Tal Hoffman

Starting a startup

Last week marked one year since I quit my previous job and began chasing my dream of starting my own startup. Even though it’s still early days in what will hopefully be a very long journey, I thought now would be a good time to take a step back and reflect.

This is by no means a unique take or professional advice on starting a startup so please do take this with a grain of salt. Some people, usually far more accomplished than me, will tell you totally opposite things in some cases along this post, so it’s at least recommended that you develop a good advice filter.

Entropy

The shift from what feels like perfect order to complete chaos is of frighteningly expeditious speed. It’s funny to talk about chaos when you’re a one-man team and have not yet raised a single dollar. But, it does happen, just on other fronts. At this point, it’s not about the chaos of having your top X employees leave, or production environments catching on fire (actually, sometimes it is).

As a founder, you can start your day thinking you’re going to be the next Google, and wrap up your lunch break thinking you’ve completely wasted two weeks on a goose chase.

The randomness of it all can be quite scary. When you get to positive outcomes in your journey, you keep wondering how much of this was deliberate vs how much was just going with the flow. It gets much scarier when the outcomes are substandard, because it then feels like you might be falling off a cliff at any moment, if you can’t figure out what got you there in the first place. Not to mention that the pace in which you walk feels so much faster. Personally, it’s been super important to go on debugging mode and get my head around how every milestone (good or bad) is reached exactly.

It’s so easy to get lost in your own head that the best way to keep sane is focus on your users. In the most difficult and uncertain of times, you’ll find that the biggest reassurance you can find, is users wanting and willing to pay for your product.

YCombinator said it best (they usually do), and although it does sound over-simplistic at times, your main goal should be ‘building something people want’. Focusing on that will help get you through to the promised land more than anything else.

Like most other startup stories, what I ended up working on is not what I initially started with. As a matter of fact, I started off with a totally different idea, which seems so ridiculous now looking backwards. Not because it’s necessarily a bad one (some would argue it is), but because it’d be next to impossible for me to pull off — between my zero passion about that space, the domain expertise needed, and the physical, operational work to get it done. Not to mention, that it is more of a vitamin than a painkiller.

That initial idea was to enable small businesses to affordably advertise offline, inside brick-and-mortar stores, by having them place tablets in-store in exchange for passive income. Think Google Adsense, for the offline world. Shortly before leaving my job, I closed a POC with a local brick-and-mortar convenience store and had asked them to wait a couple of weeks, so that I can onboard some advertisers and get this thing started. Looking for advertisers was a total bust, and came across as a huge red flag telling me to stop.

So I did. Back at the drawing board, I started looking for other ventures to pursue. This time I decided to chase a real problem, rather than trying to apply X for Y — otherwise known as ‘Solution in search for a problem’.

At the time of closing the POC for the previous idea, I asked the store owner about other problems he might have as a business owner. He passionately ranted about procurement issues and working with his suppliers and gave 3 different, concrete examples of why this sucks for him. In a nutshell, those problems were: Constantly changing costs of goods, sometimes without him noticing; Expired and nearly-expired goods being supplied; Having high prices due to not being able to purchase & store supplies in large wholesale quantities. And so, once I left the store, I immediately wrote everything down in my notes app, just in case…

He told me that he’s been trying to manually log everything in a spreadsheet, and despite having trouble maintaining it, this meant that it’s a enough of a big problem for him to try to solve and — later on — for me to explore. So that started what has become a ten months ideation phase, exploring everything procurement-related. It eventually ended-up becoming Mellow (shameless plug). Looking back at the website’s Wayback Machine archive draws the story of the ideation process quite well.

The point of this whole story is rooted in that moment when I, almost randomly, asked the owners about others problem they’re having. It seemed a little bit out-of-context at the time, both for him and for me, but turned out to be pivotal looking back at this 12-month journey. And it happened because a real end user, unknowingly, put me there. Users are in fact your north star - just follow them.

I’m happy it’d happened, because working on this specific problem I ended up working on, feels like the most clear, ‘Eureka’ moment I’ve had. But it almost never happened. Of course others ideas could have popped instead and prove out to be really good, but you never know…

Other than talking to users, another good strategy to hedge risks is doing everything in short, time boxed iterations (2-3 weeks every time). So even if something does go wrong (and it does), you’d only wasted 3 weeks working on that, instead of 3 months.

