It's been a while since I've posted anything on my personal blog, but this is something that I've been considering for almost a decade, so I wanted to make sure this group heard it first.

If you aren't familiar with startup studios, here's a great Harvard Business Review article on them.

We went full-time on the studio in the middle of last year. Since then we've pulled together a world class team, closed a studio financing round from the best investors in Atlanta, designed our studio process and - as part of our public announcement today - we are announcing that a well-known venture fund is leading the pre-Seed round for our very first studio company!

I could not be happier with our progress so far, but this is just the beginning.

We've written a bunch of stuff about our studio, so if you'd like to read more you can go to these links...

• Neighborhood Studios launch announcement

• Hypepotamus launch announcement

• Neighborhood Studios homepage

It would really help the studio if you could do two things today...

• Please share the news! Here's the LinkedIn post & Twitter post of the announcement ready for sharing.

• A big part of our success relies on having a few hundred beta testers for our new products. If you know people in Atlanta who love seeing new products when they launch, please share our Beta Tester link - there's a sign-up link at the bottom.

Many of you have followed my journey as a founder and investor for a decade. I can't thank you enough for your support. Please let me know if you find yourself in Decatur - the studio offices are right next to Switchyards Decatur.

And if you'd like to keep-up with Neighborhood Studios, you can sign-up at the bottom of our homepage.

Thank you!

Neighborhood Studios
Only neighborhoods can save us!

If you agree to meet with me for coffee every month and tell me everything, I'll advise you.

And I never asked any of these founders for any form of compensation.

My startup was well-known in town and I began to have a reputation as a helpful person to local founders, so I was able to begin to work with a few good founders.

Those relationships have since turned-out to be some of the best in my career, but I was struck in the beginning (and continue to be surprised today) at how difficult it is to mentor founders.

Why's It So Difficult?
Two years ago I wrote a blog post about this topic, but here's a few things that are non-obvious for people just starting to casually mentor founders...

1) Founders want to cut their own path. Think of the people you've known who didn't go to college so they could tour around the country until their rock band hit it big. Or the people living in east coast cities in the late eighteen hundreds who headed out west to stake their claim. Or friends who leave their steady jobs to launch a local restaurant. Startup founders are very similar in that the passion/vision/mission/itch of the goal is worth the (very bad) odds of success.

Because this is a group of people who (in the beginning) aren't being primarily guided by logic, mentoring can be tough.

2) The fog of war. A very accurate definition of a "startup" could be "an organization where you have to get outsized results from less-than-adequate resources." This means that every founder is constantly moving from thing to thing trying to make something out of nothing. So one day the goal is to hire a new developer, then next day the goal is to move into a new office space and the following day the goal is to get money from a new investor.

Because of moving priorities, mentoring can be tough.

3) That feeling that only founders know. While it might seem like the founder is super confident, things are going really well and the path is clear, each of these is only true about one day per month.

Founders (especially good ones) are great at making outsiders believe that everything is fantastic. The rest of the time the founder wakes up with a feeling that's difficult to understand unless you've been there.

Imagine a day where something bad happens to you. Maybe you crash your car on the way into work...and it's your fault. And on this particular day you have something important to present at work. Then imagine that on your Uber ride into work (after the crash) you get a call that your significant other just had to go to the emergency room.

This is close to the feeling that founders have. The feeling that things are bad. Then more bad stuff happens. And this will likely keep happening with no end in sight. And it's all your fault because you started all this. This is the feeling most founders have pretty much constantly until the business gets some traction.

Because of these constant, non-obvious from the outside, real or perceived existential threats, mentoring can be tough.

4) What you know might be wrong. There's another facet of mentoring that is tricky. Let's say you are the President of a 100-person real estate development firm. Or the VP of Marketing for a Fortune 500 company with an MBA. Much of what you've learned along your path is geared towards organizations at scale. Hiring best practices. Navigating successfully across departments. Strategic planning. These types of activities either aren't important at all for 3-person startups or the way they are handled are entirely different from big organizations.

Because many lessons learned are different based on the phase of the organization, mentoring can be tough.

So How Do You Navigate All This?
Just like successful rock bands, successful explorers and successful local restaurants, successful startups make our lives much better, so supporting their creators is important.

But what's the best way?

For anyone wanting to mentor startups I'd recommend doing five things...

1) Find the best founders. There's this term in the startup investing world called "deal flow." Ask a VC about what's most important to their business and the first thing they'll say is deal flow...how do they see the best founders and startups?

I'd encourage mentors to think in the same way. If you want to spend some time helping a founder, make sure this founder is coming from the best channels, so you know your time and effort are going to support the best founders possible.

So find people who are very connected to local startups and have them help you identify the best founders to support.

2) Put yourself into a bucket. I think about mentors in three buckets.

