Five books every startup founder should read
Founders need to understand how to operate a new business, how to iterate quickly; and have a go to market plan. They need to understand what a cap table is, what caps and discounts are and how they work. They need to understand how to sell themselves and their vision to potential investors, employees and customers. These are the minimum expectations a founder needs to meet BEFORE they talk to anyone about investing in their business, and preferably even before they embark on building a startup in the first place.
Too many founders I encounter are not informed about the basics. These books are a great foundation for any aspiring startup founder. And if you’re already a founder and haven’t read these yet, you’re handicapping yourself. Fix it. On to the list:
“The Lean Startup” by Eric Ries
Eric came up with his “lean startup”concept after founding several businesses with both successes and failures and then advising startups as a partner at Kleiner Perkins. A combination of Steve Blank’sconcepts combined with the Japanese concept of lean manufacturing, which seeks to increase value-creating practices and eliminate wasteful practices, the “lean startup” methodology was compiled during his time as Entrepreneur in Residence at Harvard Business School.
Still the go-to book for aspiring founders, Eric Ries provides the roadmap for starting a business with concrete steps and strategies for executing a plan. He gives guidance on how and when to continue with the initial plan and when to “pivot” into another direction. Founders need to learn what their market wants and to provide this (product/market fit) and not some product or service that the founder thinks that the market should want or need. To do this requires building and testing a minimum viable product (MVP) to determine the markets reaction. Customer engagement is core to the model. I have yet to meet a startup founder who couldn’t benefit from reading this book.
“Zero to One” by Peter Thiel
One of the members of the “Paypal mafia” along with Elon Musk and now one of Silicon Valley’s most prominent investors, Peter Thiel promotes the idea that startups need to build tiny monopolies and then expand from there, avoiding competition. Here are the seven questions that Thiel writes “every business must answer:”
1. Can you create breakthrough technology instead of incremental improvements?
2. Is now the right time to start your particular business?
3. Are you starting with a big share of a small market?
4. Do you have the right team?
5. Do you have a way to not just create but deliver your product?
6. Will your market position be defensible 10 and 20 years into the future?
7. Have you identified a unique opportunity that others don’t see?
“The Hard Thing About Hard Things” by Ben Horowitz
Ben is half of the famous Silicon Valley VC duo of the Andreeson Horowitz (a16z) VC, a co-founder of Netscape and early investor in Skype, Airbnb and Twitter.
Almost all management books focus on how to do things correctly, so you don’t screw up, these lessons provide insight into what you must do after you have screwed up.
If all you want are the big ideas, or Horowitz’ philosophy, you can get them from his blog and articles. You don’t need to buy this book. But if you want a handy advisor for that 3 AM moment when you’re thinking about firing someone you like, buy the book. Keep it handy.
The Hard Thing About Hard Things has a whole lot of information packed inside it. You can read it from cover to cover and get a lot of value. Or, you can think of it as a series of conversations with bosses and mentors. Horowitz had a lot of those. And his mentors included people like Andy Grove and Jim Barksdale.
“Measure What Matters” by John Doerr
John was an early investor in Amazon and Google is a partner at Kleiner Perkins.
Developed at Intel under the leadership of Andy Grove, thanks to John Doerr the OKR framework is used at Google, The Bill and Melinda Gates Foundation and Amazon. Some of the best parts of the book are the mini case studies from a variety of companies. By letting you hear from founders in their own words — from small startups to fast-growth startups to non-profits — John makes it easy for the reader to model how OKRs could work at their company. It’s not just Google: Doerr shows how any ambitious, outcome-oriented organization can benefit from implementing OKRs.
Anyone who wants to understand what makes Silicon Valley tick will learn a lot from this book. So many of the giants from the last fifty years are captured in these pages — as relayed by John, their commitment and ambition shine through. John makes clear that they also shared an embrace of a simple framework for setting goals and communicating throughout their organization — which should be encouraging to any founder who wants to know how to build similarly effective organizations.
Also check out the website for more resources.
“Venture Deals” by Brad Feld
Co-Founder of TechStars and VC firm The Foundry Group, Brad was an early investor in Fitbit, Zynga and Makerbot.
Venture Deals provides entrepreneurs and startup owners with a definitive reference for understanding venture capital funding. More than an overview of the process, this book delves into the details of the term sheet, the players, the negotiations, the legalities, and more, including what not to do.
You’ll learn how the decisions are made, what every item on the term sheet means, what’s up for negotiation, and what’s not. You’ll discover the secrets to expanding your prospects, negotiating the right deal for your company, and figuring out the right balance of funding versus control. You’ll see the process through the eyes of the venture capitalist, the angel investor, the syndicate, and the lawyer, and develop a strategy that makes funding your company a win for all parties involved.
This book is designed to help entrepreneurs succeed, by bringing transparency to the venture capital funding process. Veteran investors walk you through the process from start to finish and beyond to help you:
- Understand how venture capital funds work, and how investors decide to invest
- Learn effective negotiation tactics based on game theory
- Delve into the meanings behind the term sheet’s economic and control issues
- Avoid common issues that sink deals at the seed, early, mid- and late stages
As a founder you need to understand the details or you may end up working your ass off for years, have a “successful exit” and end up with zero to show for it financially (literally). Educate yourself and surround yourself with mentors and advisors who know more than you do.
So that’s the list. There are of course many more resources out there for founders and I’m happy to hear other suggestions if you want to make a comment. I’m also a fan of the Ycombinator blog, snapstorms by Marc Shuster and Startup Professionals Musings, among others.
So the short lesson is: educate yourself. It’s a lot easier than learning only by the mistakes you make (and you will make plenty:)