Asking For An NDA Is A Waste Of Time

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When I wrote a post about how important is to pitch your startup idea, it surfaced an old topic that I considered tackled. That is asking people to sign an NDA to pitch them.

The startup community is well aware about this mistake, and it was topic openly discussed back in 2006 (at least, this is as far as I can recall).

The startup community is growing and it seems more people are becoming entrepreneurs. That’s a good thing. The bad part about this is that you get to see people making rookie mistakes that were tackled a few years back. This includes the NDA.

Among other reasons, you don’t ask for an NDA:

  • You’re asking someone to trust you with their money when you clearly don’t.
  • People won’t risk what they have to steal your idea.
  • Investors and entrepreneurs get pitched several times per day, and they can’t keep track.
  • Your idea is probably not as original as you think.
  • You should be pitching your idea as much as you can.
  • Your idea itself is worthless; only execution matters.
  • It’s virtually worthless as a means of protecting your intellectual property.

Techstars’ Brad Feld blogged that if you even ask investors to sign one, you might as well tattoo “I’m clueless!” on your forehead. They take this request as the clear sign you probably decided to become an entrepreneur only a few days ago.

The point is that respectable people in the startup community are likely to dismiss you along with your gazillion-dollar-idea. Fred Wilson hasn’t signed a single one in his more than 20 years in the industry. Guy Kawasaki also blogged about this back in 2006.

 

Real value is in the execution, not the idea.  

As Paul Graham’s essay on how to start a startup stated, the idea itself is only the beginning. A lot of would-be founders think the key is in the initial idea, but VC’s know better. They will tell you to get lost if you ask them to sign a nondisclosure agreement.

Seriously, it’s all about the execution. It’s how you make this idea come to life and your day-by-day strategy on how to compete in your market and reach your target will define your success. In Gary Vaynerchuk’s words, ideas are horsesh*t, value is in how you execute them.

Rui.-

How To Bootstrap Your Startup

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It’s a great feeling when you decide to pursue your idea and create a startup. It’s exciting, thrilling, and scary. You feel as if your gut is telling you loud and clear that can do anything in the world, and at the same time, you’re very scared of failing. That’s cool, but let’s stop and talk about money for a second.

Regardless if you have a lot of money or not, the best chance to survive and avoid making stupid decisions with money is to bootstrap. That means to run your startup by just spending the very minimum to get the very essential.

 

Forget about a big launch, you’re not Apple

It’s stupid to do a secret launch where you would dramatically reveal your new startup. This is real life, and you need to make smart decisions when it comes to running your business. You need to save energy and efforts, because sometimes it’s not clear how much time you would need to bootstrap.

You can’t afford being silent until your product is launched. In fact, as I said before, pitch your startup to anyone you can. And no, nobody is going to steal your startup idea.

 

Only essentials, even if you can afford more

If you have some savings, I know there would be a lot of cool stuff you can afford. But that doesn’t mean you should go ahead and spend money on them.

Remember that running a startup is full of surprises and unforeseeable expenses. That’s why you need to bootstrap.

You might end up paying for things and services you didn’t think about at the beginning, and most of the time those are going to be very expensive. So every dollar counts.

 

No flashy expensive first version of your product

You need to roll down an MVP and improve it with the metrics you will get from your first users. I know people who have spent almost hundreds of thousands dollars on their first version of the app, without even knowing how users would react to it! Guess what? They failed.

Remember you need agility to add, modify or delete features of your product. Agility means having time and money in your hands. If you burn everything on a version you don’t know it’s going to work, you won’t have any capital to pivot, and your startup company will not survive.

 

Leave marketing for later

You really have to work on your startup and launch a few weeks before going crazy on marketing. Right now, it’s complicated to approach media because you’re not ready. If you do, you will spend too much time on it and you could’ve used it to make your product better.

Get feedback from your first users and debug the product as much as you can. When you get seed capital and users are going back to your platform, then start spending money on marketing. Trust me, I learned this the hard way.

