Thread by @jaltucher

The Ultimate Cheat Sheet to Starting and Running A Business (and treat your career as a business): the next 50-100 tweets by me but all on this thread. It took me about 20 businesses plus another 50 investments to START to get this right. So...here goes....

1) there are many types of businesses. So some of these tweets I'm about to do don't apply. And I'm not a lawyer. So some of this is from experience rather than from a lawyer. You decide. And feel free to add or suggest or propose alternatives to the tweets I'm about to do

2) HOW LONG DOES IT TAKE TO RAISE MONEY? In a GREAT business, six months. In a mediocre business, infinity. (which means: if you have six months of money left, you are ALREADY out of business).

3) Should I blog / create content? Yes. You must. Blog about everything going wrong in your industry. Blog personal stories that you think will scare away customers. They won’t. Customers will be attracted to honesty. Creating content creates authenticity. You stand out.

4) My 2 successful businesses in past 12 years came from creating MASSIVE amounts of content. Current biz is about 60mm in revs, give or take.

5) SHOULD I RAISE VENTURE CAPITAL MONEY?

No, get a customer. I never started a successful business that didn’t start with a customer.

“But what about Google?” someone might ask.

Stop asking that.

First get a customer. Then build a product. Then create content. Lots of it.

6) SHOULD I QUIT MY JOB IN ORDER TO "FOCUS"?
No, many successful businesses were started by people who did not quickly quit their jobs.

Starting a business is not about taking risks. It’s 100% about risk mitigation.

EXAMPLES:

Larry Page stayed in graduate school for an entire year or so after he started Google.

Steve Wozniak stayed at Hewlett-Packard because he didn’t want to give up his safe job.

I stayed at HBO full time for 18 months before quitting to join my first business first time.

6A) WHEN DO I QUIT MY JOB? When there are profits. When there are recurring customers. When you have so much work to do you have to hire people. When I first quit my job to join my business I was SCARED. If you aren't scared enough then you are ignoring the risks.

6B) THEN DO I RAISE VC MONEY? Not if you don't have to. The easiest money is customer profits, then bank loans, then friends and family, then finally VC money. I've never been fired by "friends and family" but Ive been fired twice by VCs.

7) WHEN SHOULD I GIVE UP ON AN IDEA? In the beginning of a business, don't smoke your own crack. No matter how good an idea seems, it might not work.

Give up on an idea when you can’t generate revenues, customers, or interest for two months.

No interest, no business.

8) HOW MUCH EQUITY SHOULD I GIVE A PARTNER(S)?
Divide things up into these categories: manages the company; raises the money; had the idea; brings in the revenues; built the product (or performs the services). Divide up in equal portions.

9) SO...WAIT! WHEN SHOULD I QUIT MY JOB? I REALLY WANT TO QUIT MY JOB! Only if you have recurring profits that can pay you for six months at your startup. Aim to quit your job but don’t quit your job. Six months is a MINIMUM.

10) HOW DO I GET NEW CLIENTS? DO I SPEND ON ADS? The best new clients are old clients. Always offer new services. Think every day of new services to offer old clients. THIS WORKS FOR EVERY BUSINESS? Even with my podcast. My best podcast guests are my recurring podcast guests.

11) WHAT'S THE BEST THING TO DO FOR A NEW CLIENT?
Over-deliver for the first 100 days. Then you will never lose them. (see my podcast with Joey Coleman. This is also a truism for many areas of life). Practice over-promising and over-delivering (and no, don't say "underpromise")

12) WHAT ARE THE SIGNS OF AN AMATEUR?
- Asking for an NDA.
- Trying to raise VC money before a product or customers.
- Having fights with partners in the first year. Fire them or split before anything gets out of control.
- Worrying about dilution.

12a) AMATEUR HOUR, PART II:
- Trying to get Mark Cuban to invest because “this would be great for the Dallas Mavericks.”
- Asking people you barely know to introduce you to Mark Cuban.
- Asking people for five minutes of their time. You are establishing yourself as a liar.

12b) AMATEUR HOUR, PART III
- Having a PowerPoint that doesn’t show me arbitrage. Investors need to know WHY they are getting this "amazing" opportunity.
- Rejecting a cash offer for your company when you have almost no revenues. Hello Friendster and Foursquare

13) WHAT ARE THE SIGNS OF A PROFESSIONAL:
- Going from BS product to services to product to SaaS product. (Corollary: The reverse is amateur hour.) (e.g. Oracle).
- Cutting costs every day.
- Selling every day, every minute.
- Studying the entire industry (applies to career).

