Self Help

Fall in Love with the Problem, Not the Sol - Uri Levine

Author Photo

Matheus Puppe

· 58 min read

Here is a summary of the key points in the foreword by Steve Wozniak:

  • Wozniak was impressed by Uri Levine’s casual and friendly speaking style, which made the material easy to understand.

  • Wozniak sees Apple as a rare case that doesn’t provide much guidance for startups today. Apple’s early success depended on unique circumstances.

  • Wozniak was compelled to read the entire book and take notes because of its practical advice and use of metaphors to explain concepts.

  • Levine advocates “falling in love with the problem” - caring deeply about solving users’ needs, not money or ego. Wozniak agrees this focus on users is key.

  • Levine compares a great product experience to a first kiss - unforgettable and emotional. Wozniak says he will use this metaphor in his thinking going forward.

  • The book stresses iterating to find product-market fit through constant failures and retries. Levine uses real examples from his startups like Waze.

  • Levine aims to create products for ordinary people. Once they work for the masses, funding follows. He provides tips for monetization without alienating users.

  • Wozniak appreciates Levine’s principles and formulas for decision making and assessing value, applicable to both consumer and business products.

  • Wozniak praises Levine’s goal of educating others based on his successful experiences. He believes the book can be an entrepreneur’s “bible.”

  • The author sold his startup Waze to Google for $1.15 billion in 2013, which was a record price for an app acquisition at the time. This exit confirmed Waze was building something better than the big tech companies in navigation.

  • The author believes there are only right decisions or no decisions - when you choose a path, you don’t know how the other path would have turned out. You have to make decisions with conviction as a CEO.

  • The author defines luck as “when opportunity meets readiness” - this book aims to make you ready for the opportunity.

  • The book shares the author’s method and “cookbook” for building successful startups, focused on solving problems that are worth solving.

  • Key startup components covered include determining product-market fit, figuring out the business model, and locking down a growth path.

  • The author is an entrepreneur but also a mentor - his goal with this book is to teach entrepreneurs how to build startups with a higher success rate.

  • The main message is to fall in love with the problem, not the solution - start with the problem worth solving and build from there.

Here is a summary of the key points in your text:

  • The trigger for starting a successful startup often comes from a personal frustration that leads to identifying a big problem worth solving.

  • This was the case with several of the author’s startups like Waze (frustration with traffic jams), FairFly (money left on the table when booking flights), Pontera (excessive fees charged on retirement savings), and Engie (feeling like an idiot at the mechanic).

  • Starting a startup is like falling in love - you go through an initial infatuation period, face doubts and skepticism from friends, work through challenges together, and over time build an enduring relationship.

  • It all starts with identifying a significant problem that creates value when solved. Focus on falling in love with the problem, not your solution.

  • Persist through setbacks using the problem as motivation. Most successful startups take years and overcoming many no’s before succeeding.

  • The problem should be the trigger and focus that drives you through the long journey of building a startup. Love the problem enough to stick with it through the inevitable challenges.

  • Identify a big, widespread problem that is worth solving. Don’t build a solution unless you know it will help many people.

  • Start with the problem, not the solution. Understand how people experience and perceive the problem before developing your solution.

  • People may respond negatively at first to your company idea because change is difficult. Give them time to get comfortable with the vision.

  • Know you’re ready to launch a startup when you’re willing to sacrifice - your job, salary, hobbies - to fully commit. Lack of sacrifice signals lack of commitment.

  • A good problem definition is one that makes people say “Yeah, I have that issue too!” The more people that validate the problem, the more real your value proposition becomes.

  • Fall in love with the problem, not your solution. Stay focused on making progress towards eliminating the problem and creating value for people.

  • The problem, not the solution, is usually the motivation for starting a company. Identify a frustrating, recurring problem that many people face.

  • Evaluate the problem using the Qualification Matrix, assessing the total addressable market size and the pain intensity/frequency. Winners are high on both, losers are low on both.