 

Don’t rent an office just yet

Waait! Don’t go that far when you’re just starting. Right now you need to launch a product and forget about getting an office. Sometimes getting seed capital is more complicated than you expected, and having too many expenses could kill your startup.

Check out coworking spaces nearby your area, coffee shops with good wifi or start working from home if you’re disciplined enough.

 

No expensive trips until you have something to show

You shouldn’t go to SXSW this year if you have nothing to show just yet. There will be a lot more opportunities to go to big expensive conferences, and even there will be a time when you don’t want to go to them (because you’d be too busy with your startup). Right now you need to focus your wallet in giving a good basic product.

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The funny thing is that I made a lot of mistakes enlisted here. And more. You will get better at running a startup with time, and finding ways to save money. I promise after a while you will become a bootstrap master.

Now I’m curious: did you make any of those mistakes or other ones? Leave a comment!

Rui.-

You Must Nail Your One-Line Startup Pitch

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“So tell me about your startup, what exactly do you do?”

That’s the famous request we used to love at the beginning, until we became tired of pitching our company over and over again. We end up forgetting how important it is for the other person to really understand what you do.

Sure, they might mention a “competitor” that has absolutely nothing to do with your company or a few other remarks that label them as “startup outsiders” (not clear). And don’t get me started when they’re relatives. But, you never know, so you better nail your startup pitch all the time.

Think about it. You’re building a pretty lazy first impression of your company to that person. It’s not fair to them nor to you. Just put into perspective: why would they care about your company if you don’t seem to care yourself?

What you can do is a little bit of real-life A/B testing. Make it exciting for you as well. You can experiment a little bit with your pitch, and see what gets better reactions. You can actually achieve building the ultimate one-line startup pitch.

If you think whoever is listening to you can’t add any value to your company (which I highly disagree), that person at least would be the perfect canvas to practice with new twists and modifications in your pitch.

Make the effort even if you don’t have that much energy. The good vibe and excitement of the listener if you did a good job will feed you.

Rui.-

4 Basic Lessons From The Art of Networking

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Networking is a must, especially when you’re developing a startup. Sure, the product is the most important thing, but at the beginning you have to meet people in order for them to use your product. You need to network to get to know customers, users and investors.

We are social creatures and we have the drive to connect with other humans very deep in the root of being an entrepreneur.

Unfortunately, a lot of people really suck at networking. They think it’s a game of who gets more business cards, instead of making real connection. They treat networking as if it has to be a technical maneuver and make no impact at all on the other side of the conversation.

Here are 3 basic lessons to have in mind when networking:

 

Firm handshake

It’s instinctive. I seriously believe there’s nothing remotely worse in the entire world of networking than the inability to give a decent handshake. It has to be a confident and firm while looking straight at the other person.

When you shake someone’s hand, it becomes a projection of the respect you are giving that person. If it’s weak, it projects you’re not making and effort to say hello to that person, it translates as if you don’t really care. And don’t get me started with people who look the other way while giving a handshake.

If you were eventually going to ask something to that person, it’s a lost cause now. Make the effort for those few seconds it takes to make a great first impression. There’s no better way to make a great first impression and that person will also be more receptive to you.

 

Ditch the script and be natural

I despise when people use a mental script to ask questions when being introduced. What do you do you, what your startup does, what’s your business model, have you got any funds, etc… It feels as if you’re in a speed dating game and you’re asking questions without even caring.

Engage with the person you’re talking to, ask questions you’re really interested in. Make a few inputs about what you have asked, but only after gathering enough information, or you will make a fool out of yourself.

 

Don’t be an interested a-hole

The worst thing when you’re networking at an event is when you find that prick who instantly start working the room again with their eyes the millisecond they realized you’re not interesting to them. That’s rude.

I’ve seen many people doing this to -as it turns out later on- key people to their business. They are very quick to judge and dismiss the person in front of them without the slightest touch of education. When they realize they made a mistake, it’s too late.

Treat people with respect and even though you will probably not contact that person again, enjoy the conversation. It will not take more than a few minutes and it’s free.