Of course, some leads take more than 3 weeks to explore, and so there’s a risk in not pursuing them all the way.

Enter Blindness.

There’s this saying ‘You don’t know what you don’t know’. Even if you’re 100% certain that you’re able to successfully guess what’s coming up next — you cannot. You cannot know what’s around a corner that you didn’t know existed or was too dark for you to see.

And so, other than the mental struggles in working alone, the most difficult part for me is the lack of additional point of view. Some other founder that I’ve had coffee with described this perfectly: Think of this like stage lightning where you have 1 beam lighting a single spot on the stage, versus having multiple beams lighting a few different spots and directions on that same stage.

Nonetheless, there ought to be a fine-tuned balance between having too many POVs or opinions, and having none. Both would likely get you nowhere or stuck. The ideal set-up that I aspire for, and so far failed to accomplish, is to have at least one more POV anytime, in the form of a co-founder.

Investors

Obviously focus is key when you start a startup, especially if done with limited resources.

One of the biggest distractions for me was investors. At first, the temptation is big. Who wouldn’t want to talk to a top-tier VC who tells you that your profile is perfect for them, and that they absolutely love to invest as early as possible?

My advice to you is don’t. Don’t talk to investors with the hopes of miraculously getting an investment because you just met for coffee. Unless you’re a second-time founder or a big shot entrepreneur (you likely aren’t), it doesn’t work that way for you.

Also, don’t buy into the ‘it is never too early to talk’ mantra.

At the end of the day, you’re just the top of the deal flow funnel for them. It doesn’t cost them much to meet for 15 minutes or an hour, hear you out, say “It’s too early” (although they “love to invest as early as possible”), and put you back somewhere in their CRM’s ‘Follow-up’ or ‘Rejected’ columns. On their end, they’re making sure that they’re not missing on a big opportunity. For you, it means time wasted on someone who’s not your user, and is basically an easily-avoidable de-moralizer. Speak to them on your own terms, at your own timing. Refuse politely.

Needless to say, they are not your enemy and some will hopefully become your long-term partners. But the cost of wasting time talking to investors when you’re not ready to is too high.

That being sad, investors can be quite helpful when it comes to domain-specific tips, or business-related advice that you’ll ultimately might need to follow to help score an investment.

Personally, I’ve talked to investors that I think highly of and are considered domain experts in some areas I needed an extra point of view. Be careful though, as this can easily get you off-course and distracted. Remember that ultimately your users know best when in comes to their problems (not necessarily the solutions.)

Toys

What I’m building is sometimes being referred to as a toy. After all, it’s merely an add-on for Google Sheets™, aimed at small merchants. An indie project, at best, for some people. And yet, for me, it feels like this is its biggest advantage. Everyone knows kids love toys, and so everyone also knows that if you have created a good one, then, well… you got yourself a jackpot.

Creating a product that looks like a toy, in a market that have none, will mostly be dismissed by both investors and competitors. And so, if users love it and are willing to pay for it — which is obviously easier said than done - and if the unit economics make sense (this one’s important!), then you laid the grounds for it to silently disrupt that same market. A silent incumbent killer, if you will.

For them big incumbents, serving the long tail of the market helps them avoid being eaten by new disruptive ventures, even at the cost of not being economically worthwhile. It helps not being blind-sided by smaller, more agile, niche-operating teams.

Classic Innovator’s Dilemma right there.

Long live toys.

Finding a co-founder

Finding a co-founder has been the most frustrating part for me on this journey. I feel like I got to have one. Both for the sake of my mental health, and in order for this thing to really take off (remember blindness?). This is also my biggest failure thus far.

I’m looking for a technical co-founder, an all-rounder. A full-stack code ninja with a real passion for building products. I’d like us to be able to iterate quickly, as less dependent of others as possible. Constantly iterating, talking to users, building, improving, until we eventually, hopefully, find PMF (Product-Market fit). And because I’m highly technical myself, it’s so hard for me to do. In order to find such great co-founder, I need to prove or show complementary business skills, which is hard to do, given that I’m not a business person. I’d like to be, but am not the at moment.