13a) PRO, PART II:
- When you have a billion in revenues, staying focused.
- When you have zero revenues, staying unfocused and coming up with new ideas every day.
- Saying “no” to people who are obvious losers.
- Saying “yes” to meeting winners, without a purpose.

14) WHAT DOES THE CEO MAKE IN THE BEGINNING? (and middle):
No more than 2x your lowest employee if you are not profitable. If you are not funded, your salary should be zero.

IMPORTANT: The CEO’s salary is the last expense paid in every business. This is LEADERSHIP.

15) WHEN SHOULD YOU HAVE SEX WITH AN EMPLOYEE?

When you love her and the feeling is mutual. And if he works for you, he should make first move.

16) SHOULD I EVER WORRY ABOUT THE ECONOMY OR THE NEWS? IT SEEMS BAD OUT THERE.
Absolutely not. The best businesses are started in horrible economies. GE, Microsoft, GM, Disney, Apple, were all started in recessions or the Depression.

17) WHAT HAPPENED TO ALL MY FRIENDS WHEN I STARTED A BUSINESS?
You don’t have any more friends.

18) SHOULD I SPIN OFF THIS UNRELATED IDEA INTO A SEPARATE BUSINESS? No. Make one business great. Throw everything in it. Do DBAs to identify different ideas. There are exceptions but this is the rule. Make one business GREAT.

19) I MADE A MISTAKE. SHOULD I TELL THE CUSTOMER? (again, true for career and all relationships):

Yes. Tell him everything that happened. You’re his partner. Not the guy that hides things and then lies about them. TRUTH IS REWARDED ALWAYS

20) I UNDERCHARGED. WHAT SHOULD I DO ABOUT IT?
Nothing. Relationships > Money. But... charge next customer more.

21) I HAVE A LOT OF TRAFFIC AND BUZZ BUT NO REVENUES. WHAT SHOULD I DO? Sell your business. There’s only one Google. (Well, there are two or three Googles: Facebook, Twitter, etc., but none of them are you.) If you can't figure out how to monetize, don't waste 10 yrs (e.g bitly)

22) I'VE BEEN IN BIZ FOR SIX YEARS AND WE AREN'T GROWING.

Come up with 10 ideas a day about new services your business can offer. Try to get a customer for each new service. Ask current customers for advice.

OR...sell your business.

23) DO I LISTEN TO MY VENTURE CAPITALISTS?
Yes, of course. They gave you money. But then don’t do anything they ask you to do.

24) DO I CARE ABOUT REVENUES OR MARGINS?
Revenues. Get customers. Then monetize. Margins can always go down but revenues can't always go up.

25) WHEN SHOULD I HIRE? My best businesses is when we had so much work, we were 24/7. Then we hired. Only hire when you DESPERATELY NEED the help. Worst case, hire slow, fire fast.

26) C-CORP or S-CORP or LLC? C-Corp if you ever want to take on investors or sell to another company. Take a low salary and expense a lot. Sometimes you can do structure and easily switch but why bother?

27) WHAT STATE SHOULD I INCORPORATE IN? Deleware.

28) SHOULD FOUNDERS VEST? Yes, over a period of four years. On any change of control, the vesting speeds up.

Once, I did not do this and I had a founder quit almost instantly and I had to buy him out.

29) SHOULD I PATENT MY IDEA? Get customers first. Patent later. Don’t talk to lawyers until the last possible moment. Don't overthink the basic rule: get customers.

30) SHOULD I REQUIRE VCS TO SIGN AN NDA?
No. Nobody is going to steal your idea. This applies to many areas of life. Nobody can do your idea as well as you if you have passion for it.

31) SHOULD I HAVE A TECHNICAL CO-FOUNDER IF I AM NOT TECHNICAL?
No. If you don’t already have a technical co-founder, you can always outsource technology and not give up equity.

32) SHOULD I BARTER EQUITY FOR SERVICES? No, you get what you pay for. Ancilllary law: don't take equity for services rendered. It's worth zero.

