because of that, my #1 fault is my apparent inability to realize when I am being unfocused.
I love the word yes. Who doesnt?
Yes means work. Yes means shifting priorities. Yes means roadmap adjustments. Yes means late nights and frustration. Yes means a loss of faith.
I hate the word no. Passionately hate it. It doesn’t compute. How can we become a better company because people are saying no. When I raised my Series A, 37 potential investors said no.
That’s more than enough no to last me a lifetime.
About eight months ago, I realized this very dynamic. To help a Hacker be successful, they need the space to focus on problems and solutions, and to do that, everything that is not core to that mission has to be thrown away.
The Hustler has to learn to say no, and by doing that gives the Hacker the ability to build awesome things, because they arent spending time in meetings or thinking about how to “just make it work,” or make “that deal that is going to make the company” work.
They are just building.
Eight months ago, I started to force myself to say No multiple times per day. I started with my dogs. And, yes, those punks didnt listen, but at least I learned I could say the word and not feel bad.
Then I took our product roadmap, and every time an idea or potential deal was brought to the table, I weighed it against that roadmap, and as a default, I said No.
No. Not right now. And the quality of our product and the speed at which it was developed – and more importantly, the ease at which its selling – has accelerated.
The power of no.
Saying no for the Hustler is a learned skill. It seems like a simple thing, but its really the antithesis of a Hustler’s core value.
Does that mean a Hacker should learn to say yes?
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Over the past year and a half, I have spoken to more than 100 entrepreneurs that are in various stages of company building, and are looking to raise money. Over that time, I have gotten better and better (at least I think I have) in outlining the best way to frame the story of the startup.
BTW: If you are looking to really understand raising money and everything that goes with it, stop reading this and go buy Venture Deals by my friends Brad Feld and Jason Mendelson. They are smart; I just have a big mouth.
What I can tell you is how I look at the world of raising capital. Also, this is for seed rounds, after your first money, I am no longer really helpful. (And, please this is MY VIEW. You might disagree. Great comment away.)
Excepted Success Rate
|Friends and Family||High||Emotional||0%||~$10,000|
|Professional Angel||Medium||Emotional / Money||5%||~$50,000|
There are four investor types:
- Friends and Family: These tend to invest 100% in the person and less worried about the idea. They are your friends and family after all. Most expect to lose the money, but want to be helpful. Usually are just money not great advisors or rolodexes.
- Personal Angels: These are rich people who invest their own money. Often they have had a successful startup and want to see other entrepreneurs do well. Often they invest because they have a real interest in a market segment (They just love location based gaming!!) but really invest because they become passionate about the team. They do 25 – 40 deals over the course of 18-24 months, and expect one or none of them to really return anything meaningful. Usually these guys are great money, but not great advisors since they tend to not want to get super involved. Can have fantastic rolodexes. You have probably never heard of them, but should.
- Professional Angels: These folks are investing their own money, but are doing it as a job. Sometimes, they invest other people’s money as well. They are better as advisors, but also tend to be bigger “names” and in higher demand, which leads to their inability to sit on boards or get super involved in anyone startup. If you have professional angels in your round, you need to make sure that you effectively communicate with them to get the most value, which can be immense in terms of connections and advice.
- Venture Capitalists: Stop caring about the fund’s name. Worry about the partner. A great partner can add more value than having a big brand name fund investing in your startup. Being able to call a partner 4 times a week because you are freaking out is worth more than you will ever know (until you are freaking out and have no one to call). They are professional investors. That means they do more due diligence, want to see more traction and make bets that mitigate risk for their LPs as much as possible. They tend to work the hardest for you, but you also tend to give up more of the company and expectations explode. The cadence of your company you’ve been running out of your living room changes, and its about knocking it out of the park, not about slow growth and organic success.
In terms of how a company is evaluated, its pretty simple: Team, Problem/Solution and Market are the three levers. (There might be micro-levers, but on a macro, story telling level, these are it).
- Team: A great team is made up of at least a Hacker and a Hustler. The quick of it is: A Hustler sells passion and gets people excited about what you are doing; a Hacker is a problem solver. They dont have to be the best engineer, just the best at seeing the innovation and helping it get built. If you team is great two things happen. Its easier to raise money, and recruitment is easier. Not because A players recruit A players (which is true), but because A players set your culture and make it easy to understand what working for your startup is like; and more importantly they SCREEN FOR GREATNESS.
- Problem/Solution: Is your solution interesting and unique? Is it a real problem? This is important, but not as important as the team or the market.
- Market: One question: Is it a big market? Yes? Thats good. No? Thats bad. How big is a big market? $10B+ is interesting. Start talking $100′s of B’s thats awesome. Its why Square is so valuable. Its an interesting (but not unique) solution in a BIG MARKET.
