The only 2 ways to scale a startup

If you have anything you want to scale, I think there are only 2 ways to do so.

Before you start to scale you need to document the steps of any “process” or discipline you want to scale.

  1. Additive Scaling: Add more resources, servers, etc. to steps that need more help in your process.
  2. Subtractive Scaling: Eliminate steps by automation.

Which works better?

Additive works better if your are relatively early in your scaling and the steps themselves are hard to replicate.

Automation always works better in the long run though. Which is why algorithms and robots will eliminate many of the current “tasks” performed by humans.

Scale Your Startup
Scale Your Startup



Is it better or worse to start a company during a “downturn”?

I personally prefer to start companies and new ventures “all the time”.  Keep experimenting is my motto.

That said I have been more successful building on new ideas when the “market is not so good”.

Why? Since I have been largely working on software ideas, they involved hiring and building small technical teams.

It is “easier” to hire during a downturn is what I have seen.

While many folks prefer to stay at a large company to “weather the storm”, the good folks can get new opportunities all the time.

They tend to look for interesting new work that can keep them engaged for 2-3 years instead of treading water.

Startup during a downturn
Startup during a downturn

On giving back

I took 2 months away from my writing to understand why I was writing. Initially I thought I’d write just for posterity and for me to document what I learned.

At some point having 106K subscribers became a vanity metric I would track daily. I started to write based on what would increase my readership and what pleased my subscribers. That was my mistake.

I naively thought, I was helping people by writing about what I learned. I also assumed I was “giving back”.

I truly believed this until I read this post by Rachel.

So, I will continue to write as often as I think is relevant, but focus on writing just to please myself. Selfishly, so to speak.

I totally understand if you wish to unsubscribe.

How to use “Semantic framing” to keep absolute focus on your top goals

I was reading a great research piece in the Journal of Consumer Research the other day about “Semantic framing“.

The primary reason was to keep up with not gaining all the weight that I had lost over the last year or so. I found out about the power of “I don’t vs. I cant”.

This is a really neat hack that I am using to avoid certain foods that are really bad for me, which I used to be “addicted to”. Specifically I was a sucker for Reese’s peanut butter cups. I had to get the fix each day after my lunch, which blew all my diet from my breakfast and lunch.

I have never had coffee in my life and tried tea a few times only to give up. I “don’t” drink coffee.

So, giving up things is not unnatural or out of habit for me.

Both the authors of this research have concluded that saying “I don’t” is more empowering for self-talk towards goal-behavior than “I can’t”.

For goal-directed behavior, meaning if you want to achieve a specific goal, using the word, I don’t do X is more powerful and gives you a sense of being in control than I can’t do X.

Cant vs. Dont - Don't is better
Can’t vs. Don’t – Don’t is better

For example, just me starting to say “I don’t eat Reese’s, has helped me avoid the chocolate 21 days in a row”. 45 more days and I can comfortably kick the Reese’s habit for good, based on the the 66 days to habit formation research.

I started to wonder where else I could use this and as I have mentioned before, I tend to do a pretty bad job of working on a project for extended period’s of time. I tend to have “shiny object syndrome”, which causes me to lose focus on the one thing that matters many times in a project.

That’s one of my resolutions to fix. I think I am already on the path to fix that since I have successfully figured out the exercise routine I need, the food and the fact that I have been writing for 9 months without missing more than 4 days.

This new hack is a trick in the book that I plan to use for more time to keep focus on the projects that matter, but saying to myself and others “I don’t”.

Instead of “I can’t make time for a new advisory position”, I am saying “I don’t have time”.

Less endearing to the receiver, more blunt, but more effective.

Well, maybe now I have to work on the empathy part.

The real use of this new tool of “semantic framing” is around focus on projects.

“I don’t work on more than 1 project at a time” is more empowering to my mind and prevent it from accepting multiple projects and failing at them all.

The 7 best ways to bootstrap your tech startup; a list for #entrepreneurs

I often hear entrepreneurs tell me how they don’t have cash to fund their startup dream and that’s why they are not even going to try.

I understand there are many circumstances where you just don’t have enough cash to fund the business for growth, and many situations where the cash is needed to pay the initial expenses, so I am mindful of telling most folks that this is an excuse and that “you really dont want to get started”.

There are though, an increasing number of ways to bootstrap your business and I thought I’d ask many of my friends who have built a good business to tell me how they got started and generalize the means to do it for others.

  1. Customer funded software assignment. Many software companies actually get started this way. A customer with a problem asks for a bespoke / custom piece of software to be written that they can use. A good friend Greg Anderson, actually got started this way. When Cisco systems wanted a configurator for their order systems written, he wrote the version 1 and licensed it to them. They were the first customer and then Comergent was created.
  2. Consulting assignment: Possibly the most frequently used bootstrapping method ever. This is how I got my start early on. A consulting engagement with 2 companies led me to understand the market and need for reverse auction systems. After 2 consulting engagements, we started on building a generic platform for the same.
  3. Freelance your skills, on Contract. Slightly different from consulting, where you spend most of your time with one client and actually build the product and learn it for the first time, the “freelancing” opportunity is more to help you get “cash flow” to keep food on the table while you work on your startup. eLance (UpWork) is where one of my friends got started, doing small gigs and projects, building websites and working on SEO, for other businesses before starting his company.
  4. Factoring receivables. This is more risky, but one of my friends, Ricardo Jenez got started. eTimeCapital did factoring for a long time. The basic idea is to finance your receivables and ensure you get cash early to fund your expansion or growth of your business. It is debt finance, where you expect to get money from customers, over time, but another company or organization (typically a financial institution) tends to loan you the money before you get it. They do charge you an interest for the loan.
  5. Side projects: Many of my friends have a side project, while they have a full time job. This is to bootstrap their business as well. The side project is typically in a different business than their work, and you have to ensure it is declared free of conflicts of interest to your employer, but this is another way to bootstrap.
  6. Crowdfunding campaign: A good friend actually paid for his book completely with a crowd funded project, which they resulted in speaking engagements, paid consulting and now a good steady software SaaS business. The crowd-funding revenue was enough to last him 4 months, which was the time he needed to write the book and in the meanwhile, he also helped get his speaking engagements lined up.
  7. Credit card debt, savings funding etc. This is possibly the most risky, but also most frequently used mechanism I have heard of. Many entrepreneurs I know were in lots of credit-card debt before they built their company and many others have dipped into their “Rainy Day Funds” to start their company as well.