33) SHOULD I BUILD A PRODUCT? No, why waste the time? Start as a service somehow. See if theres interest, then build. Or white label another product, then build. Or advertise a product, see if people want it, then build. BUT...first a service, then productize what people use.

34) WHEN IS IT TOO MUCH DILUTION IF I RAISE MONEY? If someone wants to give you money, then take it. The old saying, “100 percent of nothing is worth less than 1 percent of something” is true.

I once wanted to give 3%, they wanted 50%. I gave it. Made them more involved.

35) WHAT IF NOBODY WANTS MY PRODUCT? Then change to a service and do whatever anyone is willing to pay for using the skills you developed while making your product. Example: Even if Amazon never sold any books, they developed infrastructure to create their cloud services.

36) If a client wants me to hire their friend or they won’t give me the business (e.g. like a bribe) what should I do?

Always do the ethical thing: HIRE THE FRIEND and get the client’s business.

37) What do I do when a customer rejects me in a B2B business?

Stay in touch once a month. Never be angry.

I deliberately like to sell WHEN they reject me. Staying in touch allows me to build relationship without providing service or product.

38) What if my client asks me to do something not in my business plan?

Do it, or find someone who can do it, even if it’s a competitor. If you sell life insurance and they want auto insurance. BE THE SOURCE. Help them find best auto insurance.

39) SHOULD I EVER TALK BADLY ABOUT A COMPETITOR?
- NO. All competitors are frenemies. You never know when they will buy you. And it is classless to trash them.

WHAT ABOUT A BAD EMPLOYEE?
- No, be a leader. Train them or find them a better opportunity.

NEVER GOSSIP. EVER!!

40) I HAVE LOTS OF IDEAS. HOW DO I PICK THE RIGHT ONE?

- Do as many ideas as possible. The right idea will pick you.
- Advertise all of your ideas. See which ones generate most interest.
- Remember above: when zero revs, remain unfocused.

41) SHOULD I DO MARKET RESEARCH?
Most market research is BS. Most people don't know what they want. Hence..advertising.
Find one customer who DEFINITELY – without a doubt – will buy a service from you. Any service, even one you don't offer direct.

42) SHOULD I PAY TAXES? No. You should always reinvest your money and operate at a loss.

43) WHEN SHOULD I FIRE AN EMPLOYEE?
- When they gossip.
- When they don’t over-deliver constantly.
- When they ask for a raise because they think they are making below industry standard.
- When they talk badly about a client.
- When they have an attitude.

44) HOW BIG SHOULD THE EMPLOYEE OPTION POOL BE? 15 to 20% 5-10% just for a good CEO to replace you if need be.

45) HOW MUCH DO ADVISERS GET? 1/4 of 1%

46) HOW MUCH DO BOARD MEMBERS GET? If they are investors, zero. If they are not investors, then 1/2 or 1%.

47) WHAT IF ONE CLIENT IS MORE THAN 50% OF MY REVENUES? (this goes for career. If you have a job, 1 client is 100% of your revenues!)
- Treat them VERY nicely. Send them a big Christmas basket. Go on vacations with them. And find new customers before you kill yourself.

48) WHAT'S THE BEST WAY TO SELL ANYTHING?
Big ("this will change everything") + Safe ("you won't risk anything") + Easy ("all you have to do is X") + Unique ("We're the only place you can get this"). PLUS...be their friend. Everyone wants a friend. Sell a product, business, idea

49) WHAT'S THE BEST WAY TO TALK ABOUT MY COMPETITION? Use “choice ambiguity” (Google it). Say, “First, show knowledge by describing industry in detail. Then: "All of my competition is great. I wouldn’t even know how to choose among them.” This is choice ambiguity bias.

50) WHAT'S THE BEST WAY TO VALUE A COMPANY?
Two ways:
a) Roughly, (to an investor) what's my potential income times ten.
b) If selling your company, what profits will the buyer have (with their much bigger customer base) and divide by 4. Hence, some cos with $0 profits, sell.

51) HOW DO I CHARGE FOR MY SERVICES?
Itemize each item as finely as possible and charge for each service. Then charge monthly maintenance.

