This article could save you and your cofounder $1.1MM+.
“Oh no, someone checked out.” — My cofounder was on the other line.
It was 2 days before Christmas, 2.4 weeks past Hanukkah. The long term effects of word-of-mouth marketing and final last remains of all the time working to boost SEO had yet to fall into oblivion. A motivated user found our retired checkout flow, somehow.
It was bitter sweet. We still could technically fulfill the order but we just completed and submitted all the dissolution documents and heck if we were going to reopen.
We were ready for a change. Plus, fulfilling an order when the business is closed would “pierce the corporate veil” and cause other legal implications.
“Get the money back to them.” We agreed.
My mind shifted to what could have been…
Photo above: Our business card when we would be out speaking with folks in the physical world. Back when people did that. We didn’t just AB test the platform. We tested everything, including the cards and fonts.
I thought back to when checkouts were a huge celebration…
How exciting each of them was, yet how it was also a lot of work to convert most users. I looked at some notes on my Mac… “EasyTrust Lessons”.
The source of these lessons
This article is based on those notes to myself during and after dissolution. These thoughts could potentially save you and, perhaps your CTO (or, maybe you are the CTO) $1.1MM+ in opportunity and out-of-pocket cost.
This article isn’t meant to dissuade you from your dream. It’s meant to give you a reality check prior to going all-in on your idea (or joining your friend’s startup idea).
If your idea is great, needed, and you are ready to spend the next 10+ years of your life in that industry you should go for it.
This isn’t meant to be preachy, although some of it may come across that way. They’re simply notes I had for myself for the next endeavor, whether that would be at a company or forming a new company.
Here is the list…. I can guarantee something in here is not something you’ve read elsewhere. But, perhaps you’ve experienced this and more yourself, or heard it through the grapevine.
Context: A Disclaimer
All startups are (or should be) different.
These are the notes from a very early-stage startup with a lean team.
One that was not funneling VC money in and rapidly hiring to build up quickly.
Some industries you have to get in quickly, build, ship and break things.
One could argue everything is urgent. At that time, the industry we were going into was a slower-pace. Unless a death is looming, it takes (and still does) time to educate and convert in the estate planning market.
The vision when we began was to start small, get a feel for the need and build up on our own, then raise when we were ready to speak to investors and show earnings.
This may or may not have been the way to do it.
If your competitors have deep pockets and/or OPM (other people’s money) rolling in, it’s probably not the best way to approach.
Unless you’re in the proverbial “blue ocean” (* blue ocean is an idea that there is nothing quite like your concept on the market).
Photo above: Living trust and estate planning workshop hosted in the early days.
☀️ Lessons from Creating & Killing a Startup
1) 💵 Before starting, imagine the time and cost to convert ONE paying user. Then, think about % of total market share you can gain.
I had an estimate — ~122MM households in America, we just need to sell to a microscopic percentage to get going. We’d start mid-high income and work our way down.
One oversight was just how long the sales process would be for helping the average American understand (and want) to act on their death planning.
Photo below: For Legal Tech, we learned you have to really make it very simple.
We told real stories and showed the money when we couldn’t simplify any further.
Below is what someone in San Francisco paid in fees required by the court for doing what a relative could have done at a fraction of the cost (and, if they had a fully-funded living trust, likely no cost):
2) 👩🏼You become your startup and your identity is now that industry.
Being a cofounder of a living trust and will company meant my team and I were associated with death, dying, and probate.
The phone would ring and people would tell us about their deceased grandmother in Santa Barbara and how their brothers are trying to rip them off.
We ate, slept, and breathed ideas around money and death (planning).
3) 💵 You will pay yourself in paper equity and $0 to the-lowest-possible-salary
Your startup is your identity, and needs the cash.
Paper equity will be as valuable as a mixture of yours and your team’s:
execution, timing, insane vision, and ability to build and market something customers want, love, buy, and tell people about it (some call it luck, maybe it is).
4) 🙋🏼YOU will be the primary salesperson
Unless your cofounder is selling, it will be you. Hate salespeople? You’ll have a new appreciation — As in the famous book Zero-to-One, you can have a great product, but someone’s got to sell it.
That will (and should) be you (unless you’re building the app and have another partner who is selling it and good at it).
It will give you an appreciation of what you need to build next.
I always admire CEOs who sell and are highly involved with Customer Support and Sales.
