 Alright guys in this video. I'm gonna be talking about five simple startup lessons And I'm gonna be making a series of these so these are the first five simple ones and eventually I'm gonna get down to probably 25 maybe a little more but roughly 25 and so my focus if you guys missed my last video go check that out is I want to be focusing more or less on playlists so educational series and Focusing on different themes. We're gonna have you know health. We're gonna have startup. We're gonna have business We're gonna have relationships, etc. And so this is the first one in the series of startups. So basically, I'm trying to distill the most important startup lessons and I'm coming from I'm coming from a point of view of just personal experience. So everything that I speak about I'm speaking about from personal experience. I'm not speaking about from theory or thesis or Shit that I've read in the book and I think that's the best way to teach people Just tell people hey, this is the shit that I've been through These are my experiences and hopefully you can learn some lessons from them. So let's begin five simple startup principles So lesson number one Now before you start any startup It's really important to figure out an audit and this ties into the last video I did about how failing is actually successful in life if you view it as as a teacher is Where are you currently in your life and What type of lifestyle do you want to have because? Where you are in your life and what and what lifestyle you want to have will determine For the most part what kind of business you want to start because an individual I'll give you example an individual that's 24 that Let's say still living with their parents that person can take a shit ton of risk That person doesn't really have to worry about too many things he or she can go out and raise a shit ton of money from angels investors VCs etc and If all else fails, they're not really responsible for anybody. They don't have a partner. They don't have kids They don't have mortgage their overhead is pretty much nil and so their risk to reward ratio is good Right, they can take high risk for high reward as opposed to let's say somebody who is a father has two kids Has a mortgage has a shit ton of responsibilities that individuals Risk to reward ratio is going to be much different than that young kids a risk to reward ratio So it's really important to audit where you are in your life. What responsibilities you have then once you do your audit Then it's about what kind of life you want to live, you know most people when they talk about when they start a business unless you're in the VC space and You know when you want to go for one of those big home runs Most people really don't know the number that they need for themselves, you know people talk about hey I want to have this successful business or I want to make money sure You know somebody making a million dollars That's amazing know for them. That's everything in their life as opposed to somebody else a million dollars is nothing They want to make a billion dollars So it's really important to audit and figure out. What is the cost of your lifestyle? Like what type of lifestyle you want to live so let's say you are then individual with two kids in a mortgage, okay? What where do you want to be in five years? Do you want to have a lifestyle where everything's paid off for your companies? Maybe paying you 200k a year in dividends It's a lifestyle business and you get to spend more time with your kids Is that what you want or is or are you in a position where you like fuck it? I'm going all in I'm this is type of business that has a huge market. It can be a potential, you know a billion-dollar business I'm going to go big go big or go home So it's really important to kind of audit I want to say auto say engineering exactly the lifestyle you want to have And finally number three, which I just touched on briefly is your risk-to-ward ratio And it's really important to figure out what that is. How much do you have to lose? You know if you're putting your house on the line and you have bills to pay and you have kids to feed That's a huge risk And so for you you can't take the luxuries so maybe it depends on where you are But for the most part most people can't take the luxuries of saying fuck it I'm not gonna have a salary anymore and I'm gonna live off my savings and it shit hits the fan is like where the fuck do you go? So, you know, this is really important. I think a lot of people don't look at this and like I said This is different for everybody, you know, this is different for somebody who's 22 compared to somebody who's 40 a mother versus not a mother You know experience versus non experience like there's so many variables when it comes to this But these are like before I do anything and I've learned this the hard fucking way but Before you go into any business really ask yourself this first question. So that's lesson number one designing your lifestyle first lesson number two a Big one pick your partners wisely and create options So there's many reasons why people team up with people Reason a just serendipity two people meet. They like each other. They like the idea. They go into business Reason number two. They know each other Reason number three, you know through networking, etc For the most part all of them will conduct each other in The same manner meaning you and I meet. Hey, I got this brilliant idea. Cool I like it. Let's team up and we go into partnership 50 50 50 percent equity and then we do let's say we raise money Or we don't whatever but it's all set in stone 50 50 And so let's say and we really don't know each other, right? It's really rare to find founders that know each other I'm talking about years and years of history together and they really understand each other. That's rare And so let's say we come together and now we're 50 50 and we fast forward a year later And we realize one of us we're not pulling our weight, you know We're not putting in the time. We're not putting the effort our minds not there and there's many reasons Why this is so it could be that both of you are great at as individuals, but together you're horrible It could be life gets in a way Maybe somebody has a kid or maybe someone has some health issues. Who knows shit. She happens But then what do you do, right? The equities already there 50 50. What do you do and then? Seen it all the time people get into legal arguments and lawyers involved and people are fighting and then it's hard to raise money from investors Because investors won't want that fucking baggage coming in and it's just a can of worms a lot of trouble And so I've done this model before it's called slicing the pie from Mike Mike Moyer So you can check out the website slicing the pie comm and I think it's really good for like first-time founders and people who are First starting off in a relationship with other founders. They really don't know and so basically it's all about pay-as-you-go type of deal and Slice in the