[Note: this appeared on TechCrunch this past weekend. ]
This is going be a bullet FAQ on starting a business. No joke. If you’re a lawyer, feel free to disagree with me, so you can charge someone your BS fees to give the same advice. If you can think of anything to add, please do so. I might be missing things. If you want to argue with me, feel free. I might be wrong on any of the items below.
There are many types of business. Depending on your business, some of these won’t apply. All of these questions come from questions I’ve been asked.
The rules are: I’m going to give no explanations. Just listen to me.
1) C Corp or S Corp or LLC?
C-Corp if you ever want to take on investors or sell to another company.
2) What state should you incorporate in?
Delaware.
3) Should founders vest?
Yes, over a period of four years. On any change of control the vesting speeds up.
4) Should you go for venture capital money?
First build a product, then get a customer, then get friends-and-family money (or money from revenues which is cheapest of all) and then think about raising money. But only then. Don’t be an amateur.
5) Should you patent your idea?
Get customers first. Patent later. Don’t talk to lawyers until the last possible moment.
6) Should you require venture capitalists to sign NDAs?
No. Nobody is going to steal your idea.
7) How much equity should you give a partner?
Divide things up into these categories: manage the company; raise the money; had the idea; brings in the revenues; built the product (or performs the services). Divide up in equal portions.
8) Should you have a technical co-founder if you are not technical?
No. If you don’t already have a technical co-founder you can always outsource technology and not give up equity.
9) Should you barter equity for services?
No. You get what you pay for.
10) How do you market your app?
Friends and then word of mouth.
11) Should you build a product?
Maybe. But first see if, manually, your product works. Then think about providing it as a service. Then productize the commonly used services. Too many people do this in reverse and then fail.
12) How much dilution is too much dilution?
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.
13) Do you listen to venture capitalist?
Yes, of course. They gave you money. But then don’t do anything they ask you to do.
14) What if nobody seems to be buying your product?
Then change to a service and do whatever anyone is willing to pay for using the skills you developed while making your product.
- “You’re gonna rattle the stars, you are.”
15) If a client wants you to hire their friend or they won’t give you the business (e.g. like a bribe) what should you do?
Always do the ethical thing: Hire the friend and get the client’s business.
16) What do you do when a customer rejects you in a B2B business?
Stay in touch once a month. Never be angry.
17) In a B2C business?
Release fast. Add new features every week.
18) How do you get new clients?
The best new clients are old clients. Always offer new services. Think every day of new services to offer old clients.
19) What’s the best thing to do for a new client?
Over-deliver for the first 100 days. Then you will never lose them.
20) What if your client asks you to do something not in your business plan?
Do it, or find someone who can do it, even if it’s a competitor.
21) Should I ever focus on SEO?
No.
22) Should I do social media marketing?
No.
23) Should I ever talk badly about a partner of an employee even though they are awful?
Never gossip. Always be straight with the culprit.
24) I have lots of ideas. How do I pick the right one?
Do as many ideas as possible. The right idea will pick you.
25) What is the sign of an amateur?
— Asking for an NDA.
— Trying to raise VC money before product or customers.
— Having fights with partners in the first year. Fire them or split before anything gets out of control.
— Worrying about dilution.
— 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. It’s never five minutes, so you are establishing yourself as a liar.
— Having a PowerPoint that doesn’t show me arbitrage. I need to know that there is a small chance there is a 100x return on money.
— Catch 22: showing people there’s a small chance there’s 100x return on their money. The secret of salesmanship is getting through the Catch 22.
— Rejecting a cash offer for your company when you have almost no revenues. Hello Friendster and Foursquare.
26) What is the sign of a professional?
— Going from bullshit product to services to product to SaaS product. (Corollary: the reverse is amateur hour).
— Cutting costs every day.
— Selling every day, every minute.
— 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 any meeting at all with someone who is an obvious winner.
— Knowing how to distinguish between winners and losers (subject of an entire other post but in your gut you know — trust me).
27) When should I hire people full time?
When you have revenues
28) How long does it take to raise money?
In a GREAT business, six months. In a mediocre business, infinity.
29) Should I get an office?
No, not unless you have revenues.
30) Should I do market research?
Yes, find one customer who DEFINITELY, without a doubt, will buy a service from you. Note that I don’t say buy your product, because your initial product is always not what the customer wanted.
31) Should I pay taxes?
No. You should always reinvest your money and operate at a loss.
32) Should I pay dividends?
See above.
33) What should the CEO salary be?
No more than 2x your lowest employee if you are not profitable. This even assumes you are funded. If you are not funded your salary should be zero until your revenues can pay your salary last. Important RULE: the CEO salary is the last expense paid in every business.
34) When should I fire employees?
When you have fewer than six months’ burn in the bank and you aren’t getting revenues growing fast enough.
35) When should you have sex with an employee?
When you love her and the feeling is mutual.
36) What other reasons should one 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.
37) When should you give a raise?
Rarely.
38) How big should the employee option pool be?
15 to 20 percent.
39) How much do advisers get?
One-fourth of 1 percent. Advisers are useless. Don’t even have an advisory board.
40) How much do board members get?
Nothing. They should all be investors. If they aren’t an investor, then one-half of 1 percent.
41) What if one client is almost all of my revenues?
Treat them very nicely. Don’t forget the Christmas gift basket.
42) What’s the best way to sell anything?