  • Examples of startups founded to address pain points:

  • Waze - avoiding traffic jams

  • Moovit - frustration of waiting for the bus

  • Engie - going to the mechanic is frustrating

  • Pontera - lack of transparency into retirement fees and savings

  • FairFly - airfares change after booking flights but no one checks

  • Refundit - failing to get tax refunds when traveling in Europe

  • Fibo - complex, expensive tax filing

  • Pontera aimed to bring transparency to retirement plan fees, helping people retire richer.

  • FairFly saves travelers money by tracking post-booking airfare drops so they can rebook for less.

The key is identifying a pervasive frustration point, assessing the market potential, and building a solution to alleviate the pain.

  • Amir saw problems and frustrations people faced in everyday experiences, which sparked ideas for startups. Examples include long airport security lines (Pontera), fluctuating airfare prices after booking (FairFly), complex tax-refund processes in Europe (Refundit), and difficulty filing taxes in some countries (Fibo).

  • The startups aimed to solve those specific problems. For instance, Pontera speeds up airport security lines by pre-screening passengers.

  • Sometimes the perception of a problem can disappear if conditions change, as happened with Mego when the postal service made improvements that reduced customer frustrations.

  • In addition to founding startups himself, Amir has invested in and mentored other startups at early stages, like SeeTree (using drones and data to boost crop yields) and WeSki (ski trip planning app).

  • For Amir, identifying and deeply understanding consumer frustrations has been key to finding startup ideas that can make a real difference in people’s lives. The right team is then critical to persevering through the startup journey to actually solve those problems.

  • Finding your passion is key - it must be greater than your fear of failure. This “entrepreneurship zone” requires sacrifice and risk-taking.

  • Strong emotions like frustration, love, hate or revenge can create the passion needed to drive change and build a successful startup.

  • Start by identifying a problem you care deeply about based on your own experiences. But don’t rely only on your own perspective - validate the problem is shared by talking to others.

  • The problem Engie aimed to solve - feeling ripped off and helpless with car repairs - seemed like a good opportunity based on a $1 trillion market. But after 6 years, Engie shut down because they couldn’t find the right business model that solved pain points for both consumers and mechanics.

  • Startup journeys involve failures, ups and downs. Passion and a compelling problem are starting points but not sufficient. You need to find the right business model and product-market fit.

  • Building a startup is very challenging - if you’re not truly passionate, it may not be the right path. But if you have the passion and commitment, you can potentially change the world.

  • Building a startup is a journey of failures because you are trying to do something new that no one has done before.

  • It is a rollercoaster journey with many ups and downs. Expect to fail often and fail fast so you can quickly try new things.

  • There will be a long period of no traction or progress, like crossing a desert. This “desert of no traction” is the hardest part where nothing seems to work.

  • Don’t change directions or pivot too often - stay persistent. And don’t run out of funding.

  • Focus first on figuring out product-market fit by creating value for users so they come back. This gets you through the first major phase.

  • At Waze, they started with a blank map and crowdsourced data from users’ GPS to gradually build up the map and platform. This user-generated content is the magic behind Waze’s success. But it was a long journey of trial and error to get there.

  • The key is to fail fast, learn from failures, and persistently work to create value for users. This increases the chances of eventually finding product-market fit and success.

  • Waze began as a crowdsourced navigation app in Israel, relying on users to provide map data, traffic information, and other updates.

  • It took 2 years of development before launching in Israel in 2009, where it was “good enough” due to the country’s density and Waze’s existing map data.

  • The global launch later in 2009 was a disaster - with over 90% churn as the app didn’t have enough data in most countries to provide good routing.

  • Waze tried many iterations to improve - empowering map editors, hiring map editors, changing algorithms, and messaging users when routes improved.

  • The key was listening to user feedback to understand what wasn’t working and rapidly iterating. Each new version aimed to address user issues.