• Successful founder. These are people who have been on the journey before and created something meaningful. It doesn't matter if the company went public, raised millions of dollars or was bought for millions of dollars. What matters most is that this person burned the boats, convinced good people to work with them and built something that customers loved. The distance between this outcome and daydreaming about a startup idea is immense...if you've done those three things then you are a successful founder in my book.

• Investor. One commonality across 99.9% high-growth startups is that they need capital to grow. Because of this, investors into startups are very important to each founder's journey. Plus investors typically meet with lots of founders, so their instincts are good (even if they never started something themselves).

• Tactical support. The third important way you can help founders if you aren't a founder or an investor is to help them with tactical issues. If you are a lawyer, you can help with legal issues. If you are a finance person, you can help them with modeling. Or if you are an operations person, then you can help them there. The key point here is not to try and be an expert at everything the startup is facing. You might have friends who have raised capital for their startups, but be careful with giving capital raising advice if you haven't done it before. As much as possible, try to stay in your lane of expertise and make sure the founder is clear about it. I'd also encourage tactical mentors to learn how their area of expertise (eg financial modeling) is different between their current job and a 3-person startup. Learning the differences here is a great opportunity for you to learn because at one time your organization was 3 people and (trust me) the financial model wasn't as mature as it is today (and it didn't need to be)!

3) Identify your superpower. Whether you are a founder, investor or someone more tactical, I'd encourage all mentors to identify their three main "superpowers." These are things that you love doing and are naturally good at. Things that you'd do for free all day long if you could. Because these talents come so naturally to you, you'll enjoy every minute that you are teaching founders about these topics.

Identifying your superpowers also helps people in the startup ecosystem connect you to founders that need help in your areas of expertise.

Off the top of my head, my superpowers might be (a) how to get into a startup accelerator, (b) how to find good graphic designers and (c) consumer engagement. Even thought I'm a founder, these are topics that I have a deep understanding of and love talking about.

4) Don't ask or expect anything in return in the beginning. Maybe the single characteristic that attracts me to startups the most is the fact that all that matters is results. Say whatever you want about your big vision. Get the best advisors on the planet. Raise millions of dollars from top-tier VCs. None of this matters if customers aren't loving your product. Due to this clear & simple fact, anything that produces real results is super clear to everyone involved in a startup. And anyone providing true value will be rewarded eventually. So fight any instinct that you might have to expect compensation for your mentorship in the beginning. At Techstars we call this philosophy #givefirst and it's a fundamental part of the Techstars culture.

5) Be patient. Before you begin please know that this won't be one or two meetings and then your work will be done. I wouldn't start a founder mentoring relationship unless you are committed to many meetings over many months. And if the startup takes off, the relationship could even go for years. My most successful founder mentor relationship is now seven years old. And I just had breakfast with the founder a few days ago.

I tweeted more thoughts on this topic here.

One Last Thing
I hope none of this discourages anyone from helping startup founders. The relationships that I've built over the years as I've seen founders grow are almost as satisfying as seeing my own startup grow.

And this tweet describes the Techstars Mentor Manifesto pretty well if anyone wants to read more about it. Thanks @JeremyShure.

If this post resonates with you please forward it to one mentor (or should-be mentor) that you believe in. You'd be surprised at the ripple effects this will have.

Create great startups and help great founders!

#givefirst

• Team. Nothing matters more than great people. The hugely successful Techstars accelerator values team so much that they say that the five things they care about (in order) are "team, team, team, idea & progress."

• Product-market fit. This is the north star for all startups. It's how you know you've created something that customers love. You either have it or you don't.

• Build small. Because startups are about testing assumptions, build quick and small so that you can change the product quickly as you get customer feedback.

While these (and maybe 5-10 others) are the most common themes of advice from the best people in early stage startups, there is one that the most respected founders fixate on the most...

• Unique insight (otherwise known as an "earned secret"). What's the invisible world that you see that others don't? How did you authentically arrive at this vantage point?

A truly unique insight isn't mandatory to create a successful business. If you live in a neighborhood that doesn't have a pizza restaurant and you start a successful pizza restaurant then you didn't have an "earned secret"...you just identified a basic need and filled it. I suspect that this straight-forward approach is what makes up 95% of all successful businesses.

The reason why the notion of a unique insight/earned secret is so important in the startup world is that it's the best foundation for having a venture-backed, high-growth startup because you can apply resources (eg money, people) to a small, powerful flywheel and see outsized returns from those resources. Lots of resources applied to a slower-growth business (eg a pizza restaurant) doesn't produce the same amount of leverage. High-growth founders and investors need leverage.

On this podcast Ben Horowitz, the very successful co-founder of the venture firm Andreessen Horowitz, talks about this thoughts on earned secrets using Airbnb as an example.

He describes an earned secret as...

"You did something in your past to solve a hard problem and learned something about the world that not a lot of other people know."

Here's how Ben describes Brian Chesky's earned secret...

