Navigating New Waters: 10 Tips for First-Time Founder Success

Tactical advice from seasoned founders like Thumbtack’s Marco Zappacosta and Dropbox’s Drew Houston about the biggest mistakes to avoid as a first-time startup founder.

Outline

There’s no shortage of quippy maxims about being a startup founder — you’re building the plane while flying it, changing the tire while the car’s still moving, plunging into the deep end — you pick your favorite.

But no pat turn of phrase can quite capture the chaos that comes from building 0 to 1 and beyond. On top of having to find a winning idea and create a stellar product in the first place, founders bear the weight of what can feel like a million different responsibilities — finding early hires, building a culture from the ground up, acquiring customers, and raising money. Seemingly every day, novice founders are faced with an endless list of things they’re learning to do for the very first time — and the stakes are incredibly high.

Any way you slice it, embarking on the first-time founder path is a bumpy journey, but you don’t have to go it alone. That’s why we’ve combed the Review archives for some of our favorite pieces of advice specifically tailored for folks taking up the mantle for the first time.

From the thrilling highs of idea inception to the chaotic jolts of navigating user feedback and hiring top talent, this guide offers tactical tips directly from founders like Drew Houston of Dropbox, Marco Zappacosta of Thumbtack, Christina Cacioppo of Vanta and Tim Chen of NerdWallet. While now an incredibly successful bunch, these folks were once first-timers themselves, and viscerally remember the growing pains.

Each offers the frameworks they’ve relied on at every twist and turn, as well as useful examples from their experience in the driver's seat. Alongside the advice from founders, experts like executive coach Alisa Cohn and marketing maven Arielle Jackson add their finely-tuned tactical advice from teaming up with hundreds of founders over the years.

While there’s no exact formula for first-time founder success, read on for a thorough guide on how best to handle your first entrepreneurial roller coaster ride.

START WITH A PROBLEM THAT MEETS THESE THREE CRITERIA

Even before founding Dropbox in 2007, Drew Houston was a problem solver. As an undergrad, he signed up to beta test an online game and eventually landed his first engineering gig when he discovered a host of security vulnerabilities that needed fixing.
With over 700 million users today, Dropbox is a fairytale success story of a scalable product born out of a simple idea. And while the road has been far from smooth, Houston credits much of the triumph to what he learned back in college: To build a great company, you need to start by solving a problem.
“Dropbox’s conception was pretty simple,” he says. “I got fed up with the lack of seamless storage solutions for my files and wanted to build something to fix that.”

But not every seemingly simple idea is necessarily bound to be good. To find the worthy ones, Houston offers a list of criteria to help new entrants choose their projects wisely:

It just pulls you. While perhaps not as scientific as the typical founder’s advice, this gut feeling shouldn’t be overlooked. “Sometimes you just get this feeling that you have to work on something, and you can’t stop thinking about it,” he says. “You need that hunger no matter what, because eventually the honeymoon period wears off and you realize, ‘Oh, actually this is a ton of work.’”
You think it can go far. In short, the problem needs to be something that other people (lots and lots of them) will care about — not just you. “With something like Dropbox, it was immediately like, ‘Wow, this is a product that anyone with an internet connection could use.’ Everyone needs something like this, they just don’t realize it yet.”
It optimizes for learning. To find a problem worth solving, go where you feel you’re going to learn the most — even if that means diving into a completely unfamiliar space. Consumer demand and scalability are driven by solutions to complex problems — not easy ones that anyone with a computer and a few minutes could solve.

“It’s okay if you do things wrong at first. You can learn a lot from that. Ask yourself, ‘Where can I find an environment where I can work really hard and that challenges me to learn?’”

LET GO OF YOUR ENTREPRENEURIAL EGO

While the earliest stage of being crazy enough to set out on the entrepreneurial journey requires a healthy dose of self-importance, too many new founders take this past its expiration date.

“It’s easy to slip into that ‘I know this best’ or ‘I have to solve this myself’ mode,” says NerdWallet founder Tim Chen. But building a company poised for success means giving away your legos — when you’re making decisions, shaping the culture and architecting your product strategy.

In his guide to shifting from first-time founder to seasoned exec, Chen outlines some of the areas where ego is bound to crop up.