Show arbitrage: If they pay X now they are buying something worth X * Y. That is the ONLY way to sell.
43) What is the best way to sell anything?
Part II: fear and agitation. Get them afraid (the world is falling apart). Get them agitated (this is the only way to stop it).
44) What’s the best way to talk about your competition in a meeting?
Use “choice ambiguity” (Google it). Say, “all of my competition is great. I wouldn’t even know how to choose among them.”
45) What’s the best way to value a company?
Ask yourself (no BS): How much would it cost to recreate the technology, services, brand and customers you have already built. Then quadruple it and see what people would pay.
46) Should I ever worry about the news or the economy?
Absolutely not. The best businesses are started in horrible economies.
47) What happened to all of my friends?
You don’t have anymore friends.
48) How do I charge more for my services?
Itemize as finely as possible and charge for each item.
49) Do I charge per hour or per project or per month?
First per project, then per-month maintenance.
50) How do I prepare for a meeting?
Know everything about the clients: competition, employees, industry. Over-read everything.
- Read everything.
51) What is the only effective email marketing?
Highly targeted email marketing written by professional copywriters, and the email list is made up of people who have bought similar services in the past six months.
51a) Corollary: If you have zero skills as a copywriter then everything you write will be boring.
52) Should I give stuff for free?
Maybe. But don’t expect free customers to turn into paying customers. Your free customers actually hate you and want everything from you for nothing, so you better have a different business model.
53) Should I have schwag?
No.
54) Should I go to SXSW?
No.
55) Should I go to industry parties and meetups?
No.
56) Should I blog?
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.
57) Should I care about margins?
No. Care about revenues.
58) 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.
59) Should I hire people because I can travel on a seven-hour plane ride with them?
Don’t be an idiot. If anything, hire people the opposite of you. Or else who will you delegate to?
60) When should I say “no” to a client?
When they approach you.
61) When should I say “yes” to a client?
Every other conversation you ever have with them after that initial “no.”
62) Should I have sex with an employee?
Stop asking that.
63) Should I negotiate the best terms with a VC?
No. Pick the VC you like. Times are going to get tough at some point, and you need to be able to have a heart-to-heart with them.
64) Should I even start a business?
No. Make money. Build shit. Then start a business.
65) Should I give employees bonuses for a job well done?
No. Give them gifts but not bonuses.
66) What should I do at Christmas?
Send everyone you know a gift basket.
67) If my customer just got divorced, what should I say to him?
“I can introduce you to lots of women/men.”
68) When should I give up on my idea?
When you can’t generate revenues, customers, interest, for two months.
69) Why didn’t the VC or customer call back after we met yesterday and it was great?
They hate you.
70) 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 relativity. Figure out what that means and live by it.
71) Should I hire a professional CEO?
No. Never.
72) Should I hire a head of sales?
No. The founder is the head of sales until at least 10 million in sales.
73) My client called at 3 a.m. Should I tell him to respect boundaries?
No. You no longer have any boundaries.
74) I made a mistake. Should I tell the client?
Yes. Tell him everything that happened. You’re his partner. Not the guy that hides things and then lies about them.
75) My investors want me to focus.
Should I listen to them? No. Diversify in every way you can.
76) I personally need money. Should I borrow from the business?
Only if the business can survive for another six months no matter what.
77) I just bought two companies. Should I put them under the same roof and start consolidating?
No. Not for at least two years.
78) Should I quit my job?
No. Only if you have salary that can pay you for six months at your startup. Aim to quit your job but don’t quit your job.
79) What do I do when I have doubts?
Ask your customers if your doubts are trustworthy.
80) I have too much competition. What should I do?
Competition is good. It shows you have a decent business model. Now simply outperform them.
81) My wife/husband thinks I spend too much time on my startup?
Divorce them or close your business.
82) I’m starting my business, but I have relationship problems. What should I do?
Get rid of your relationship.
83) Should I expand geographically as quickly as possible?
No. Get all the business you can in your local area. Travel is too expensive time-wise.
84) 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.
85) I undercharged. What should I do about it?
Nothing. Charge the next client more.
86) I have an idea for an app but don’t know how to execute. What should I do?
Draw every screen and function. Then outsource someone to make the drawings look like they come from a real app. Then outsource the development of the app. Get a specific schedule. Micromanage the schedule.
87) I want to buy a franchise in X. Is that a good idea?
Only buy a franchise if it’s underperforming and you can see how to improve it. Don’t buy on future hopes; only buy on past mistakes.
88) I want to buy a franchise in X. Is that a good idea?
Rely on the three Ds: Death, Debt, Divorce. When someone dies, the heirs will sell a business cheap. When someone is in debt, they will sell a business cheap. When someone divorces, the couple usually has to sell a business cheap. IMPORTANT: even if the trends in the industry are in your favor, you CANNOT predict the future. But you can use the past to help you get a deal. Always get a deal.
89) I have a lot of traffic but no revenues. What should I do?
Sell your business. There’s only one Google. (Well, there are two or three Googles: Facebook, Twitter … )
90) I have no traffic. How do I get traffic?
Shut down your business.
91) Should I hire a PR firm?
No. Do guerilla marketing. Read “Newsjacking” and “Trust me I’m Lying.” PR firms screw up from beginning to end. The first time I hired a PR firm, instead of sending me my contract they accidentally sent me their contract for “Terry Bradshaw.” He was paying $12,000 a month. Was it worth it for him?
