The First-Time Founder’s Guide to Learning Everything the Hard Way

Steve El-Hage picks his head up and shares his biggest lessons as a first-time founder from the 8-year, heads-down journey of building Drop.

Outline

1. LESSON #1: LISTEN TO USERS TO RESUSCITATE REVENUE THAT’S FLAT-LINED.
2. LESSON #2: YOU’RE GOING TO SCREW UP KEY HIRES — IT’S ALL ABOUT HOW YOU COURSE CORRECT.
3. LESSON #3: WHEN IT COMES TO ADVISORS, BRING ON MORE AND DEDICATE MORE TIME TO THEM.
4. LESSON #4: PROACTIVELY MANAGE BURNOUT FOR YOURSELF AND YOUR TEAM.
5. LESSON #5: SPOT LOOMING LONG-TERM PROBLEMS, MAKE UNPOPULAR CALLS, AND STICK TO YOUR GUNS.

This article is a lightly-edited summary of the key takeaways from Steve El-Hage’s appearance on our new podcast, "In Depth." If you haven’t listened to our show yet, be sure to check it out here .

The earliest days of Drop began with what founder dreams are made of. In the first week after launch, the company (then called Massdrop) did $12K in revenue, and it continued on to do $25K in week two, followed by $50K in week three — all with only (as co-founder and CEO Steve El-Hage puts it) a “janky website.”

El-Hage and his co-founder Nelson Wu had unearthed something special by tapping into enthusiast communities, which went nuts for its discounted group buy process on electronics products. That kernel of an idea generated tons of traction early on, which enabled them to quickly meet potential investors and raise venture capital.

But after stacking up a series of promising wins, the startup quickly toppled off a cliff, and revenue went down to zero — and we don’t mean that in a hyperbolic sense. “We chalked it up to, ‘Well, we’ve been busy with fundraising and we’ve been distracted. We’ll see next week.’ And then the week after we did zero again. And then the third week we did zero. We did zero for eight consecutive weeks and we couldn’t figure out why," says El-Hage...

LESSON #1: LISTEN TO USERS TO RESUSCITATE REVENUE THAT’S FLAT-LINED.

To right the ship when revenue nosedived after early wins, the young entrepreneurs tried to recapture that initial magic that helped them take off in the first place. “It was a process of elimination — just replaying those amazing first three weeks. But everything was happening too fast for us to truly understand why those early successes were happening,” says El Hage.

To start sleuthing, they cozied up to those users who were so jazzed at the beginning. “We started talking more and more to our users and breaking down what they liked and why they got excited. The common theme was that we were listening to them and were responsive to them. We weren’t just another company trying to sell them shit. We were representing the community, and that was really important to them,” he says...

LESSON #2: YOU’RE GOING TO SCREW UP KEY HIRES — IT’S ALL ABOUT HOW YOU COURSE CORRECT.

To get started on the long trek of scaling the new business, El-Hage and team set off on hiring without a clear trail map to follow...

Look beyond conventional candidates and ordinary interviews for your first few crucial hires.

El-Hage and his co-founders would stack a day with 80-90 interviews at just five to 10 minutes apiece. “We just wanted to start figuring out whether or not they’d be interested in working with the circumstance that we’re in,” he says....

LESSON #3: WHEN IT COMES TO ADVISORS, BRING ON MORE AND DEDICATE MORE TIME TO THEM.

With funding in the bank and a strong conviction in the company’s mission to spotlight enthusiast communities, El-Hage turned to grappling with the challenge of running a growing company as his first-ever “real job.” ...

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LESSON #4: PROACTIVELY MANAGE BURNOUT FOR YOURSELF AND YOUR TEAM.

El-Hage admits that he works long hours and that Drop’s culture was intense in the early days. "I didn’t know anything when we started Drop, and I felt like if I wanted to maximize my likelihood of success, I needed to work 100 hours a week...

LESSON #5: SPOT LOOMING LONG-TERM PROBLEMS, MAKE UNPOPULAR CALLS, AND STICK TO YOUR GUNS.

Many years later, the learning curve is still just as sharp as when El-Hage was just 22. Recently in Drop’s journey, he’s faced some tough — and unpopular — decisions that bring to mind those choppy waters in the early days...

A lot of times when I talk to founders who need help, it’s that they’ve gotten into this headspace where they’ve tried everything, they’ve worked like crazy and it’s just not working. They’re depressed, miserable and they’re out of ideas. It’s especially hard for first-time founders, because you have less evidence of your own success and less momentum to lean on...

The goal is to figure out how to reset, recontextualize, and make a new plan. Get out of this pit and go give it another shot.