Ego in decision making. First-time founders tend to succumb to the delusion that they can add value to every decision. Yet in order to keep the machine humming, a little disengagement can go a long way. “I used to be involved in everything,” says Chen. “Up until we were about 200 people, I’d interview every single person, and you can imagine how much that slowed us down.”
Ego in company culture. When you assign something or someone a negative label, your ego prevents you from seeing the truth. If company culture isn’t taking the form you expected, it’s important to take a step back and get curious about what's going on instead of immediately trying to change things.
Ego in product building. Chen stresses the importance of user feedback, taking it a step further by telling first-time founders to put it above their own ego. “Of course, you need to start with a really crisp thesis on what you’re trying to build,” he says. “But you have to balance that with listening to your customer, who sometimes ends up telling you that the assumptions you had as a founder flat-out aren’t true.”

As a founder, your job is contingent upon your ability to improve at the pace that the company needs you to — ego is the only thing that can stand in the way of that.

Executive coach and author Alisa Cohn has 20 years of experience teaming up with founders — and to help folks put their ego aside, she never strays too far from this question: “What does the business need from you right now?”

PRIORITIZE FIT OVER TALENT FOR EARLY HIRES

“Early founders, myself included, tend to over-index on talent and under-index on fit,” says Marco Zappacosta, co-founder & CEO of Thumbtack. “It’s so hard to recruit when you’re two people with no brand, no money, experience, or traction — that’s a tough sell. So you often hire the most talented or skilled person you can get.”
Zappacosta — who founded Thumbtack after graduating college and has held the same role for the past 15 years — learned the hard way that skill isn’t everything.

“What causes relationships not to work isn’t a lack of talent, it’s a lack of fit,” he says. “Interpersonal issues don’t crop up because one person is smart and the other isn’t. Folks just have different approaches. It’s not right or wrong, it’s just left or right.”

When there’s high fit on a team, there’s high trust, and with that trust comes the ability to make decisions quickly. This is especially important in the early days, when the cultural tone is still being set. “Building the culture starts with who you hire,” says Zappacosta. “And if you hire the right ones — people who mesh with the work style and are attracted to the idea — you can have a really great culture start to grow around that.

“I didn’t always appreciate the impact one person can have on the vibe of the place. Had I known that earlier I would have been more maniacal about who we brought on in the early days.”

As the founder of Rupa Health, Tara Viswanathan decided to codify these hiring values early on — and still sticks with them today. Each value has a corresponding interview question that probes the candidate’s aptitude, as well as what a good answer looks like versus a red flag

Holds High Standards: Not only do they hold high standards for themselves, their work and their teammates, but they also enjoy being held to high standards.
Jumps in the Deep End: They have an “ask for forgiveness, not permission” mentality. They get their hands dirty and are a proactive problem solver not defined by a job title.
Be Curious: They are open-minded about potential solutions to a problem. They approach new topics and ideas with curiosity.
History of Hustle: There are clear examples in their past where they have had to figure things out on their own and take chances. They’ve proven they can be thrown a curveball and still make it happen.
Be Human: Bring your whole self to work. Treat people with kindness. Optimize for friendly.

GET SPECIFIC ON YOUR TARGET CUSTOMER

In 2018, Ryan Glasgow said goodbye to the life of a serial early-stage PM and set out to build the ultimate customer insight tool. As the founder and CEO of Sprig, Glasgow and his team found success in a crowded space by taking the time to narrow in on a specific target user.

“The surveying and product research space was hardly a new category,” he says. “We needed to go much further than just creating a modern surveying tool in order to get people’s attention.”

To get more detailed on who you’re serving, Glasgow recommends new founders take three key steps.

Figure out who to build for. The first step in sifting through a crowded market calls for some segmentation. By dividing up the space into distinct audiences, groups who are underserved become easier to spot, and the next step becomes evident.
Figure out where to play. A role or type of person isn’t targeted enough. To build a successful profile, you need some more specific demographics.
Figure out what they need. Even the most precisely narrowed-down customer persona can have multiple needs. Glasgow recommends finishing out the targeting process by naming which one(s) you’re going to focus on specifically.

“From day one, set out to build solutions that address a highly specific customer segment and meet very specific needs. That’s how you build a differentiated product.”

BALANCE YOUR INPUTS FROM EVANGELISTS AND DOUBTERS

In the early days of exploring ideas for what would eventually become Bowery Farming — a digital agriculture company with a mission of bringing local foods closer to communities — Irving Fain conducted his fair share of exploratory conversations.

With no prior experience in vertical farming and, at the time, it being an industry that wasn’t exactly mainstream, Fain was keen on collecting a mix of perspectives to parse through.

“You don’t want to fall victim to confirmation bias,” he says. “It’s equally important to find people who don't believe in what you're doing to help you operate from that base level assumption that what you’re doing shouldn’t work and then trying to prove that wrong.”