5) 🔭YOUR vision (insane obsession) must be so over the top you can’t imagine a future without it
This one is probably obvious / self-explanatory.
I ask myself this now before attempting to start any new project.
6) ⏳ You will likely work 15–20 hour days
I just read this point to a tech friend. He said this is obvious.
I’m keeping it in because I knew this starting but didn’t truly grasp it.
If you picked the right industry you won’t notice it’s 2am at your cofounder’s questionably-located yet posh Mission apartment.
You also won’t notice that your designer just ate the entire contents of their fridge until it’s midnight.
7) 💰VC funding means dilution and loss of the complete control, but it’s how you play if you want to go big most of the time because everyone else is doing it.
I didn’t realize this fully until I was already burned out. Next time, I know better. We had multiple offers from friends and people we pitched to who already had their own trusts that said that they loved the vision and wanted to fund it.
I had a grand vision we could do it lean and retain full ownership. Looking back it was a blend of idealism of the “American dream” and simply being naive.
It did not help that at that time, I had a good friend who’s startup was going bankrupt despite being the talk of the town and actually succeeding to build incredible machines that delighted fans. He would share his insight of how awful the process was and what it’s like owing VC’s millions of dollars and then some for the lack of returns.
He was surrounded by success stories, did a great job building a working product, but didn’t get the exponential growth that was required and was calling it quits. It was a dark dark place for him.
He now makes $1–2 million per year selling products. Alone. (Ok, he’s hired some people to help him with fulfillment.)
Why am I sharing this confidential information?
He likes to post his bank account on Instagram.
I am always highly amused.
Good for him.
8) 👩🏫 Give beginners a chance — Train them.
If you pick passionate ones, they could very well be your best employees with some training.
Don’t let their lack of an Ivy degree get in the way.
Hungry? Terrific.
Hard life? Terrific.
A lot of bootcamp grads fit this category. If they can pass your interview, give them a chance.
At least that’s my personal thoughts on it.
Our hardest working team member fit that category and she would make sure that her job was done. She did user research interviews and wasn’t afraid. Of anyone. It was perfect.
She also was extremely attentive to us and made sure that she was doing a terrific job in a very genuine way.
9) For key competencies of your startup hire people you trust who are (or have the capacity to become) experts. Then, let them do their jobs.
I cannot emphasize, “Let them do their jobs” enough.
Of course, we should review their work, but not micromanage.
This might be hard for some people.
It doesn’t have to be.
Of course, you may think you can do it better (perhaps you’re right), but you don’t have 48 hours in 1 day. You have 24. Even less if you sleep.
This could be an entire book — For those just starting out, you probably don’t have a lot of free time to read a book on hiring and managing people —
Think “What’s my dream job? How would I want to be managed? How would I feel if I just started here and had NO CLUE about this company?” — Then, write down those ideas and onboard your staff.
I don’t mean to be preachy here, these were notes to myself.
10) 🌅 Like Seinfeld — Know when to end it (or sell)
Seinfeld prioritized the quality of their work and knew when to end — They were on top when they decided to do their last series. Now, you’re probably in this to gain profit, but if you see the future, and it surely isn’t where you know, you, or your team can go…
Or, the competition is heating and walls are closing in…
Or, heck, you’ve had enough nervous breakdowns for a TV series.
Perhaps it’s time to try something new. It’s not a failure. You did it and should be proud.
Before you go dissolving, one of my recommendations that my cofounder and I did not do was pursue selling the company.
Could we? Yes.
Why didn’t we? Call it ego… Maybe we were just done-done…
I just couldn’t imagine seeing it rise to stardom in someone else’s hands.
Ego? Yes…
At the same time, the thought of the handoff was a headache I just couldn’t handle at that time. I was ready to lay it to bed.
Heck, I was ready to lay in bed. In peace. For a full 8 hours.
Don’t let yourself get to this stage of burnout…
11) 📑 Incorporation is just the beginning (outsource it)—Your main goal is to get users / monetize.
Incorporation is primarily around ownership and tax purposes but the real work is getting users / monetizing.
My CTO and I spent a lot of time fretting about organization structure, stock options, back office, location, etc… Next time I’ll shave 2 weeks of research / thinking about this, trust (and verify) the experts, and replace it with the MVP work.