  • It took nearly a full year of constant iterations before Waze finally reached product-market fit and took off globally.

  • The lesson is that startups require a “journey of failures” - trying ideas, failing, listening to users, and trying again until you get it right.

  • Waze started in 2007 and took 3 years to reach a “good enough” level in the US and Europe, going metro by metro and country by country.

  • In 2007, mapping and navigation were separate. Waze combined them into a single product with real-time crowdsourced data.

  • Ehud Shabtai created the early version, FreeMap, allowing users to crowdsource speed camera locations. This evolved into crowdsourcing map data.

  • Uri Levine met Ehud and Amir Shinar in 2007 and they decided to partner to create Waze, with Uri raising funds and Ehud and Amir leading R&D.

  • They started in Uri’s mom’s living room and raised $12 million in 2008 to officially launch Waze.

  • Failure is important and necessary for startups. By embracing failure, you learn faster. What matters is how quickly you recover and try again.

  • Failure and mistakes are part of the learning process. Don’t be afraid to fail - learn from your failures.

  • If you know something in your personal or professional life needs to change, make that change today. Don’t wait for “next time”.

  • Experience gained from failures and wrong decisions is valuable. It increases the probability of success in future ventures.

  • Product-market fit is key. Startups that don’t figure it out die quietly. Retention is the metric that indicates you have product-market fit.

  • Established companies can run more experiments and take more risks in finding product-market fit because failure has a lower cost.

  • Keep trying new things and running experiments until you get the product right. Pack the learnings from failures into each iteration.

  • Teach children to try new things and not fear failure. This builds confidence and resilience.

  • If the problem disappears or the team isn’t right, it may be time to give up on a startup and restart.

  • Persistence is important but know when to pivot or restart completely.

Here are the key points from the passage:

  • Product-market fit is crucial for startups to take off and succeed. Before achieving product-market fit, startups are just “taxiing on the ground.”

  • Launch your product even before it’s ready, when you’ll be embarrassed by the quality. You’ll learn much faster from real user feedback. Your early users’ role is to provide feedback to point you in the right direction.

  • Take a “fail fast” approach with lots of small experiments rather than spending a long time building something perfect. Validate assumptions quickly.

  • Manual solutions can help test the market before investing in a full product build. Focus on the problem, not the solution.

  • Have a roadmap of experiments to try until you find what works. Add features carefully - more features create more complexity.

  • The biggest enemy of “good enough” is trying to make something perfect. Move quickly and be ready to pivot based on user feedback.

  • Failures are inevitable when building a startup. Don’t take failures personally - view them as learning experiences.

  • “Good enough” products can win markets even if they’re not perfect. Don’t get stuck trying to make something perfect when good enough will do.

  • Fear of failure can hold back entrepreneurs. Cultures and environments that embrace failure produce more startups.

  • Treat failures as events to learn from, not opportunities to blame people. Ask “What happened and what can we learn?” not “Who’s responsible?”

  • Celebrate small successes throughout the startup journey to stay motivated. Also celebrate when others take you seriously enough to sue you or complain when your product goes down - it means you’re having impact.

  • Keep trying new ideas and experiments. You only need one success out of many failures. Speed and quantity of experiments matter more than quality.

  • The “fail fast” mentality means you’re faster than competitors. You only have to outrun other startups by failing faster and trying more experiments.

Here are a few key points about disruption:

  • Disruption is about changing behavior and the market, not just introducing new technology. Technology can enable disruption, but it is not inherently disruptive on its own.

  • Disruption often involves offering a new type of product, business model, or pricing strategy that shifts market demand and market share, usually from established incumbents to new entrants.

  • Classic examples are Netflix disrupting Blockbuster with streaming video, Uber disrupting taxis with ride-hailing, and Gmail disrupting paid email services by offering free web-based email.

  • In each case, the disruptor tapped into consumer demand for more convenience, lower cost, or a better user experience. This shifted market share from established leaders who were caught off guard.