1) His background. Brian was a graphic designer who wanted to go to a design conference, but he didn't have enough money for a ticket. All the hotel rooms in the cities were filled, so he decided to rent an air mattress on the floor of his apartment so he could get enough money for a ticket. No unique insight here...just someone working hard to solve a problem in a clever way in his everyday life.

2) The surprise. 500 people replied to Brian's Craigslist ad. If you think back to a time before Airbnb you'll remember how radical and surprising this must have been. Wait...500 people are willing to stay on an air mattress in a stranger's home??? The only comparable human behavior at the time was CouchSurfing, but that was a tight-knit, non-profit community staying on couches for free...not strangers paying real money.

3) Research. These surprising results caused Brian to spend some time researching the hotel industry. He found out that hotels have only been around for about a hundred years. Before that it was people renting rooms in their individual homes for travelers. This way to get rooms began to lose out a century ago because the quality of these rooms varied widely. This allowed hotel chains (like Hilton and Hyatt) to emerge because they gave travelers much more consistency. Then the rise of new media like newspaper and television fueled the growth of national chains in the 20th century. In this research it occurred to Brian that online ratings and reviews solved the consistency issue even more than hotel chains are doing now.

This was the journey of Brian's earned secret that became Airbnb.

Using this story as a guide, here's how I would characterize the main parts of arriving at an earned secret...

1) Looking for problems. The best founder that I know have their antenna up constantly looking for unseen problems in their day-to-day life. They approach these problems with optimism and flexibility, knowing that everything in the world was created by people just like them.

2) Manual effort. Like Brian at Airbnb, once a problem is identified the founder tries to find evidence that people really want this problem solved. Sometimes this evidence already exists in the world (as human behavior around the edges like CouchSurfing) and sometimes a simple test is necessary (like posting an air mattress on Craigslist).

3) Surprising results. One of the most counterintuitive things about startups is that many problems can't be solved. Or they can't be solved in a way that creates a high-growth startup business. My favorite example to use of this is babysitting apps. Over the last few years I've had at least five potential founders approach me with babysitting apps that they planned to launch. While there are some exceptions, the vast majority of babysitting apps don't get initial traction because they aren't any better than what currently exists (mostly text messaging with one or two trusted sitters + Venmo). Despite this (lack of) evidence, very capable founders notice that their friends aren't using any babysitting apps, so they proceed to build one and no one uses it. This wasn't an earned secret...it was just a logical process to fill a perceived opportunity in the market. These founders would have been much better off doing a manual test of the behavior that they thought would get a groundswell of interest from a dozen moms...and not launching anything until the manual results were extraordinary. It's not enough to correctly identify a hidden problem in the world...you have to have some indication that your solution will solve it in a way that people will love.

4) Reconciled into a viable business. The final piece of the puzzle is to organize this whole situation into a business model. And by "business model," I don't mean "financial model"...I mean a holistic product and brand that provides a clear value proposition. My colloquial term for this process is creating a "mechanism." I started using this term because of what is said around minute 16:13 in this video. In this video Reid Hoffman, famous startup founder and investor, says that he views startups as overcoming key frictions. If you can identify the right one or two (mostly through talking with trusted advisors) and solve them (with a mechanism) then you can create a very big business. In the case of Airbnb the mechanism (that got attached to Brian's unique insight about excess "hotel" inventory sitting in peoples' homes) was ratings & reviews because of the trust issue inherent in strangers sleeping in strange homes.

I realize that this framework flies in the face of what most people consider "starting a business." To most people you simply find an opportunity in the world and then just work to solve it. As I said, I suspect that 95% of (great) businesses are started this way...just not the fastest growing 5%.

What I believe separates good founders from great ones and good ideas from great ones is stepping through their ideas in this way (even if it's accidental). This wind-at-your-back as you progress from one step to the next is practically required to grow an idea on a napkin to a very big business.

Too many founders (especially first-time ones) discount the power of this type of momentum. It sounds good as a general rule-of-thumb, but who has time for all this when I'm creating the new unicorn startup??? Then they proceed to push a boulder up hill for 24 months and then quit.

Still don't quite see the value in all this early work? Let me say it this way...how important was this early momentum to helping the Airbnb founders battle for 1,000 more days before getting enough traction to know if they had a big business? Without these early, foundational results would they have quit after a year? I might have.

Step through this process like Brian did and it greatly increases your odds of creating a successful startup.

Sidenote: If you enjoyed this post, you might like this one as well.

Get Right to the Lesson
I’d recommend listening to the entire thing, but to get right to the point go to minute 8:07 of this podcast.

Thanks to these folks for helping us all learn faster
a16z (@a16z)
Ben Horowitz (@bhorowitz), co-founder of Andreessen Horowitz (@a16z)
Sharon Chang (@sychang), Operating Partner at Andreessen Horowitz (@a16z)

Please let me and others know what you think about this topic
Email me privately at dave@switchyards.com or let's discuss publicly at @davempayne.