 

Offer something first

Don’t give me bull about how small you are compared to that person. You can always find something that other person needs. And if that person is out of your professional league, even more reason to do it.

Be different. They are probably tired of people trying to suck the life out of them and asking for stuff the minute they meet. It has to be a win/win situation. If you find something you can do for that person, the impact you will create on that person will be remarkable.

Rui.-

Big Competitors Will Not Crush You

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Entrepreneurs with early-stage startups tend to press the panic button when big tech companies are about to enter their field. They start going mad, their motivation goes South and they truly believe the fight is over.

What these entrepreneurs don’t realize is that they have become their biggest competitors. Usually, the reason they end up failing is not because big competitors are trying to tap the market. Their lack of motivation and willingness to go on is what ends up killing their startup.

Just think about big tech companies from 10 years ago that have disappeared. People used their services for a reason and a purpose. When they decided to drastically change or expand, hurting the core experience, people decided to go somewhere else.

Remember, big competitors have more to lose than you. There’s a logical reason why the risk they’re taking is way higher than yours. A lot of them could lose their core in the process of expanding the company, and people could stop using them.

Facebook CEO Mark Zuckerberg flew out to LA to meet Snapchat in late 2012 to know more about their vision. According to press recently, he told them about Facebook’s upcoming Poke app referring to it as a Snapchat killer. It doesn’t sound good when a big competitor is about to enter your field and eat you without any mercy.

Perhaps at that time he wanted to pressure them into selling or maybe it’s just the press trying to make Snapchat into another Hollywood story (alongside with Facebook and Twitter), but clearly it didn’t work.

Snapchat did amazing for themselves and the app made by their big competitor failed massively (Mark, if you’re reading this, please know I’m writing this with all due respect).

So stop thinking big companies will crush you instantly. Find what makes you different and better than them. Remember, Internet give us all a fair chance to shine, but you have to work hard for it.

Rui.-

How To Get Startup Investors Quickly

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Somewhere down the road you will feel that gut-feeling that your startup is definitely ready to make the seed round happen. You need to get in front of those investors, get to know them and get them to know you and the most important part of the deal: closing it.

Let’s say you already approached those startup investors like a boss, and you want to close a deal with them as soon possible. There are a few things you can do to make this process as quick as possible.

 

Meet With Them With A Reason

Have a meeting with them with some bullet points of what you want to talk to them about. Try to get the most out of the encounter. What I do is to set an Evernote note with a reminder on it, so a notification would pop up on my tablet or phone screen when I’m in the meeting.

 

Everything in Writing

Investors are busy and they see a lot of startups. You can’t expect them to remember absolutely everything you have agreed upon in person. That’s why you should always send a follow-up email after a meeting, summarizing all the decisions you guys have made.

If you have the meeting in the morning, send it on the afternoon, and if you go for drinks at night, send it the morning after. That way they can validate everything you put in the email is true, and you’re actually helping them to have all those ideas and decisions organized.

 

Know Your Term Sheets

You really have to know and understand everything about the potential term sheet. Most investors have a very standardized system that you should know beforehand. They can work around exceptions (depending on every case), but you should find out what they normally agree to.

 

Don’t Lose Momentum

It seems I haven’t learned this. It’s quite important to get things done when they’re hot. If you lose momentum, the excitement about your company will fade away. Make sure you set timelines and gently urge investors to make a decision before it’s too late.

It always helps when others are also interested in your company. Of course, you have to be careful about not being too much of a sell-out for the highest bidder. You have to appreciate who are behind the cash.

 

Be Honest

Don’t lie about your numbers, experience, expectations and the reality of the company. They will detect any BS you try to sell them and when they find out that you haven’t been honest (because they will), they will lose trust in you and that’s a deal breaker.

Rui.-

Gary Vaynerchuk’s Book is the Right Hook for Social Media

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We’ve been talking and talking about social media since before 2008. With this new field there is now an endless list of social media experts. Some of them are pretty good, most of them are full of sh…

Regardless of how much you learned about social media, things change. Social Media Marketing is not the same as it was in 2010. Everything changes. We have Vine, we have Instagram, and people’s habits change. Online Marketing evolves more rapidly than most professional areas because people are changing the way they use the web every day.