  • Disruption is a process - disruptive products or services often start out inferior to incumbents in mainstream markets. But they later improve and reshape markets by pulling customers away from incumbents.

  • Industries and companies can miss disruption coming if they are too focused on existing customers, business models, and improving current products rather than exploring truly new offerings.

In summary, disruption revolves around changing consumer behavior and market dynamics, enabled by innovation in product, business model, pricing, or experience. It is often hard for established companies to see it coming or adapt in time.

  • Disruption is brought about by introducing transparency and access to information that was not previously available. Examples include Uber (supply and demand data), Airbnb (availability of properties), and Apple (App Store ecosystem).

  • Entrepreneurs and startups are frequently the source of disruption, as they are willing to take risks and challenge the status quo. Established companies often struggle to disrupt themselves.

  • Disruption creates a much bigger market overall. While incumbents may fear disruption, the enlarged market creates opportunities for multiple players.

  • Markets ripe for disruption often lack transparent information, like healthcare in the US.

  • If a market is going to be disrupted, it will be - the key is whether you participate in the disruption or become a victim of it.

  • Startups aiming to disrupt often propose win-win partnerships to incumbents, offering new value in exchange for assets like maps. But incumbents frequently refuse, trying to protect existing business models, not realizing their market is changing regardless.

  • Disruption brings an opportunity that is usually bigger than the threat. Companies that participate can thrive in the new expanded market.

Here are the key points from the summary:

  • Waze pitched their crowdsourced navigation app to Telmap, a mapping company, multiple times over several years, looking for investment or a partnership. Telmap repeatedly dismissed Waze, not seeing them as a competitive threat.

  • The first pitch was in 2006, before Waze was established, where Telmap considered acquiring Waze’s concept and team for $1 million but ultimately passed.

  • In 2007, Waze proposed adding crowdsourced traffic data to Telmap’s maps, but Telmap didn’t think traffic info was valuable.

  • In 2009, after Waze launched and had tens of thousands of users, they proposed sharing user GPS data with Telmap for traffic info in return. Telmap again declined.

  • A reason Telmap didn’t see Waze as competitive was because Waze’s maps had some flaws, like directing people to turn right instead of left near Telmap’s office. Telmap wanted perfection.

  • In 2010, Waze tried again to partner as they looked to expand internationally, but Telmap still dismissed them.

  • Ultimately, Telmap missed multiple opportunities to acquire or partner with Waze in its early stages, before Waze disrupted the market. Waze was later acquired by Google for over $1 billion.

  • In the early “all over” phase of a startup, the founders tend to focus on many different things at once - the problem, solution, market, business model, funding, go-to-market strategy, etc.

  • This leads to a lack of focus. As you start talking to people, you get distracted trying to address all their feedback and objections across all these different areas.

  • You need conviction about your plan - the sequence and timing of phases. Product-market fit should come first before everything else.

  • When investors give feedback about things like business model or growth, don’t get distracted. Stick to your plan of focusing on product-market fit first.

  • You just need enough validation of your assumptions to have conviction. You don’t need to fully execute yet.

  • The key is focus - stick to the phases and focus on one thing at a time. Don’t try to do everything at once.

  • For example, Waze focused first on product-market fit and acquiring users rather than monetization.

  • Overall, operate in clear phases with laser focus on one thing at a time instead of tackling everything all at once. Conviction in your sequencing is key.

  • Focus is critical for a startup’s success. Saying “no” to distractions helps maintain focus on the core mission.

  • Waze turned down a lucrative offer from a trucking company to customize their product, staying focused on their core users - commuters.

  • Startups should “operate in phases”, with the most important thing (MIT) changing over time.

  • The first phase is achieving product-market fit (PMF). This is measured by retention. Without PMF, the startup will die.

  • After PMF, the startup focuses on monetization, growth, etc. Each phase takes 2-3 years.

  • For each phase, a different part of the organization becomes most important. People’s roles may transition between phases.