The bottom line is if you are motivated and passionate, you can find a way to get where you want to be. Else you will find many excuses to make capital a key bottleneck to getting started. Choose wisely.

It is all about the “Shoe” in most cases, but how do you figure that out

I have been running quite a bit daily for the last 1.5 years and have finally developed a love for it. Took me a long time, but I am finally enjoying it. Over the last 4 weeks though, I noticed a sharp shooting pain in the shin. Not ankle, neither the knee, which most people warned me about, but my shin.

In fact I had such a difficult time that for 2 days, that, I was sidelined with the inability to even walk for 15 minutes without a break.

I kept asking myself what changed?

Turns out it was my shoe.

For mid-range runners like me, shoes matter. They dont apparently (too much) for professionals, which is why you see so many of the top runners doing a barefoot race and winning, and they do slightly for the amateur runner (or maybe a lot, depending on your constitution).

I tried changing my diet, my stretching, my warm ups, blamed it on the extreme cold (30 degrees F some mornings when I wake up to run). I also blamed the extra gear I had to wear to keep warm.

Then I realized I changed my shoe and the new shoes were a comfortable fit, but not designed for running, but for hiking.

That’s all I had to change.

Went back to buy a new pair of my “favorite” shoes that I had no issues with for 1.5 years and the pain in the shin was gone in 2 days.

I wear my shoes out in 3-4 months, so this was a big deal.

So back to entrepreneurship – Paul G has famously said, startups are all about Growth.

You might have heard many people also say SaaS is all about churn.

So, if you are an entrepreneur, with all the conflicting information available, how do you figure out what the “it is in your business”?

Is it trial and error?

Is it reading enough online and going with an “expert”?

Is it go with your gut?

Is it a bunch of hypothesis and a lot of testing?

Or is it “data driven”?

I think the answer to that varies by the entrepreneur, like with most things.

The faster you figure out that it is the shoe, though, the more enjoyable and less painful it gets.

What I learned from the #Parisattacks about entrepreneurship and reactions vs. responses

I am not going into the details of the Paris attacks so much as to the reaction / response for entrepreneurs. Most people know the details and if you have not bothered to follow the news, you don’t care about it anyway.

This post, though, is about reacting and responding, with an example of what I think entrepreneurs go through at certain times during their journey.

There will be certain times in your entrepreneurial journey when you have to respond quickly – a large customer does not renew, or a big sales opportunity does not close, or an investment round falls through, find out a competitor who won a large deal by beating you, etc.

There are typically 3 path’s you can take.

  1. Be calm, continue down the path and stay the course.
  2. React to it either in a very defensive way or in a very negative way with communication that similar.
  3. Acknowledge the situation first, asses the new landscape and respond with facts and the outline of a plan.

My preferred model used to be to keep calm and carry on.

I am not sure that’s appropriate anymore based on what I am hearing, observing and reading from various reactions and response to the #ParisAttacks.

I believe this is just an observation and I don’t have a fully formed discipline yet.

On one hand I see several people being “calm” and providing the same facts as they did before, with a “stay the course”, the “plan is the right one all along” – specifically the President of the United States and few others.

On the other hand I see many others react in a very defensive way with a range of emotions from “ban asylum seekers” to “register immigrants” and “bomb the militants” and other extremes.

I used to and still admire people that are very calm in the face of extreme pressure, but I am not sure that in the face of a rather big change in the landscape that you can calm everyone else who is upset, angry, sad or emotionally spent. The calmness seems to anger them or upset them even more.

Similarly on the other side, I tended to loathe people who would react and make incendiary, knee-jerk comments, as well, thinking of them as juvenile or unsophisticated. That’s not right as well, because they are tapping into emotions that most people do face and they need an outlet. As my daughter said the other day – Its okay to cry, since I feel better.

I do think now that the best option is first to acknowledge the issue, then break it down into piece parts, understand what the new landscape, outline the changes or lack of changes if any and  address the new environment with changes to the plan.

Here’s thing I learnt, and my takeaway as an entrepreneur.

Even there are no real big changes to your plan, acknowledging the new changes, with some cosmetic and superficial changes, immediately has a lot of value.

As an entrepreneur you might still not change your plan to go after other customers if you lose one, and focus on winning other accounts instead and choose not to lay-off any of your good talent.

Not saying and communicating anything at all would be horrible.

Acknowledging, it and not making any changes, because your plan was good all along, may be the right approach, but it is not going to be perceived well.

Best is to make some smaller, but noticeable changes, with a promise of deliberate, thoughtful response given more time.

I think that’s the best course of action, than a tame “no change” response.

The personal blog of Mukund Mohan

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