92) My competition is doing better than me across every metric. What should I do?
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.
93) I’ve been in business now for six years, and my business doesn’t seem to be growing. It’s even slowing down. What should I do?
Come up with 10 ideas a day about new services your business can offer. Try to get a customer for each new service. I know one business in this situation that refuses to do this because their VCs are telling them to focus more. You’re going to go out of business otherwise.
94) 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?
95) 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.
96) XYZ just sold for $100 million. Should I be valued at that? I’m better!
No, you should shut up.
97) Investors want to meet me and customers want to meet me. Who do I meet if I need money?
You should know the answer to that by now.
98) If an acquirer asks me why I want to sell, what should I say?
That you feel it would be easier for you to grow in the context of a bigger company that has experienced the growing pains you are just starting to go through. That 1+1 = 45.
99) I just started my business. What should I do?
Sell it as fast as possible (applies in 99 percent of situations). Sell for cash.
100) I can change the world with my technology.
No you can’t.
100a) Corollary: Don’t smoke crack.
101) If you’re so smart why aren’t you a billionaire?
Because I sold my businesses early, lost everything, started new businesses, sold them, and got lucky every now and then.
101a) Corollary: These rules don’t always apply. But like Kurt Vonnegut said, “if you want to break the rules of grammar, first learn the rules of grammar.”
RULE #infinity:
You create your luck by being healthy and not regretting the past or being anxious about the future.
James Altucher 
August 27, 2013 at 8:29 am |
James, in question #20, are you suggesting to refer them to the competitor, or to hire the competitor myself?
20) What if your client asks you to do something not in your business plan?
Do it, or find someone who can do it, even if it’s a competitor.
August 27, 2013 at 8:31 am |
Either. It’s not so bad to recommend a competitor. Then you become a trusted source for the client if you do it right.
August 27, 2013 at 8:33 am
That makes sense. Thanks!
August 27, 2013 at 9:41 am
Hey James, NEVER write a business plan right?
August 29, 2013 at 3:29 pm
It can sometimes be helpful to know what you’re doing, how and why. Kind of the way double-entry bookkeeping can be a lot better than wandering around in a pitch-black cave, cash-flow-awareness-wise. 🙂
August 29, 2013 at 3:35 pm
cool thx
August 27, 2013 at 8:31 am |
Great list James.
I would love to know your alternative suggestions to some of the questions you answered no to…
I’m going to take a shot at a response to one myself if that’s ok:
“Should I ever focus on SEO?”
No.
Focus on optimising your content for humans, not machines.
Emotions are more powerful than keywords. Imagine you are using an emotion generation tool instead of a keyword generation tool.
Be honest. Be human. Be real.
Write stories not “blog posts”.
August 27, 2013 at 8:32 am |
Agreed
August 28, 2013 at 8:25 am
Right, but it doesn’t mean you can’t build a business around SEO. There are many examples of great niches that have been created by companies that do SEO really well. And by this I mean creating great content and not shooting yourself in the foot by not acknowledging Google exists. This means writing for humans, etc.
August 29, 2013 at 1:30 pm
Well, if you do the math, you should be able to use SEO well to draw business to a commodity-level service of the type that used to get most of its business from the Yellow Pages. Yellow Page ads used to do well when they used bulleted lists of services, because people arrived with a need and scanned to see if you met the need, and then got in touch.
Keywords would seem to function a good bit like those bulleted lists. They won’t differentiate you; they’ll commodify you. Then perhaps you can put a bit more effort into design and a bit of short, friendly, personable copy; some customer reviews; a map. Some Yellow Page ads just made better impressions than others. Sites can do that, too.
SEO shouldn’t work if you’re going to surprise the customer in any way; how do you search for something you don’t know is out there? That’s where the sales guy or the sales letter comes in handy, saying, “Imagine a day when…”
September 3, 2013 at 7:38 am
a lil slow sometimes – with whom are you agreeing?
Ann or cycle love?
56) Should I blog?
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.
August 28, 2013 at 11:02 pm |
You have read too many famous blog and do not know SE algorithm well.
Be honest. Be human. Be real
The people who gave you above advice are people who had done completely opposite to get to where they are now and probably realized they should Be honest. Be human. Be real.
Be honest. Be human. Be real only apply to people who either has succeeded or don’t care about success.
August 27, 2013 at 8:34 am |
no regrets. check. anxiety? going to run 3 miles and i will get back to you.
August 28, 2013 at 6:51 pm |
If you spent the same exact energy and focus it takes to run 3 miles on something useful, you would be a lot better off.
August 28, 2013 at 7:00 pm
Dude. 1) it was a joke about anxiety. And 2) disagree, I wouldn’t be “better off” without the run because exercise is part of my happy daily practice. Therefore it’s “something useful” to me. Do you always give out unsolicited advice on other people’s blogs or is this your first time?
August 28, 2013 at 7:20 pm
Stop drinking coffee if you have anxiety. I’m just saying, the way you typed it, sounds like you are just using running to alleviate your anxiety, rather than doing something about your actual problems.
August 28, 2013 at 7:23 pm
Dude. Again with the advice. It was just a joke, I don’t drink coffee. Thank you for your anonymous concern.
August 28, 2013 at 7:24 pm
Oh. sorry.
