I recently re-connected with an up-and-coming venture capital Associate who thanked me for introducing her to the masterworks of Steve Blank and Eric Ries. I told her to check out Sean Ellis’ blog, and mentioned that I’ve learned just as much from Sean.

Later that night, she sent me a note: “Sean Ellis is awesome. Thanks so much.” Let me tell you why Sean is awesome.

First, Sean lead marketing from launch to IPO filing at LogMeIn and Uproar. He later worked with Xobni (Khosla Ventures, First Round Capital), Dropbox (Sequoia Capital), Eventbrite (Sequoia Capital), Grockit (Benchmark Capital), Flexilis (Khosla Ventures), eduFire (Battery Ventures)…  the list goes on. So all of his theory is backed by a wealth of experience across a broad range of startups.

Second, his startup pyramid changed my life and increased my bench press by 75 lbs. This is the best model I’ve seen on how to build a startup. Read it.

Finally, he shares a lot of his knowledge for free on his blog. Here are extracts from a few of his posts. Make sure you click through and read all of them in full. I read his blog from front-to-back when I first discovered it (start with the newer stuff).

When Should a Startup Start Charging?

“I’ve recently changed my long held belief that all startups should charge immediately upon the release of a new product.  I now believe that non-enterprise targeted startups should only charge once you have achieved product/market fit.  As explained in this earlier post, I define product/market fit as at least 40% of your active users saying they would be “very disappointed” if they could no longer use your product…

“For startups targeting enterprises, it actually does make sense to charge before reaching product/market fit.  This is the best way to help the enterprise figure out how to get value from your product (somebody on the inside will be motivated to work with you to unlock value since they’ve already spent the budget).  If you haven’t charged anything, your attempts to engage the customer and find value are likely to be perceived as an aggressive sales annoyance rather than genuinely helpful…

“Startups often delay implementing a business model claiming “we’re focused on growth right now.” But once you’ve achieved product/market fit, most startups will grow faster with a business model (I wrote a post on this earlier).  A business model gives you rational constraints within which you can execute very aggressively – otherwise you are held back by fear that you may be wasting money on paid marketing programs.”

The Startup Pyramid:

“Product/market fit has always been a fairly abstract concept making it difficult to know when you have actually achieved it…

“I’ve tried to make the concept less abstract by offering a specific metric for determining product/market fit. I ask existing users of a product how they would feel if they could no longer use the product. In my experience, achieving product/market fit requires at least 40% of users saying they would be “very disappointed” without your product. Admittedly this threshold is a bit arbitrary, but I defined it after comparing results across nearly 50 startups. Those that struggle for traction are always under 40%, while most that gain strong traction exceed 40%. Of course progressing beyond “early traction” requires that these users represent a large enough target market to build an interesting business…

“If you haven’t reached product/market fit yet it is critical to keep your burn low and focus all resources on improving the percentage of users that say they would be very disappointed without your product. Avoid bringing in VPs of Marketing and Sales to try to solve the problem. They will only add to your burn and likely won’t be any better than you at solving the problem. Instead, you (the founders) should engage existing and target users to learn how to make your product a “must have.” Sometimes it is as simple as highlighting a more compelling attribute of your product – but often it requires significant product revisions or possibly even hitting the restart button on your vision.”

To Pay Or Not To Pay To Acquire Users?

“I recently heard a VC say that startups “should spend the least amount of money possible on marketing.”  This is a healthier attitude than the opposite prescription of undisciplined land grab, but a better approach is pure ROI marketing.  Marketing opportunities that offer a fast payback with additional profit margin are a key component for reaching your startup’s full market potential…

“If your growth is accelerating, you will attract competition.  And this competition will likely be savvy enough to replicate the customer acquisition and monetization approaches that you worked hard to invent.  So it is important to make it as difficult as possible for them to get traction.  I know some of you are saying “but your recent post told us to ignore the competition.”  My point was not to ignore the competition forever, simply to ignore them while you are figuring out a repeatable, positive ROI way to acquire customers. Competition (especially those that are spending irrationally) will distract you from this critical task.

“But once you have optimized the first user experience and introduced a business model that generates sufficient revenue to fund user acquisition, it’s time to focus your marketing efforts to aggressively build new customer acquisition channels and scaling existing channels – both free and paid.”

I am a fan. And so can you.

Remember when mainframes did all of the computing? And workstations were dumb terminals docked to the mainframes? The terminals had less power, but were more “mobile”.