12) Taxes for corporations are a mess, hire someone (and this is someone who loves spending hours on legal and configuring my own personal taxes)
Hire someone to keep your books and file the returns.
Keep your books on day one.
Taxes are not an end-of-the-year activity, they are an every day activity.
Photo above: 5% of our “Legal & Corporation Documents” folder.
13) 📇 B2B takes a long time to covert but the payoff can be far greater
I’ll use an example that isn’t my company here.
Although Meta (Facebook) is targeting end consumers for the Oculus Quest (VR headset), Accenture purchased 60,000 headsets in 2021.
B2B is a fast track if you can get businesses to see your value.
14) 💆🏻♀️B2C- Unless your sales-tag is high or you have many repeat transactions, subscription-based is likely far more lucrative especially if it takes time to convert
EasyTrust was pay per checkout with an optional annual subscription for amendments.
Some newcomer apps to market tried low monthly subscription, but for this it didn’t make as much.
One app in particular tried to push for a conversion with a rather scam-like approach / fear-based selling turned on it’s head to “you can do updates anytime!” (If you’re in industry, you usually have 1 will, and changes don’t need to occur for years so it’s not really necessary.)
We’d have been scamming folks if we said they really needed this month to month service.
”Scam” is a mindset — One can easily tell themselves they are being truthful, but this app made it appear like it was required for a will. Creative, but the way it was marketed to get users to subscribe was disingenuous. Maybe that’s just me.
14) 👋Support is your new secondary role.
Like Bezos in the early days, who would read all the new customer complaints and take action —
You will naturally care more than any other job you’ve had in the past because it’s your own time and, likely, money.
Photo above: I’m sure most of you have seen this, but it’s too good to not repost.
15) 👀 Show your product to users before launching to everyone
We did user research ahead of our launch and got feedback.
We had a line “Bulletproof your estate.” With the background being an elderly woman with her grandchildren.
Older generations immediately responded “It feels like this is saying she could be shot.”
16) Make the product SO easy to understand NO MATTER what industry.
How do you know if it’s easy to understand? Ask your mom / dad / [target demographic] relative if they get it.
If your smart [insert relative here] doesn’t get it and it’s for end consumers, chances are it will be hard for others to grasp.
Photo below: We had different ad campaigns and tinkered with product flow changes that we ran for different target markets.
18) Hire / recruit a mix of personalities
This isn’t a comprehensive list, but it’s an idea of what I found helpful building and when I’ve worked at larger companies. 1 + 2 are critical to ship. 3 + 4 are essential when getting to the next phase of growth (assuming here that you or your cofounder are the visionaries). Sometimes people are good at multiple traits. Perhaps you identity with one over others.
- Doers — Who will do your job / things you don’t have time for — Often overlooked / undervalued.
- Experts — People who know the industry as well or better yet, better than you.
- Visionaries — You are the visionary, but it helps to have a CXO who has vision alongside you. Ideally, everyone you hire has the vision.
- Strategists — Later, when your company is more mature. You will provide the strategy, but some day you may need to get help on this. You don’t want too many strategy people though, and too few who actually do the work.
And, personality-wise:
- People who are passionate and will follow you.
Things need to ship, and if you have a person who argues just for the sake of arguing, that will hold up the entire process.
These people are ok with changes and will just do the work. But sometimes you don’t have time to calm down people, you just need the product shipped asap. - People who are passionate and will tell you when your ideas are dumb
At the same time, we don’t want the whole organization to blindly follow, it’s good to have someone who will be your check-and-balance party. Too many, and it becomes toxic / difficult to ship. Too few critical thinkers, and you could find yourself missing edge cases / critical compliance pieces.
Too much of one or the other can lead to biases. I’ve noticed some people are better at one or the other. You can usually get the honest truth out with silence and true listening without judging.
19) Taxes may come back to bite you AFTER it’s closed
The California Franchise Tax Board / “Amazing corporation-friendly” Delaware will find you. Pay it off sooner rather than later.
* Talk to your attorney if you have other ideas.
20) If it isn’t going to 10x and you could do something greater (more money / switch of passion / exhaustion) it may be time to retire it or sell
21) Congratulate yourself for doing it no matter the outcome. You likely did your best with what you had and knew at that time.
No matter what your outcome. Pat yourself on the back.
You probably are a better person and have learned something along the way.
Many say they will go for it.
Many dream.
You actually went after it.
I commend you. 🏆 🏆