September 12, 2013 at 10:23 pm
asag stop trolling
August 30, 2013 at 7:00 am
He is an idiot that validates himself by offering his wisdom…
August 30, 2013 at 6:59 am
Said the focused person commending to strangers on a blog. You clearly have issues.
(I comment too, but I’m not telling others to be “focused”).
August 27, 2013 at 8:37 am |
Love #94. Did that for 3 years while at a job that I knew was basically training in skills I lacked but needed to take my business full time. Would love a rule about prioritizing.
August 27, 2013 at 9:26 am |
James, you’re the greatest.
August 27, 2013 at 9:45 am |
Hey James- Love it (as usual). Short, direct answers are the best answers (in my opinion). I agree with NEARLY everything.
Your point #57 I am a bit at odds with (pun intended) as I believe margin is major. Especially when it comes to underestimating G&A as quite often overhead will put you out of business. I agree you need revenue in order to show both market viability and proof of concept HOWEVER, if you are selling something that costs more then you are selling it for, you now know why you are priced cheaper than the competition… On the other side of the coin, I am guessing your point is, as revenues increase, costs go down and margins go up so the margins eventually work themselves out.
Your point 41 is a big one as it nearly cost me my first business so I had to drastically switch my formula. I used to have 1 account with 800 stores… I changed to about 5-600 accounts with 1 store, 50 or so with a handful of stores and 5 or so accounts that were statewide or reigional chains. Made me sleep much better at night.
I think point #18 is the most important to me as old clients are a million times easier to keep then new clients to acquire.
Again, great post as always. I’ll let you slide on missing my comment on ‘how to avoid death’ … you cant be at all places at all times. Later my man. Best- MJ
August 27, 2013 at 10:01 am |
Yes, that could be. I just find that Wall St focuses SO MUCH on margin, I wanted to downplay it. The most important thing is growing revenues because you can then wipe out competition and then cut costs (not that simple but that was, in a nutshell, the Amazon plan). It’s also why Ken Fisher always focused on P/S vs P/E because margins and earnings can be manipulated easily.
Also, if you have quantity and make a little bit of money off each item, then you will get rich. But if you don’t have quantity, you won’t.
August 27, 2013 at 9:47 am |
Dear James. Good one, great checklist, thanks.
In my opinion point #5 applies to web oriented projects that do apply for utility. I think that those companies which core is technology should have a lawyer but as partner. The precedence filling on the patent office is necessary to create a compelling portfolio. Paying lawyer services is not possible, too expensive, so partnering is the way in such case.
August 27, 2013 at 10:34 am |
In terms of raising money, my company just had a nice 2-3 month vetting process with potential investors. Solid advice there. What I might add is this. Given the time frame of six months, be SURE you want to actually raise money. Another thing I’d add? Raising money is the absolute last thing you want to do unless you are completely sure of it or if you want really speed up the growth of your business and need the capital to do so. Raising money is practically a full time job in and of itself so you better be positive. For us, we had a lucky change in our financial situation and the last thing we wanted to do was go down the road of creating a pitch deck, talking to 1000 people where we MIGHT get money (but probably not) and not to mention wasting their time by saying “whoops, we don’t need the money now.” Raising dough has got to be a commitment, just like your business is a commitment.
August 27, 2013 at 10:35 am |
One more thing James. I know you’re a busy man but we’re about 11 years apart in age and I feel from similar points of view. Inspired by this blog I’ve formed by own. Would love to hear your thoughts on it if possible – http://nathanielberman.blogspot.com – went old school with the blogspot thing but I wanted to keep it as simple as possible.
August 31, 2013 at 3:12 pm
You should get a real domain with just your name. It’s less than $100/year if you find a cheap provider. Easier to remember too.
August 27, 2013 at 11:10 am |
You are the man
August 27, 2013 at 11:18 am |
I have to say, this post ABSOLUTELY BLEW MY MIND.
The cut to the chase, the single-minded, to-the-point, tough love in it…
It is the best business post I have ever read, should be mandatory reading in every business school and program.
Amazing James. I am in awe
August 27, 2013 at 11:20 am |
Maybe you are biased though!
August 27, 2013 at 3:08 pm
Biased or not, she’s right — Amazing post!
August 27, 2013 at 10:40 pm
So awesome! You’re all right.
August 28, 2013 at 5:18 pm
Oh shut up, what do you know! 😉
This IS good!
November 23, 2013 at 5:35 pm
The article is biased to America only, see the first two points, I stopped reading after that cause the writer has no consideration for the overall audience.
January 4, 2014 at 5:05 pm
Simon, the first two items are specifically made for the international readership! Of course you may argue about it but it’s not the point:)
August 27, 2013 at 11:23 am |
In regards to rule #infinity: how do you stop regretting the past when the people you love the most are the ones you’ve burned the most (even if they don’t know it)?
August 27, 2013 at 11:27 am |
It’s ok to acknowledge you might not have done something right. And to even make amends if you can. But if you stay in the past, you’ll miss what you can be doing right now this second to be with the people you love, who love you, and the people you can help.
August 29, 2013 at 3:19 pm |
You can learn from the past and then apply what was learned to trying to take better, and certainly different, actions in the future. But since you can’t change or affect the past, any “regretting” or other emotion directed toward it seems pretty self-involved and like a very convenient limiting factor. You can always play the past card, and all sorts of people will give you a break and expect less of you because of something you just can’t “get over.” But if you really wanted to improve on the effects of something in the past, and reach a better tomorrow, you have today to work with… and if you’re consistent enough with carrying out your newer, better actions over enough “todays,” eventually your new track record wipes out your old. (Unless someone can’t get over “the past” no matter what you do… which conveniently traps THEM in a place where time doesn’t move and things can’t change. Meaning: Their own little Groundhog Day situation.)