And that’s before we even started talking about our personal connection, about them having some minimal amount of passion for the industry, for serving small businesses, etc…

Jumping headfirst and starting to build a product could have been a mistake. I’ve been looking for a co-founder for the last year, and although having a few (very few) potential ones, none of those processes have come into fruition. Here’s to 2023…

Hiring goals

Yay, you’ve raised $8m seed round! Now, you have to deploy it, right? Hire like crazy! Become Google! If you have a death wish, go ahead!

One of the biggest mistakes pre-PMF startups do is over-hiring. It’s so easy throwing more and more people at a problem thinking it’ll get solved faster. Not shipping fast enough? No problem, let’s hire 5 more engineers! I noticed this first-hand as an employee in startups, and watching other people repeatedly do it themselves. I did it myself as an employee, pushing my bosses to recruit more teammates. I was wrong!

Growing from 2 people with a deck to 20 (or even 10) feels like progress. But unless you’ve hit Product-Market-Fit, or doing hardtech/biotech/a moonshoot startup, it really shouldn’t. The more people you have, the slower you move, the faster you burn cash.

One reason startups do this mistake, other than a fake feeling of progress, is Schleps. Some founders don’t want to do those less sexy tasks, so they hire. The truth is, and you know it, that you probably don’t need to have a CFO or a COO. None will get you to PMF — which should be your only goal at this stage.

Paul Graham has written all about Schlep Blindness. In the beginning of his essay he describes Schleps as following:

Schlep was originally a Yiddish word but has passed into general use in the US. It means a tedious, unpleasant task.

No one likes schleps, but hackers especially dislike them. Most hackers who start startups wish they could do it by just writing some clever software, putting it on a server somewhere, and watching the money roll in—without ever having to talk to users, or negotiate with other companies, or deal with other people’s broken code. Maybe that’s possible, but I haven’t seen it.

When you’re a 20-people seed stage company with no PMF, you’re basically forcing a mini-organization into finding one. It’s definitely possible, but much harder. Ideally, the team should be agile, resourceful, and highly tolerant when it comes to iterations/pivots (and boy, they’ll come). In reality, when you’re too many people, the opposite is true. Please take a look at YC’s great video on Hiring Mistakes to Avoid.

Considering all of the above, I know that one of my requirements from my future investors would be to not have a say about hiring and headcount: The team should be minimal as long as the product is pre-PMF. It was true much before the latest economic downturn (and they all knew it), and it’s true now. Remember what your north star is at those early stages: Finding Product-Market-Fit. Do what it takes to get there.

Mental health

Keeping sane is probably the most important part of this journey. Before Product-Market-Fit, before users, before anything!

For the past 12 months I’ve been living off of savings specifically saved for this purpose. It’s not the nicest thing to experience, but knowing that at any point can I do some consulting gigs and get a few months worth of runway makes it less painful. Generally speaking, the more successful this venture will become, the harder and more tense it’ll get.

To date, the hardest part for me is trying not to live up to people’s expectations. You’ll constantly get asked, by friends and family, ‘How is it going?’ or ‘Are you rich yet?’. Sometimes you’ll even hear things like ‘Why wouldn’t you just quit?’. And as much as I wish I wouldn’t give a fine f*ck, sometimes I do. Not every bit of progress can be lucidly explained or be measured. Sometimes it’s all about your internal intuition. Remember that although it’s statistically likely you’ll fail, you have chosen to pursue this path because you believe to be an anomaly. Personally, it seems like there’s no other choice, no other option. I’ll fail once, I’ll fail twice, at some point, I’ll succeed. Who knows? Maybe even on that first attempt.

Lastly: Go on vacations, go for that beer with your friends, and definitely go on those weekly dates with your partner. Sometimes you’ll need to be persuaded and it’ll feel wrong, but ultimately, this is what helps you see everything through the right proportions.

Closing remarks

I’ve recently made my first sales. Those first dollars in the bank were worthy of everything happened in the last year. Finding a problem people are willing to pay you to solve feels really great. Now I have to deliver.

Lets go 2023.