Gary Vaynerchuk’s Jab Jab Jab Right Hook is the best social media manual I have ever read. Period. There’s no other way to describe it. You can be social media savvy or be complete ignorant of it, and you will definitely learn a thing or two from Gary.

Of course, if you’ve been around social media you don’t need to be convinced Gary Vaynerchuk really knows what he is talking about. This new book is perfect to understand how to properly use every platform and to always go for the right content.

Jab, Jab, Jab, Right Hook means you need to give to your audience (jabs) before you convert them and make a sale (right hook). People don’t care about you. You need to give them more content than pitching your product or service.

You need to generate content based on what your target needs, not your brand. As my friend Vilma Núñez always says (she’s a prettier version of Gary Vaynerchuk who has one of Spain’s top blogs in social media marketing), “make content not advertising.”

And creating content just for the sake of filling up your timeline is not good either. People don’t use Instagram the same way they use Snapchat or Facebook. And yes, it’s time for you to embrace Snapchat. You need to break the bad habit of being the last brand to use a social media network because your teenage kids are in it.

Providing native content for each platform is vital. Look at the difference in this comparison I found in Gary’s book:

NATIVE CONTENT FOR INSTAGRAM:
NOT NATIVE CONTENT FOR INSTAGRAM:

Let me make it clear for you: “Jab, Jab, Jab, Right Hook” by Gary Vaynerchuk is the ultimate social media marketing bible, and you need to read it now. If you have no idea how to sell and promote through social media, buy the book. If you are an expert in social media, buy the book.

Basically, the only reason you shouldn’t read this book is only if you’re Gary Vaynerchuk himself. Thanks Gary for signing my book!

Rui.-

5 Reasons Why Having No Competition Is A Bad Sign

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People get unmotivated to pursue their startup ideas when they realize someone else is already doing it. To be honest, it’s quite difficult to think of a product or a service that hasn’t been already created before. The key is in the execution, the team, and how you approach the product.

In fact, not only is very unlikely for you to have no competition, it’s bad news for you if you don’t. Here are the reasons why:

 

You haven’t done your homework

The fact you claim that you have no competition might mean that you haven’t looked hard enough. If this is the case, it portrays you as a person that is not too deep into the industry to be able to lead a startup in it.

 

Your market is not big enough

The problem could also be that you’re aiming for a very specific market. Maybe too specific. It doesn’t have to be a huge market, but you should make sure it’s big enough for your startup to be able to scale.

To have a great startup, you have to be able to grow it and make a profit, even if it’s a long term goal. Remember, startups are companies, they’re not meant to be hobbies.

 

Your competition already tried and failed

You have to check if someone was trying to tap into that kind of product and failed. It would be ideal if you can get in touch with the people behind those failed startups. You should ask them about why they failed, what happened there.

 

You’re ahead of your time

It’s great when you release a product the world just got ready to have it. But be careful if you’re not releasing something the world is not ready for.

You should definitely try test it out, because you will never know if it’s going to work. Remember, test out a few theories and measure every type of metric from the very beginning.

 

Your product sucks

Another possibility could be that your product is just not good enough, and that’s why there’s no competition. Sorry. But you probably don’t suck, so keep on going!

Rui.-

Approach Startup Investors Like A Boss

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Back in early 2012, I was trying to figure out how to launch my startup Pathfinder along with my co-founder. We were very naive at that at the time, even though I had previous experience in other startups.

I was delusional. I even sent what was probably the worst email possible you could ever send to any startup investor… to Ashton Kutcher. The email was long and awfully written. I expected him to have enough time to download a 10MB PDF attachment, because, you know, he probably doesn’t get that many emails and letters from random people like me.

So I have learned and grown so much since then, so here are some better ways to approach startup investors:

 

Avoid cold emails

If you’re asking for money directly in a cold email, it’s probably not going to work. You literally have to be the best thing ever, catch the investor in a good mood and get them curious enough to open the email.