pie works both for investors and it works for founders And so the whole idea is individuals percentage of shares equals the individual slices divided by everyone at the table and so instead of having a capped slash Standard equity a cap table meaning hey you get 20 I get 20 didn't free You know everyone has 20 on the table if we do next round everyone gets diluted so forth and so forth So everybody knows exactly what they're getting this is more variable It fluctuates and the fluctuation happens for about two years give or take so let's say we do start off a 5050 both people cool We from the get-go set The criteria our responsibilities or our business terms or startup terms we set our okay ours and KPIs You're responsible for this. I'm responsible for that We do our weekly meetings monthly meetings and quarterly meetings and we know exactly what we're going to do And if one side of the party or one of the founders starts lacking Couldn't constantly this isn't just one-time lag, you know, give a guy a break But if it's a chronic behavior where one of the partners is not performing based on what they said they can do Then Since we have a variable model here if we start off at 5050, maybe life gets in a way And due to his restrictions, he can't put that 50% of effort in anymore So then maybe become 70 30 right and then maybe becomes 80 20 And so this model works for about two years while you guys get to know each other While you guys get to work together And so once you guys have a good chemistry and once you realize you guys are both putting in the equal amount of work Then it's immense So I really like this model More and more startups are trying to do this model slicing the pie variable equity or variable performance And so this is something that I would recommend most startups get into Specifically if you're not raising ridiculous vc money if you're just doing you know early seed stage or like Small angel rounds in the future, but just you and your co-founders at the beginning for the first one or two years How they recommend this so lesson two pick your partners wisely And look at slicing the pie Which creates options optionalities Is the most important thing because that creates option for people to increase or decrease depending on the on their circumstances in life So lesson number three Whoa, what a surprise profit not revenue. So let's say your business is going you're in two three years Great, um, most people care about gross revenue. They look at these like vanity metrics Like I made a million dollars five million dollars 20 million dollars would be due You know, I'd rather be in a business making a million dollars Uh revenue but out of that revenue it's 50 profit as opposed to business making five million dollars Which only like five percent uh pre-tax profits So it's really important that you focus on profit focus on profit means freedom Profit means flexibility if your company is creating profit It means you can reinvest like profit is king cash is king And so don't worry about gross revenue Don't worry about how much revenue I can make worry about how much profit you can make You know, what is that gross margin profit you can make because once you have profit Everything else is easy. You can reinvest that into anything marketing of course more people of course Uh, and eventually once if that model Stay square, you know power square when it comes to the scaling Uh metrics then you can just pay yourself dividends if you own the company You don't have any investors right so always always always focus on profit not revenue And depending on what type of business you are maybe you're in e-commerce and you have physical products Great way to figure out profits there is go to your manufacturer See if you can squeeze your margins there or if you're doing online stuff figure out if you can have different product Sweets and different uh packages right always figure out ways how you can maximize profits and don't worry about revenue And lesson four really fucking important lesson Pivot pivot pivot and pivot fucking fast the nvp minimal viable product So, uh novella rovicon talks about this peter teal talks about this as well and that is The faster you can pivot your startup or have more iterations The higher likelihood that you have to find the proper product market fit. It's very simple It's just the laws of numbers right so it comes down to You first started the business you have this product digital physical doesn't matter and Your job is to talk to your customers As frequently as possible get feedback from them right the idea is to get from them build on that feedback code it or manufacture it Rinse and repeat rinse and repeat the faster you can do this the more negative feedback loops you have So it's a never-ending cycle It's collect data improve your product ship ship ship ship ship If you're not shipping on a constant basis, you're failing you're stagnant And your competitor is going to come around and ship much fucking faster than you And so I can't stress this enough is like I don't know if you're not doing at least a monthly review of your product And asking your customers. So don't make the assumption. You know what your customers want. That's foolish you have Your free data there get on a call with them Schedule some Skype calls with them can meet them in person talk with them You know and see what they like what they don't like what kind of features or You know, what kind of features they want and iterate up iterate on that and ship it And so finally lesson five From a psychological aspect is listen being an entrepreneur um Doesn't matter what type of entrepreneur you are or what business you have it's it gets lonely as fuck And you know, if you look at stats entrepreneurs have suicide issue depression issue mental issues um, a lot of them a lot of them state they feel alone And uh, I've been there, you know, it's it's a fucking process. And so I highly recommend Finding a form and it doesn't have to be paid form. It could be any form of finding a group Of people that you can open up to and talk to and share your troubles with and share your wins too You know, you don't get to celebrate that much But once you have a win share that with them and so find the entrepreneur groups. There's so many different cities I'm not going to name any but You know, it doesn't have to be organized group It can be literally you with a couple of founders getting together on a quarterly basis monthly basis, whatever cadence you want And just talking man That's a human tribal element where you can be like man, this is the shit that I'm going through man I need help and people give you feedback man. People want to help people. I'll leave it at that. These are my five simple startup lessons or say five principles And if I had to do a startup again, this is what I would go with and I'll be continuing this series with the next five So if you have any questions about this leave a comment below this video Don't forget to subscribe and I'll talk you soon. Peace