Founder Fridays No. 35
Helping founders scale smarter.
This week’s briefing is all about management. Enjoy!
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Phil Knight created a short manifesto for Nike in 1980. It’s highly relevant for startups. Here are some of my favorite parts: 1) Our business is changing. 2) Assume nothing. Make sure people keep their promises. Push yourself. Push others. Stretch what’s possible. 3) Dangers: bureaucracy; personal ambition; energy takers v. energy givers; knowing our weaknesses; don’t get too many things on our platter. 4) If we do the right things, we’ll make money damn near automatic. @prayingforexits (2 minutes)
Navigating a Crisis
Being a founder is a lonely endeavor. This gets more challenging in the midst of a crisis such as a macroeconomic downturn. This guide compiles advice from recession-era founders on navigating the crisis, which includes: 1) Make sense of the macroeconomic conditions. 2) Respond quickly. 3) The nuts and bolts of scenario planning. 4) Tips on extending the runway. 5) Tips on reducing burn rate. 6) Bring in more capital. 7) Support your team and lead through the crisis. First Round Review (32 minutes)
Heuristics for Decision Making
Founders are required to make good decisions with imperfect information. With thousands of decisions per day, you can’t go through a data driven process every time. This is where heuristics come in, rules of thumb that are crucial to navigating an uncertain world full of options. Here are five heuristics that can help you make better decisions quickly. 1) Recognition Heuristic—Go with the option that you recognize better; you’ll be right a surprising amount of time. 2) Familiarity Heuristic—In situations that are overwhelming and cognitively demanding, fall back on behaviors you know from previous similar situations. 3) Hesitation Heuristic—If you cannot decide, the answer is no. 4) Imitate the Majority Heuristic—Look around and see what most people are doing; then do that. 5) Charlatan Heuristic—Charlatans are recognizable in that they will give you positive advice and only positive advice. So if somebody is pitching you something and they do not address any negatives, assume they are a charlatan. The Mind Collection (8 minutes)
Founder FAQ: How do I negotiate an option pool in a funding round?
During negotiations with investors, founders often focus on getting the highest possible valuation. However, this effort can be futile if they unintentionally agree to an excessively large option pool. Founders should be mindful that investors may use the option pool size to lower the effective valuation of the company. This article explains how the option pool impacts valuation and provides tips for founders to address this issue. Westaway (9 minutes)
Startup Funding Guides
I’ve put together a series of guides to equip founders to excel at fundraising. These guides break down the deal term by term and give you negotiation tips so that you can speak to investors with confidence.
Move Fast. Don’t Break Things.
Hi! I’m Kyle. This newsletter is my passion project. When I’m not writing, I run a law firm that helps startups move fast without breaking things. Most founders want a trusted legal partner, but they hate surprise legal bills. At Westaway, we take care of your startup’s legal needs for a flat, monthly fee so you can control your costs and focus on scaling your business. If you’re interested, let’s jump on a call to see if you’re a good fit for the firm. Click here to schedule a 1-on-1 call with me.