For Bowery, that took the form of Fain sitting down with an equally reputable professor who thought the idea was impossible. “There should be hundreds of reasons why this can’t work — that’s fine. It doesn’t mean you don’t do it. But it’s better to know them ahead of time,” he says.

It’s important to look at all sides of the equation. To think through all the things that could go right, but equally, and maybe more importantly, all the possibilities that can go wrong. If you haven't done that as an entrepreneur, you're not asking enough of the tough questions and you're not looking hard enough at your idea.

GET CRYSTAL CLEAR ON YOUR PRODUCT'S FUNCTIONAL BENEFITS

Great startups deserve great brands. For a product to be positioned successfully, there needs to be clear communication around value prop.

To get this right, Arielle Jackson — First Round’s Marketing Expert in Residence who has helped hundreds of companies like Patreon, Loom and Front architect their positioning — urges founders to emphasize functional benefit from the get-go.

“You need to be really clear on what you do until people understand what you do,” she says. “Yet so many founders skip straight to emotional benefits, skipping over the functional messaging entirely.”

Exercise #1: Find your sweet spot on the Cinderella spectrum

Two things happen in the Cinderella fairytale. On the functional side, she has a fairy godmother who turns her pumpkin into a carriage. On the emotional side, she gets to live happily ever after.
Jackson recommends running through a similar brainstorm when thinking about product benefits. “List out all your benefits — emotional, functional, and anything in between,” she says.

Exercise #2: Take the bar test

Put yourself in the shoes of the customer. How would they describe your product? Would it be easy enough to explain to a friend over a drink?

“If your message can't be said out loud easily, it's not done,” says Jackson.

DON'T MAKE EARLY SALES HARDER THAN IT HAS TO BE

When Christina Cacioppo founded Vanta, her sales experience was close to zero. Cacioppo emerged with three important lessons she imparts on other founders:

Don’t do two sales calls when one will do. Cacioppo’s initial strategy was to schedule a follow-up to show them the ins and outs of the product. But then one prospect told her, “That should have just been one call where you showed me the product immediately, and the deal would’ve been done in 30 minutes.”
Get early wins by selling to fellow founders. It helps to sell to other founders because they're much more tolerant of the ‘let me show you what I built before I give the sales pitch’ approach.
Ask for feedback from salespeople outside of your org. Regularly asking other salespeople to review your process has the dual benefit of optimizing your pitch and keeping it fresh.

An effective kick-start to sales doesn’t require a robust background in pushing product. A tactical approach that leverages the founder network is more than enough to take your company from theoretical to money-making.

OBSESS ABOUT CASH

Rob Hayes joined First Round Capital as a Partner way back in 2006. His most blunt advice? don’t run out of money.

“Right after a round closes, the champagne’s flowing and everyone’s excited — but you need to plan out your spend for the next 18 months.”

“Founders should be worried about cash on hand all the time. Even if employees love you, they won't stay if you can't pay them.”

Cash Management Tips

Consider putting a venture debt line in place. Then forget about it just as fast.
Don’t include assumed revenue in your cash management plan. “I want to see a cash plan that assumes absolutely zero revenue.”
Share your cash plan (sans debt line and revenue) with your investors. This builds immediate accountability.

“In the early days, know that it's only about cash. That's all the money you have to spend.”

FINELY TUNE YOUR COMPETITOR RADAR

Today, he’s a three-time founder and currently helms Crossbeam, but back in 2008, Bob Moore was the first-time founder of RJMetrics — a data analytics company.

“When Looker came out of stealth in 2013, we didn’t even consider them to be our competition. But fast forward six years, and my co-founder and I are scratching our heads about how they won so big and we missed the boat,” says Moore.

Resilient founders don’t ask “Which competitor are we scared of?” Instead, it's “What fully-formed company would be an existential threat to us, whether it exists or not? And if it doesn’t exist, why aren’t we building it?”

LISTEN CLOSELY TO YOUR POWER USERS

Equally important to drilling down on specific customer needs from the outset is adapting those views based on feedback. Steve El-Hage cautions first-timers against sticking to their guns to the extent that they forget to listen.

To right the ship when revenue nosedived, the founders started deep diving with the users who were so jazzed at the beginning. “It was a process of elimination — just replaying those amazing first three weeks. But everything was happening too fast for us to understand why those early successes were happening,” says El-Hage.

“Many people that design products are in the mindset of, ‘I will magically imagine some perfect product and I will pass it down as a gift to my users.’ But it's usually the other way around — existing users talk about what they wish brands would do, but that feedback isn’t incorporated into the product.”