Most successful startup investors I have talked to, just a very few of them admitted to only have invested in a single deal originated by a cold email, while the vast majority hasn’t invested in any startup like that.

 

Do you homework about the investors

Don’t spam. Analyze them and find out as much as possible of how they prefer to get approached by startups. Maybe they respond to cold emails, maybe they prefer a specific format when they get an email, maybe they like to try out the product first.

 

Build a network of introducers first

If you have no connection with any startup investor and you don’t know anybody from the business, build that first. Start meeting other entrepreneurs, especially the ones that have been backed by the investors you’re interested in.

The feedback you will get from them is going to be very good regardless if they connect you or not. And, if you get an entrepreneur deeply interested in your company, they will be likely to refer it to their investors. They know business angels and VCs are looking for great startups with warm introductions.

 

Nourish a relationship with them

You don’t go on a first date to ask that person to marry you (at least in most cultures). You have to build trust and a relationship with the investor. You should also figure out for yourself if you want that person in your business.

 

When emailing, expect no more attention than 2 minutes

Again, sending an email to Ashton Kutcher with a 10MB PDF attached will only make the cold email worse. Don’t expect investors to click on links or open PDFs. Be precise and straight to the point.

 

Starting with an NDA is a deal breaker

Normally, startup investors are not willing to listen to you if the first thing you’re requesting is to sign an NDA. They would rather pass on you and your great startup idea. I made another blog post about this.

Rui.-

Learn How To Compete With Your Startup Clones

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If you are a promising startup, little time will pass until you notice hundreds of clones emerging from every corner of the world. It’s very unlikely to avoid this. There are not enough patents, laws and NDAs that will protect you from this.

Your best chance is to learn how to compete with them, and to make sure you will be the one that will prevail.

 

Think Global from Day 1

Most startup clones will emerge overseas. Try your best to make sure your startup works everywhere from the very beginning. It’s not an easy task and sometimes it’s an impossible one, but you have to make sure you can get as far as possible.

Before you make any rushed decisions, it doesn’t mean you should burn a lot more money to be international. That would be a very bad idea. It means for you to make sure the language in your website is understandable and relatable in other markets. This will not only help avoiding startup clones, but also to help you decide which are the best markets for you to expand.

For your website to be understandable doesn’t have to be in many different languages from day 1. Use words, icons and actions that are easy to understand overseas. Avoid using many local references that are hard to get outside of your country.

If you measure temperature, distance or weight, remember most countries use the metric system. In fact, United States is one of the only countries that doesn’t have the metric system as the official system of measurement.

 

Don’t ignore your startup clones

Take your time to analyze the startups that are cloning you. Find out who is behind them, in what market they are, how important that market is for you and if they have any general advantage over you.

You should always learn from analyzing your clones how to make things better. Always be on the lookout for smarter ways to beat any kind of competition.

 

Always be three steps ahead

Everybody is going to be able to clone what you’ve done, but nobody is able to copy your long term vision. Always have a clear vision of where you want your startup to be heading.

Learn from the market, get as much feedback as possible, and talk to everyone. You have to envision what is going to happen in your sector. Your startup must be ahead of the curve and anticipate what will make users to stick with you.

 

Recruit a better team

Your startup is as good as the execution. Your team becomes more important than the idea itself. It’s a great advantage if your team is extremely talented, work great together and has strong values and company culture.

Always hire the very best people you can find. Make sure they believe in your vision as well. If you have the right team, startup clones won’t have a chance to compete with you.

 

Buy the best startup clones out

Some of those startup clones are going to succeed and do very well for them. They’re present in a market you couldn’t pay attention to. They grew and it’s a headache to compete with them once you have the capability to be in that location.

Sometimes the best solution is to make them an offer and buy them. If they clone your business, it’s very likely they’re in it for the cash more than the passion of solving a problem. Some of them are very passionate about the product, and if that’s the case, maybe they will be make a great added value to your team.

It’s quite common to find international entrepreneurs that create startup clones in their local markets. Write them a check and don’t hate them, they actually did the work for you.

Rui.-