52) HOW DO I PREPARE FOR A MEETING?
- know everything about industry
- know everything about who you are meeting, including tweets they sent ten years ago. Interests they might have. Etc.
- I watched an entire TV series a few weeks ago (5 seasons) when I knew a cust was into it

53) SHOULD I GIVE STUFF AWAY FOR FREE?
Absolutely, but remember that when you give for free, the receiver of free IS THE PRODUCT. Figure out how to monetize that. E.g. Google monetizes YOU.

54) SHOULD I GO TO SXSW? No.

55) SHOULD I HIRE PEOPLE BASED ON "WHO CAN I SPEND 7 HOURS IN A PLANE WITH?" Don’t be an idiot. If anything, hire people the opposite of you. Or else, who will you delegate to?

56) When should I say “no” to a client?

When they approach you.

57) When should I say “yes” to a client?

Every other conversation you ever have with them after that initial “no.”

Make them work for your attention.

58) Should I have sex with an employee?

Stop asking that.

59) SHOULD I EVEN START A BUSINESS?

No. Make money. Build or do things people want. Then start a business if you legally need to.

60) What should I do at Christmas?

Send everyone you know a gift basket.

61) If my customer just got divorced, what should I say to him?

“I can introduce you to lots of women/men.”

62) Why didn’t the VC or customer call back after we met yesterday and it was great?

They hate you.

63) Why didn’t the above call back after we met yesterday and it was great?

“Yesterday” was like a split second ago for them and a lifetime for you.

There’s THE LAW OF ENTREPRENEURIAL RELAVITY. Figure out what that means and live by it.

64) Should I hire a head of sales?

No. The founder is the head of sales until at least 10 million in sales.

65) My client called at 3 a.m. Should I tell him to respect boundaries?

No. You no longer have any boundaries.

66) My investors want me to focus.

Should you listen to them? No. Diversify in every way you can.

67) I personally need money. Should I borrow from the business?

Only if the business can survive for another six months no matter what.

68) My wife/husband thinks I spend too much time on my startup.

Divorce them or close your business.

69) I’m starting my business, but I have relationship problems. What should I do?

Get rid of your relationship.

A business is HARD. No bad relationships! No exceptions!

70) I HAVE TOO MUCH COMPETITION. WHAT SHOULD I DO?
Make a monopoly by answering these:
Uniqiue: how are you better than everyone else
Big: how your product/service is better
Safe: how your customers are safer using your product
Easy: how it's easier for customers to use you

71) How do I keep clients from yelling at me?

Document every meeting line-by-line, and send your document to the client right after the meeting. I wish I had done this more. I have experienced a lot of yelling. Still do.

72) SHOULD I HIRE A PR FIRM?
No, they are useless. Every day send out 10-20 emails to media places offering to provide stories, content, whatever makes you special to their audiences.

73) MY COMPETITION IS DOING BETTER THAN ME IN EVERY WAY.

Don’t be afraid to instantly shut down your business and start over if you can’t sell it. Time is a horrible thing to waste.

74) Is it unethical to run my business from the side while still at my job?

I don’t know. Did God tell you that in a dream?

75) My customer called me at 5 p.m. on a Friday and said, “We have to talk.” And now I can’t talk to him until Monday. What does it mean?

It means you’re fired.

76) XYZ just sold for $100 million. Should I be valued at that? I’m better!

No, you should shut up.

77) If an acquirer asks me why I want to sell, what should I say?

Real reason: I want to make a SHITLOAD OF MONEY!
Say the good reason: "I feel it would be easier to grow in the context of a bigger company. That 1 + 1 = 45."

78) I just started my business. What should I do?

Sell it as fast as possible (applies in 99 percent of situations). Sell for cash. Companies buy for cash when their stock is valuable. They buy for stock when their stock is too high.

79) "I CAN CHANGE THE WORLD WITH MY BUSINESS!"

No you can’t.

100a) Corollary: Don’t smoke crack.

80) If you’re so smart, why aren’t you a billionaire?

I sold my businesses early, lost everything, started new businesses, sold them, and got lucky every now and then.

80a) Corollary: These rules don’t always apply. But if you want break the rules, learn the rules.

THE RULE OF LUCK:

You create your luck by being healthy and not regretting the past or being anxious about the future.

You create luck by building skills, building network, being persistent, building on past success.

BEGINNER'S MIND:

I've experienced a lot but I clearly don't know everything or anything. Feel free to teach me what I don't know and disagree with any of these rules.

Thanks!