- Great Team + Weak Solution + Big Market = investment (A great team will make a weak product great)
- Great Team + Strong Solution + Big Market = investment craze / high valuation
- Great Team + Weak Solution + Small Market = investment / low valuation
- Great Team + Strong Solution + Small Market = no investment. In that idea. But, they will pivot and get investment. Or they will get investment and told to pivot.
- Weak Team + Weak Solution + Big Market = no investment (a bad team wont pivot into something big)
- Weak Team + Strong Solution + Big Market = investment / low valuation (potentially, the investor might suggest adding or subtracting from the team)
- Weak Team + Strong Solution + Small Market = no investment. In that idea. But, they will pivot and get investment. Or they will get investment and told to pivot.
- Weak Team + Weak Solution + Small Market = facepalm. Dont pass Go.
Over simplistic? Yup. Accurate. Damn straight.
Your team is probably not as strong as you think it is. Really evaluate the skill set of each member, and make sure that everyone is filling the role they should. If you are flipping a coin for CEO, guaranteed an external CEO will be placed, or one of the founders will be gone. Think it through. You spent a lot of time on technology and infrastructure choices why bullshit on executive roles?
All of this should boil down to a 6 slide deck:
- Cover slide
- What is the problem?
- What is your solution?
- How do you solve it better than anyone else.
- How will everyone make money (especially the investors)
- How much money do you need to change the world?
Fund raising is about the story you tell. Whether its during a couple minute pitch at a Techstars/Y-combinator/500startups demo day or a two hour meeting with the partners at a big firm.
Think about the story you are telling; and as importantly, to whom you are telling the story.
Now go raise millions.
- 14 Key Findings of the Startup Genome Report (mojosimon.wordpress.com)
- Angel Investors Won’t Swoop Down on Your Startup (businessinsider.com)
- Fred Wilson: Startup Financing 101: How To Sell Preferred Stock (huffingtonpost.com)
- Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist (feld.com)
- Be Smarter Than Your Lawyer and Venture Capitalist (avc.com)
Every year when people start applying to Techstars (now in 3 cities!), I get emails and phone calls asking for my advice.
I always ask the same question, “Do you have a Hacker and a Hustler?”
Sometimes, I get the response, “Im both.”
To which I suggest that they rethink their application. Its nearly impossible for a single founder to have much success building his startup, let alone getting through a program like Techstars (or Y-Combinator or any of the dozens of others). One person can not do it all. Its really that simple.
What do I mean by a Hacker and a Hustler?
A Hacker is more than a code monkey, who can quickly build software and find interesting ways to hack together code. Thats a developer. Thats someone who is definitely an important part of a startup, but not critical to its success. A Hacker is someone who looks the problem, and solves it in a unique and special way. A Hacker finds the process of problem solving exciting and interesting, and spends the majority of their time looking at the problem in multiple ways, finding many potential solutions.
Often the Hacker is a coder, but not always the best coder you have on your team. Nate and Natty, of Everlater, are decent coders at best. In the last couple of years, they have taught themselves, by trial and error, how to code. I would imagine if you asked either one of them if they considered themselves amazing developers, they would probably indicate otherwise. But as Hackers? They are amazing.
A Hustler on the other other hand is a relationship builder. Someone who can build direct relationships with their customers. They arent really promoters, although they do a lot of promotion. They arent salespeople, although they do a lot of selling. They are passion people. They have the ability to articulate their passion clearly and in a way that gets other people equally passionate.
A true Hustler can get people using their product, or raise money, with little to no capital expenditure. Any one can run a Google Adwords campaign, or buy a billboard. Only a Hustler can get you to love their product in a way where you will speak passionately about it to your friends. A true Hustler is patient zero in a viral campaign.
My favorite young Hustler is Garry Tan of Posterous. Their recent campaign about switching from “dying” services to Posterous is genius, and a great example of the Hacker/Hustler dynamic. To figure out how to import data from one system to another is never easy, yet Posterous has hacked together some great importers. Rather than just releasing an “All-in-One” importer, Garry decided to release one a week, and build some noise around it. Not only has their been noise, but Posterous’ growth has been reported on (since they are self-proclaimed not dying) several times.
Was it just Garry’s idea? I would guess that with investors/advisors like Tim Ferriss, Chris Sacca, Paul Graham and others that it may have originated from the larger group, but his execution of it has been perfect.
A Hacker and a Hustler. Every great startup has a pair. Woz and Jobs are probably the most successful Hacker and Hustler tandem out there, there are thousands.
Ask yourself, as you begin down the path of building a great startup, are you a Hacker or a Hustler? Does your team have both pieces?
If you lack one or the other, your ability to be successful greatly diminishes.
(BTW: A topic for another post, but a company doesnt need a Hacker and a Hustler forever. Its why most startups see at least one founder leave.)
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- What I learned at Angel Boot Camp and Techstars demo night (gabrielweinberg.com)
- How to Create Your Own Real-World MBA – II (fourhourworkweek.com)