If one person won’t move from a place and the other will and does, separation occurs. Certain “advisers” might say, “If you had only listened to me when I told you to…” but that’s only helpful advice if you have a time machine, and agree. Otherwise you have to point out, “Face forward, adviser-person. We’ve only got today to create tomorrow, far as I can tell.” 🙂
August 27, 2013 at 11:47 am |
Bookmarked! this article is my new Entrepreneur’s Pocket Bible.
Thanks James!
August 27, 2013 at 12:12 pm |
Aren’t you the Miguel from Udemy? Cool, love your courses!
August 27, 2013 at 12:35 pm
Yes the one and only! Thanks for the love Priscilla 🙂
August 27, 2013 at 1:13 pm
haha, 🙂
August 27, 2013 at 11:47 am |
So damn true about waiting to call the lawyer until the last minute. Lawyers are in it for money (most of them). They make money by talking to you on the telephone, writing letters, reading letters that other lawyers wrote, and suing people. As soon as you call them the meter is running. Most people can figure shit out by themselves anyway. When you can’t, then call the lawyer, and your first question should be: “How much is this gonna cost me.” The second question should be: “Will you put that in writing.”
August 29, 2013 at 1:31 pm |
Of course we lawyers charge for everything. What did you think?? That we are financed by the government or by a secret treasure chest on a Caribbean island?
August 27, 2013 at 2:08 pm |
I just came reading this post.
August 27, 2013 at 2:43 pm |
I seriously think a person could read this and your post “100 rules for an Entrepreneur” and learn more in 20 minutes about business than 6 years and tons of money for an MBA. Thanks James
August 27, 2013 at 2:54 pm |
Nowadays the list is much shorter
1. can i scale my website indefinitely?
2. can i achieve exponential adoption of my app?
3. can i potentially sell this for $500M in 3 years?
you don’t need customers or a masthead. you just need people to use & share whatever your service is. some coding and a little buzz and you can be worth millions overnight (or a couple months).
August 27, 2013 at 8:11 pm |
For example….
August 27, 2013 at 9:34 pm
snapchat, instagram, webstagram, tumblr, bebo, facebook, ..need more?
August 28, 2013 at 8:09 pm
I meant an example of an overnight success. What was instagram before a photo app with filters, that made them “pivot” to that. That took time, time were probably many of the things that are mentioned in the post happened.
August 27, 2013 at 3:02 pm |
i love this list. so candid, but true . no holding back here
August 27, 2013 at 3:10 pm |
Tax CPA here – most companies should start as LLCs as they are way more flexible and don’t have double taxation. It’s much easier to add a C-Corp structure later on but not vice versa.
August 27, 2013 at 6:13 pm |
Agreed. Minimize tax and personal risk in the early stages. Once the biz has steady and growing revenue reevaluate the corporate structure.
August 27, 2013 at 3:18 pm |
37) When should you give a raise?
Rarely.
–> Why? I find this interesting, both as a CEO who asked the board for a considerable raise and as someone who on occasion has to defend giving a raise to certain employees…
August 27, 2013 at 8:13 pm |
Gifts and Benefits
August 27, 2013 at 10:35 pm
I’ll add on since no one answered my posts after clicking refresh thousand times in the past 3 hours….
Why not raise?! Human is greedy and unappreciative.. many not all but most anyway. They will never be satisfied with any X amount of $$$ you give even if it costs you a leg and an arm to give. You raised a million and I will be happy for a while. The next moment I will start comparing the value of my effort with that mansion you live in, the car you bought for your 16 year old kid, that beasts you drive, that exotic holidays you afford, that lunch you take…etc and I will ask for more because without me you can’t afford them. See?!
If you can help my above questions, please advice..
August 27, 2013 at 3:28 pm |
Lots of great advice here. Although, if it says don’t listen to advisors, so should I ignore this entire post? Also, I think many of these change given context. Have no tech-cofounder… Steve without the Woz is not a good idea. Margins increases cash flow and prevents dilution (we agree thats good?)…. If you have no traffic, at least A/B test before shutting down. Thats how I just got 50 early adopters and into an incubator with funding! All sorts of confusion in the brain.
August 27, 2013 at 4:07 pm |
Disagree #7. Change to: No partners. Pay employees well. There’s only 100% of anything, why give it away? (Done partners twice. lost friends, fired family. Just for you, one day I’ll write a blog. Doesn’t work).
#102: Never use an accountant with cuff links. Or a manicure.
August 27, 2013 at 4:13 pm |
When you say only quit your job if you “have salary that can pay you for six months at your startup” do you mean have that much saved up, or start your business on the side and only quit once it’s made you 6 months salary?
August 28, 2013 at 7:34 pm |
s
August 27, 2013 at 5:05 pm |
Seriously the best business post I’ve ever read. This is now my go-to reference guide. This and Q&A Twitter = No Excuses
August 27, 2013 at 7:20 pm |
Dude, can your next post please be about who are losers and winners?
August 27, 2013 at 7:27 pm |
James and you who are reading this……………
Female. 39. Single. Business failed thrice. Bankrupt. Unemployed. Suicidal. Depression. Fired by work. Fired by university. I had and have all the things an employer doesn’t want.