Then everyone got a desktop. And the desktop is where you did most of your computing. And you carried around your underpowered laptop, which had to be synced with your desktop, or docked to a big screen, keyboard and mouse to be usable. The laptop had less power, but it was more mobile than the desktop.

Now most early adopters have a laptop as their main computer. And they’re carrying around their underpowered smartphone, which has to be synced with their laptop on a regular basis. The smartphone has less power but, well, it’s more mobile.

We’ll dock our smartphones to our laptops for a while. But, if we can extrapolate from the history of computing, the laptop is headed for the dustbin.

Which means that Apple will be OK. Google will be OK. But if Windows Mobile is any indicator, Microsoft is in deep, deep trouble.

This post is by Naval Ravikant. If you like it, check out his blog and Twitter.

Image: Wikipedia

Picking a co-founder is your most important decision. It’s more important than your product, market, and investors.

The ideal founding team is two individuals, with a history of working together, of similar age and financial standing, with mutual respect. One is good at building products and the other is good at selling them.

The power of two

Two is the right number — avoid the three-body problem. Think Jobs and Wozniak, Allen and Gates, Ellison and Lane, Hewlett and Packard, Larry and Sergei, Yang and Filo, Omidyar and Skoll.

One founder companies can work, against the odds (hello, Mark Zuckerberg). So can three founder companies (hello, @biz, @ev, and @jack). In three founder companies, the politics can be tough — gang-up votes, jockeying for board seats, etc. — but it’s manageable. Four is an extremely unstable configuration and five is right out. When 4-5 founder companies work, it’s because two founders dominate.

Two founders works because unanimity is possible, there are no founder politics, interests can easily align, and founder stakes are high post-financing.

Someone you have history with

You wouldn’t marry someone you’d just met. Date first. Guess which pair of famous co-founders is in this photo:

Go through something difficult, like a Prisoner’s Dilemma or a Zero-Sum Game. If being ethical was lucrative, everyone would do it!

One builds, one sells

The best builders can prototype and perhaps even build the entire product, end-to-end. The best sellers can sell to customers, partners, investors, and employees.

The seller doesn’t have to be a “salesman” or “business guy”. He can be technical, but he must be able to wield the tools of influence. Bill Gates and Steve Jobs aren’t salesmen, but they are sellers.

Aligned motives required

If one founder wants to build a cool product, another one wants to make money, and yet another wants to be famous, it won’t work.

Pay close attention — true motivations are revealed, not declared.

Criteria: Intelligence, energy, and integrity

It’s not the kid you grew up next to. It’s not the person you like the most. It’s not the hacker most willing to work for free.

It’s someone of incredibly high intelligence, energy, and integrity. You’ll need all three yourself, and a shared history, to evaluate your co-founder.

Don’t settle

If it doesn’t feel right, keep looking. If you’re compromising, keep looking. A company’s DNA is set by the founders, and its culture is an extension of the founders’ personalities.

Pick “nice” guys

Avoid overly rational short-term thinkers. There are bounds to rationality. Partner with someone who is irrationally ethical, or a rational believer that nice guys finish first. Be especially careful with the “sales” guy here.

What you don’t know

Business founders who don’t code use bad proxies for picking technical co-founders (”10 years with Java!”). Technical founders who don’t sell also use bad proxies (”Harvard MBA!”). Learn enough of the other side to have an informed opinion. If you’re not seriously impressed, move on.

FAQs

What if the right guy already has his own startup? Convince him to work on yours part-time — he’ll drop his idea once yours gets traction.

Breakups are hard

If you’re going to fall out with your co-founder, do it early, recover the equity into the option pool to keep the company going, and recruit someone else great to fill the missing slot. Build in founder vesting (a.k.a. the “Pre-Nup”) to keep the breakup from getting messy. Building a great company without a partner is like raising kids without a…

Nearly everything I’ve written on this topic applies to dating and marriage. Coincidence?

Go forth and multiply.

This post is by Naval Ravikant. If you like it, check out his blog and Twitter.

We previously posted about the long tail of VC blogs. A few VC blogs capture most of our attention. The rest slog it out in the long tail.

And now, for the first time in the history of mankind, we present the long tail of VC twitterers (click to zoom in):

The underlying data is from Venture Maven’s list of 217 VC twitterers. I removed Chris Sacca, Om Malik, and David Pakman from the dataset because they have too many followers (they were on the Twitter suggested users list).

This widget aggregates all 217 VC twitterers: