What is the main message of Lost and Founder?

The main message of Lost and Founder is the challenges and lessons learned in building a startup.

Who is the author of Lost and Founder?

Rand Fishkin is the author of Lost and Founder.

Entrepreneurship

Lost and Founder Book Summary - Lost and Founder Book explained in key points

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Lost and Founder summary

Name: Lost and Founder
Rating: 4.2 (88 reviews)
Author: Rand Fishkin

Rand Fishkin

A Painfully Honest Field Guide to the Startup World

4.2 (88 ratings)

21 mins

Brief summary

"Lost and Founder" by Rand Fishkin is a candid account of the ups and downs of starting and growing a tech company, with valuable insights on leadership, culture and the startup ecosystem.

Topics

Start-Ups Small Businesses Venture Capital Entrepreneurship

Table of Contents

Lost and Founder
Summary of 8 key ideas

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What’s in it for me? A fascinating field guide to founding your startup.

The last couple of decades have seen a massive shake-up of the business world. Established “big players” have had the ground cut from under their feet by upstart disruptors playing by an entirely different rulebook.

Today’s most successful businesses aren’t like yesterday’s. The corporation with massive overheads and strict hierarchies looks increasingly outdated. The most successful businesses have gone from being headed by a university graduate who’s slogged her way up the corporate ladder for a decade or two, to being the brainchild of a Harvard dropout working out of a garage.

Welcome to the startup world, where a good idea and a convincing pitch can kickstart the path to global dominance. Just ask the founders of Facebook or Google!

But the phenomenal growth achieved by the tiny cluster of startups that became household names is misleading. Making it big in the startup sector isn’t easy. In fact, you’d better be in it for the long haul and learn to avoid the most common pitfalls.

Luckily enough, there’s a hands-on field guide designed to help you do just that...

In these blinks, you’ll learn

Why choosing the wrong investors might tank your business;
What an honest and transparent office culture can do for your business; and
The dangers of shortcuts and hacks.

Founding a startup isn’t a shortcut to fame and fortune, so dig in for the long haul.

Everyone’s heard of the big success stories of the startup world like Google and Facebook. Perhaps you’re thinking that you might be next. After all, if they did it, why can’t you? Well, the truth is that getting a startup off the ground is often harder than you think.

Most startups take years to see success and only a small percentage of those that make it go on to make their founders millionaires. Take it from Stephanie Walden, the author of the 2014 article “Startup Success by Numbers.” According to her data, less than 25 percent of early-stage, venture capital-backed companies make any profit at all. Just five percent of all startups provide a return on investments, though those that do often reap millions or even billions of dollars.

The author’s startup Moz was founded in 2004 and experienced a huge number of ups and downs until it finally found its groove in 2017. For every success, there was a failure. Raising and spending capital, hiring and firing, and launching and removing products were all tricky balancing acts. A bad decision at any point could have ruined the company.

The payoff, though? Around $45 million in annual revenue.

It’s important to remember, though, that startup founders don’t earn that much at the outset. Salaries are often lower than those of employees at bigger companies because they’re determined by outside investors. That means if you’re after the big bucks, you’re probably better off working for a market leader than setting up your own company.

At Moz, for example, the CEO’s salary remained lower than that of an average Seattle-based software engineer for five years. And even when it was raised, it was never much higher than that baseline. The reason for that is simple: investors expect revenue from startups and know how to take care of their own interests. A startup’s board has access to aggregate salary statistics and won’t hesitate to cap the salaries of senior staff.

Getting your startup up and running takes time, effort and dedication. But even if you push through all the challenges you’ll face, you’ll still need to find a buyer for your stock.

Make sure your product fills a gap in the market.

What gives companies like Airbnb and Uber the cutting edge in their markets? Two words: Market research. If you want to succeed, you need to offer something that addresses customer needs better than your rivals.

Take Airbnb. It saw a gap in the market. Lots of people wanted to book vacation home rentals online, but there wasn’t a simple, user-friendly service out there. Consumers were forced to rely on websites like Craigslist which lacked all sorts of useful features. It was the perfect niche for a rental specialist to move into.

The venture capital model is a gamble, and there are risks involved.

Okay, so you’ve got a fantastic idea for a startup. Now all you need to do is raise some capital to get it off the ground, right? Well, not quite. As the old saying goes, there’s no such thing as a free lunch. You might want silent partners with deep pockets, but you can be sure your investors won’t see it quite like that...

Raising money limits your freedom. Once you’ve got investors on board, you’ll be tying your performance to their expectations. And that means you’ll be under pressure to hit targets and maintain constant growth. They want to see a return on their investment. If your accounts start looking shaky, they won’t hesitate to take action. That could be anything from having you removed from your position as CEO to pushing for high-risk strategies that might end up killing your company.

Be transparent to avoid mistrust in your company.

Running a startup is tough. So what should you do when problems arise? Lots of founders are tempted to hide the truth in an attempt to protect their team and customers, but that’s often a risky call. A lack of openness doesn’t just put your relationships in jeopardy, it can also undermine your company’s growth and revenue.

That means it’s important to confront problems head-on. If a member of your team isn’t performing well, try to find a solution like additional mentoring rather than ignoring the issue.

Take stock of your strengths and weaknesses to better understand your company’s dynamics.

Does your mood affect your work? If yes, ask yourself another question: How much would it affect your performance as a CEO of a startup completely reliant on its leadership? Perhaps you’ve answered no. It’s still a valuable exercise since it’s these kinds of questions that give you a true sense of your strengths and weaknesses. And that makes running your company smoothly much easier.

When you’re aware of problems, it’s much easier to start fixing them. Knowing that your company isn’t particularly strong on networking, for instance, means you’ll know that you need to concentrate on that area to boost your chances of hiring the right people. That’s vital because knowledge gaps are an incalculable obstacle to growth. After all, how can you get the best possible product out there if you don’t have the know-how to make it? So here’s the solution: surround yourself with people who have expertise in the areas in which you need to get things done.

Team diversity and meritocratic promotion will boost your chances of success.

One of the most important factors in determining performance is a team’s dynamic. So what exactly is that? Well, it’s basically how well you and your team members get on with one another. The best workplace dynamics are close-knit and complementary. Put simply, everyone values his colleagues – the people he ultimately spends most of his day-to-day life with!

But a great team dynamic isn’t down to chance; it can be encouraged and cultivated. One of the best ways of doing that is to assemble a diverse team. Having employees on board with different backgrounds and skills provides a greater range of expert opinions and insights.

Growth hacks and Minimum Viable Products often do more harm than good.

Every company wants to grow. So what could be better than a growth hack? Not so fast. Growth hacks – marketing strategies for rapid experimentation and product development – often do more harm than good. While they might bring in more customers and revenue in the short term, they’re often a bad move for solving long-term issues.

That’s because growth hacks are all about quick gains. Selling more now, however, can get in the way of sustainably improving your products to leave you well positioned to meet future challenges. After all, if the balance sheet looks healthy enough today, why bother investing and planning for tomorrow? More importantly, hacks can also undermine your company over time. A promotional strategy that boosts sales by slashing prices, for example, might put your customers off paying the full price for your product later on.

Make sure you’re taking care of your existing customers before trying to grow your company.

Growth can become an obsession. It’s all too easy to become overly focused on that next round of funding that’ll give your company its next growth spurt. That’s understandable, of course, but it can get in the way of other priorities like taking care of your existing customers and products.

After all, if you’re growing in one area while shrinking in another, you’re not really growing at all. Customer retention is the foundation of your company. If you spend all your time and energy in acquiring new customers, you risk losing the ones you already have. The result is a vicious cycle. As you lose your existing base, you devote ever more energy into attracting new customers, who you may eventually lose.

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What is Lost and Founder about?

Lost and Founder (2018) is a hands-on guide to getting your startup off the ground. Written by the founder of a company that’s already made it and packed with cheat codes and hacks, this is the ultimate insider’s playbook of strategies and tactics for struggling founders and would-be innovators.

Lost and Founder Review

Lost and Founder (2018) by Rand Fishkin offers an insightful exploration of the ups and downs of building a startup and serves as a valuable guide for entrepreneurs. Here's why this book is worth reading:

It provides honest and practical advice based on personal experiences, helping readers navigate the challenges of the startup world.
Mixing personal anecdotes, data-driven insights, and actionable strategies, the book is both informative and relatable.
The author's transparent storytelling keeps the narrative engaging and ensures that the book is anything but boring.

Best quote from Lost and Founder

Transparency cant just be a tactic, though. It has to be a core value thats consistently followed.

—Rand Fishkin

Who should read Lost and Founder?

Aspiring startup founders
Entrepreneurs looking for insider tips
Anyone fascinated by the world of business

About the Author

Rand Fishkin is the founder and former CEO of the marketing technology startup Moz. When Fishkin isn’t traveling the world giving talks on marketing, he can be found in the offices of his latest venture SparkToro, an audience intelligence search engine.

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