I can’t even get past the online registration form with all the required fields. I went for interview thrice and the interviewer are kids fresh out of school. I feel like that is no tomorrow. I have only worked for others once in my life. I have ZERO money and have to depend on my parents for meals and shelter. I have NO Friends.
I want to lie about termination and bankruptcy so that I stand a better chance to be employed. I get sick when I tell the truth and get sick when I think I should tried lying the next time.
What will you do if you are in my shoes?
Ann (pseudo name )
August 27, 2013 at 8:10 pm |
James and you who are reading this,
I agreed and practiced most listed other than sending Christmas gift and #73.
#56 Does blogging still work now? Does it still work for the average joe and plain jane? Isn’t too late to start now when multimedia content is everywhere? And if you aren’t famous, who will care what you think?
———————–
I have another unrelated question…
Q. As an introvert and one who valued privacy, I have been trying to figure this out since the dot com burst. Is it possible to attain financial success without attaching a face and name to it?
### James, I can’t seem to find an option to send my question when I click Ask James on the top navigation link.
December 5, 2013 at 11:36 am
Ann,
No matter how real or unreal you are, you need a spiritual advisor (mentor). It’s not a question of jobs or resumes.
Reply here if this resonates with you.
I don’t charge for such services :).
December 5, 2013 at 11:37 am
Oh, and that does not mean “religious”. See JA’s posts on similar.
August 28, 2013 at 6:49 pm |
You expect an answer?
Re-read 26): – Saying “no” to people who are obvious losers.
August 28, 2013 at 9:54 pm
You are right. I am a loser. That is why I am hearing no every where.
I could use suggestions, advice and sharing of experiences to how to get my feet up. I could go real pathetic with my story but I chose to do it lightheartedly. I am blinded by my own plight. I need someone to talk to and get my thoughts validated.
Can anyone tell me if you are me, what will you do? I read James’ inspiring stories but I can’t start a business because bankrupt is not allowed to. Yet, I have everything an employer dislike.
What will you do?
August 28, 2013 at 10:10 pm
email your resume to asag@hushmail.com
August 28, 2013 at 11:03 pm
Thanks but I have no resume.
August 29, 2013 at 12:22 am
Love it!
August 29, 2013 at 3:35 pm
I would do a resume. Employers dislike no resume.
August 30, 2013 at 8:02 pm
LMAO!!! Can’t you tell who is the loser?!
August 30, 2013 at 3:19 am
I was starting to have some sympathy for you and was going to offer some suggestions, until I saw your response to Asag. He asked you for a Resume!! Unless you are a phoney trying to cause controversy for the sake of it, the last answer you should give is that you don’t have one. How long does it take to prepare one? Exactly how would you like potential employers, partners or advisors to help you if they don’t know what they’re dealing with? I’d suggest the first thing you need to do is improve your attitude. We all have to make an effort.
August 30, 2013 at 8:02 pm
I wish the world is made up of more naive people like you.
Who is asag? What he/she does? You know him/her? Just someone asking for resume to a web based email and you expect that person to be the real deal? LOLOLOLOLOLOLOL! LMAO!
August 30, 2013 at 8:26 pm
Re-read 26): – Saying “no” to people who are obvious losers. Well done!
August 30, 2013 at 8:06 pm
asag, do you own like 100 businesses to find a fit for Ann or you are going to tailored a new business to meet Ann’s resume? LOL!
August 29, 2013 at 8:57 pm
“I can’t start a business because bankrupt is not allowed to”
Give me a break. Right now you need to eat. Don’t think about starting a business you want to sell tomorrow. Start small.
August 30, 2013 at 6:57 am
You, asag are a loser in life. Please go away.
August 27, 2013 at 7:44 pm |
Great cheat sheet. The only thing I doubt is:
5) Should you patent your idea?
Get customers first. Patent later. Don’t talk to lawyers until the last possible moment.
How do you protect your physical product if you start selling it without even the provisional patent? What if one of the buyers reverse engineers it (it’s very easy to do with physical products, isn’t it) I bet one of the early buyers might be your competitor checking what’s interesting out there 🙂
August 27, 2013 at 8:18 pm |
Get as many customers as you can. Get the market, focus on customers and making them happy and forget about competition. If what you are selling is good competition will show up doing something similar were your patent maybe won’t be able to protect you. If you have many customers you have an advantage. Then leverage those customers and keep innovating with new products to stay many steps ahead of your competition.
August 28, 2013 at 5:46 pm
Jose hit the nail on the head. IF your product is copied (and that’s a BIG ‘IF’), most likely it will be modified a bit where your patent is useless. Better spend your time focusing on customer feedback and re-designing from there.
August 27, 2013 at 9:16 pm |
Love this, thank you James. But c’mon, no swag?
August 27, 2013 at 10:33 pm |
Great Article James.
2 Years ago you would have stop at 67) and give random reason to stop the article!!
You keep improving, thanks for all the reading
August 28, 2013 at 12:59 am |
No social media marketing? There are companies that use social media marketing and they do so well. May I ask why you’ve said no to it? I mean as you said these won’t all apply to everyone. At least if someone has a web based business I’d imagine SMM would be good.
August 29, 2013 at 1:53 am |
I’m guessing it’s because social media marketing companies are twenty-somethings selling bullshit to fifty-somethings. Once the fifty-somethings figure out it’s bullshit (soon), there won’t be a company there any more.
August 29, 2013 at 5:09 am
I might agree to some respect but the companies I was thinking that do social media well, Taco-Bell, Coca-Cola, Frito-Lays, especially Starbucks, and some retail stores, aren’t necessarily run by 20 somes. Sure they already have large followings but it does put their product in front of more people. It’s a good tool for business if used right.
It makes me a bit skeptical of this list due to the lack of explanation and the abundance of sarcasm, or what I hope is sarcasm.
August 29, 2013 at 1:47 pm
I’d have to see the amount of sales brought in by social for the four companies you’ve listed, versus every other method they have for creating visibility or generating direct sales.
Generally if you take most social advocates seriously and ask them how and why they made the shift from whatever array of other media they’ve had experience with to social, because you think you’re dealing with someone who’s telling you what they know, not what they think or hope or want to have be true…
… you’ll find social is all they know. If that’s the case, there’s no way to have a serious conversation with them concerning which available methods to use and why. They’re like the cable rep who only sells cable or the ValPak rep who only sells ValPak. It’s all you need because it’s all they have.
August 29, 2013 at 7:22 pm
Ha well I am one of those people that “only knows social” or at least mostly social. But I’m not one of those people who will say it is an end all. It doesn’t and shouldn’t even be used by every business, especially if they do it badly. If done well it has it’s uses. I’d just like to know why it wasn’t even considered in this list. It’s like it was just thrown out the window without any goodbyes.
Also I do agree I’d like to see the sales vs cost vs time for those companies and their social media experience. It would shed some light onto this subject.
I’d like to add that I know SSM isn’t really anything spectacular. But when thinking of ways you might connect with a client or customer it is one of them. It’s just another way of talking to people. No more, no less, not something to just forget about.
August 29, 2013 at 9:40 pm
Yes, that all sounds reasonable to me. I’d think social (and content, or online in general) get some vitriolic blow-back because companies like Hubspot and spokespeople like “The Sales Lion” started out trying to market their wares by suggesting that “in-bound” was the future, “outbound” was an outdated waste of time, and anyone who didn’t see that was a [insert your choice of demeaning term].
Right from the start, then, anyone who’s been in marketing a while knew that if a company’s main selling proposition was, “Use it or you’re stupid” and the description of the target market was, “Any business, ever, always needs this… unless they’re stupid!” that the company was clearly being defensive and evasive about SOMETHING.
And in the Cutting-Off-Your-Nose-to-Spite-Your-Face Department, no agency was going to partner with a social specialist who’s been badmouthing what the agency does, and no marketing directors are going to want to sit down with a social consultant to hear that everything they do but social is a waste of money.
Whatever internet advertising’s real potential is, it won’t be proven and recognized until some of the early amateurish hyperbole subsides. And that may take a while, still.
August 28, 2013 at 2:17 am |
“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.” –George Bernard Shaw
August 28, 2013 at 3:47 am |
Finally! The FAQ for founders. But in at least 50% of the questions the answer could be the opposite. Well done, anyway!
August 28, 2013 at 8:23 am |
Nice work… this is an amazing piece.
August 28, 2013 at 9:03 am |
Great one. I think it could be effective also in Italy . I had however some “betrayal” feeling for the way you think the employees have to be treated . It sounds to me like a cynical conradiction : in order to free yourself from your slavery you have to utilize and /or produce slaves . With the production of added value , I wished a win-win business.
But maybe I’m too idealist , and maybe that’s why now I’m a depressed slave with no money ( italian slavery is of course even worst…)Thank you anyway , reading your blog I have the perception I’m already taking the first steps ( ahead ?). Ciao
August 28, 2013 at 9:04 am |
Can somebody please be more specific on “choice ambiguity”, i googled it and found nothing…
August 28, 2013 at 7:04 pm |
Sounds pretty self-explanatory. You create ambiguity about which of your competitors is the best, I guess so that the VC doesn’t pick a specific company, because then they may see that one company is the leader and is the in the best position, and won’t invest in you.
August 28, 2013 at 1:10 pm |
Great post, James! But I don’t understand your use of the word “arbitrage.” Do you mean “leverage?”
August 28, 2013 at 1:43 pm |
Love your writing, but I don’t agree with #21 & 22 as well as #56 for any business that depends on the internet, which at this point is probably the majority not the minority. I was just reading a story on Jordan Eisenberg (UrgentRX) and his companies/inventions, to which your advise would be more applicable.
If your business depends on the internet for revenue (e-commerce) or to generate new clients then focus on SEO first, then social media and paid search. Blogs don’t make sense on many types of sites. It’s more important just to frequently upload content, which is SEO-friendly so that people find your site. And half the battle is in the creation of the site, and the other half is in hiring quality people to upload the content.
August 30, 2013 at 4:16 pm |
I’m with you, SDP, however, besides correcting the titles and descriptions on your main pages, I’d place SEO 2nd or 3rd. If you have money, advertise first (Google Adwords) so you know what search terms actually make you money, then pay someone to do SEO (Few people can actually do seo well, and if you’re not in the business, you’re not one of them) and expect a minimum of 3-6 months to even start seeing much movement, and then work on social media.
If you don’t have money, pound social media until you do have money.
Also, social media may be more important than SEO for some businesses. There are just some businesses that still get little to any consumers searching for their terms. Also, remember, that if your product or service converts well (people actually buy it when they visit your website), and the pay per click price isn’t too high for the terms you want to advertise on, you can start making the bucks *tomorrow* with Google Adwords.
One more bit of advice…you’ll probably lose more money doing it yourself than you’d pay to have someone manage your pay per click campaign for you, and you’ll certainly lose a ton of time that you should be spending on the 10,000 other things you have to do.
August 28, 2013 at 3:46 pm |
James,
No Clue how to get in touch with you but here are 20 reasons why I hate you – http://jacksonrollie.blogspot.com/2013/08/20-things-i-hate-about-james-altucher.html
August 28, 2013 at 6:12 pm |
This is brilliant. And, so many, laughs, dying of laughter.
August 29, 2013 at 4:32 am |
WAW. this is absolutely stunning.
August 29, 2013 at 10:22 am |
This is great. I have to say I agree with 99 out of 100 of the points except for point #22 about not doing social media marketing. Once we got our company Stryve Group up and running social media was a powerful way to reach and be discovered by some of our best and biggest clients. (Full disclosure: I’m biased because we are a marketing firm that specializes in social media as well). James wouldn’t you say you’re being a proponent of social media marketing in point #56 where you advise your readers to blog? Would you agree that blogging and content creation/distribution are synonymous with social media marketing?
Again, love this post, I agree with 99 out of 100 of the points.
October 16, 2013 at 4:59 am |
I think it’s pretty obvious. If you have a good service or product then the “social marketing” will happen not only through social media but by word of mouth. REAL social media marketing is done by others, not by you.
Believe it or not, viral online marketing used to be called “word of mouth” marketing.
August 29, 2013 at 1:30 pm |
I started a law firm once and unfortunately I had to break your rule about not talking to lawyers.
August 29, 2013 at 3:45 pm |
Great ! I agree (and as a French it’s a real commitment !) I just launched a GIFT BASKET start up http://www.apourtoi.com, please try this one for your next Gourmet Gift, it’s one of your best of advice ! thank you for your support! Julie Hasson
August 30, 2013 at 12:15 pm |
Hey James, this article is really great, like all your contributions!
What would be your advice if your business starts to bore you to the extreme?
Can anyone help on this? Thanks.
September 2, 2013 at 10:04 am |
Wow… that is an awesome post! Completely makes sense as to why when I created my business, how it bombed so bad lol. I am super happy moving forward though and learning more every day.
September 2, 2013 at 9:03 pm |
What about patent trolls? I have a couple of ideas but I have been
debating whether hiding under some sort of shell company overseas
because of patent trolls.
September 2, 2013 at 10:36 pm |
So are you knowingly going to infringe on a valid patent? If not, stop worrying. If so, making knockoffs overseas can work until you become too successful and then they can come after you anyway. Best to avoid… However, anybody can get always get sued for all kinds of silly (or not so silly reasons)…
September 10, 2013 at 11:15 pm |
Awesome! #11 is the one that resonates most with me, but words of wisdom all…
As someone who hasn’t done nearly as much as you (James) have, I have a few humble disagreements:
#8 – maybe
because I’m a software guy? If you are building a tech company you need
someone with a tech vision who can call BS on whoever’s building it. JMHO.
#10 – lots of cheap ways to market if you are ready for it and your
product no longer sucks. Anything from Adwords/FB ads/media buys
(obvious, not always cheap) to more inspired approaches. I’m not
convinced that word of mouth works for everything; only truly great
stuff, and let’s face it, there are more businesses and opportunities in
the middle ground. See #91.
Good stuff – keep it up.
September 16, 2013 at 4:29 am |
The great information shared, I think it is very useful and highly practical. The use can make you feel satisfied.
September 16, 2013 at 2:57 pm |
C-Corp? That certainly doesn’t fit all situations, and I’d argue most start-ups go the much cheaper, easier, and tax-efficient LLC. I’ve been down both roads, and the LLC is my preferred structure for a start-up, but it all depends on what the company does, who/what owns it, what kind of protections are required, what regulations drive the company structure, etc.
After that first one, where you almost lost me, I agreed with virtually everything else.
September 27, 2013 at 6:49 pm |
Simply wow!!!I How can i email this page to my friends?…Goooooooooooood job!!!
September 28, 2013 at 7:22 pm |
Love the post, I’ve already starting sharing it with our portfolio companies and gave it a shout out on my blog! Keep ’em coming!
October 13, 2013 at 9:13 am |
This list strikes me as quite achievable. And, it’s useful to be able to refer to.
November 2, 2013 at 10:40 pm |
Excellent, intelligent and witty distillation of contradictory advice found in every online crevice. Good work!
November 23, 2013 at 5:33 pm |
You wrote this article for a small audience I assume ie the USA, or you need to change the title to “The Ultimate Cheat Sheet to Starting and Running Your Own Business in the United States of America”. Your first two points are only applicable in America, I stopped reading after that.
November 27, 2013 at 11:12 pm |
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November 29, 2013 at 10:12 pm |
New to your post and writing style. Great post. I however believe Social Media Marketing is a Must, for this day and age.
December 7, 2013 at 2:20 pm |
Cool, renegade
January 14, 2014 at 12:55 am |
There’s nothing you can say to an entrepreneur that will ever be as valuable as this article. Brilliant.
January 23, 2014 at 6:29 am |
Good!