  • Pivoting to a new target user or business model is effectively a new company, showing lost faith in the original mission. Stay focused.

  • Most value creation happens in later phases, after PMF. Be patient in the early years.

The key is to maintain focus on the core mission, say no to distractions, and be patient in developing the product, users, and business model. PMF must come first.

  • Startups progress through distinct phases like achieving product-market fit, figuring out retention, etc. Trying to work on multiple phases simultaneously often leads to failure.

  • Focus your resources on achieving one key milestone or objective (MIT) at a time in each phase.

  • Before product-market fit, the MIT is figuring out what users want and building a minimum viable product. Don’t overhire or overspend.

  • Achieving simplicity in the user experience is critical. Remove any barriers or friction points that cause users to abandon the product.

  • Distribution or virality alone is not enough - you still need product-market fit. An app like Bump went viral but still failed because it did not solve a real user need.

  • The startup journey involves many failures and course corrections before finding success. Being adaptable and relentlessly focused on the current MIT is key.

  • Reaching product-market fit is just the first step. Growing a successful business requires aligning many complex factors over time.

  • You can’t move on to the next phase until you fully complete the previous one. Product-market fit must be firmly established first.

  • For consumer businesses, focus on retention and frequency of use after product-market fit. High frequency drives growth through word-of-mouth.

  • For B2B businesses, focus on business model and renewals after product-market fit. Renewals indicate increased engagement.

  • Business model = what you charge for value created. Capture 10-25% of value as revenue.

  • Pricing models should be simple and increase with usage. Avoid variable pricing early on.

  • Deal terms will vary but should become more standardized over time as you refine the business model.

  • Be patient through the journey of aligning all the factors needed for success. It’s a slow, step-by-step process.

  • It takes a long time, typically over 10 years, for even the most successful startups to reach unicorn status (valuation of $1 billion+). There are distinct phases and it takes 2-3 years to figure out each one.

  • Measuring and analyzing metrics quickly is key to moving through the phases faster. Figure out what to measure before building the product.

  • The startup organization must change along with the phases, like an orchestra adding and removing instruments. Failure to adapt is a key reason startups fail.

  • Know when to switch gears based on achieving metrics, retention, sales cycle, and user acquisition cost goals.

  • Case studies are provided of Spamoff (too successful too fast) and Waze’s expansion into Latin America (needed a new partner when business model shifted).

  • The CEO is like an orchestra conductor ensuring the right players are in place at the right time for each phase.

  • Fundraising is like a rollercoaster ride - full of ups and downs, twists and turns.

  • You need to make a great first impression on investors - within the first few minutes of meeting them. Tell a compelling story that engages them emotionally.

  • Focus on getting investors to like you and your story. Facts alone won’t seal the deal.

  • Start your pitch with your strongest point to hook them right away.

  • Go to fundraising meetings alone initially so all the attention is on you as the CEO.

  • Be prepared for a long process with lots of rejection before finding the right investors. View it like dating - you may need 100 meetings to find the one.

  • Create a “wow” moment in your pitch to win over skeptical investors, like showing a key investor’s house already mapped.

  • Learn to tell an engaging story that draws investors in on an emotional level, not just a factual one. The CEO and story are what investors will invest in.

  • Stories are more effective than facts for making an audience engage emotionally and imagine themselves as part of the narrative. Tell authentic stories that create an emotional connection.

  • “Use cases” in business documents can be dry. Convert them into vivid stories with details that make them feel real.

  • The story should make the investor feel like they could be in the same situation. Understand the investor’s background to make it relevant.

  • Listen for feedback and highlight connections the investor makes to their own experience. Empower those connections.

  • Don’t show video demos during a live pitch. Use the time to tell your story verbally while showing the product.

  • Create professional videos with subtitles to share the story when not presenting live.

  • Craft effective opening and closing slides for your deck, don’t just put the company name.

  • The opening slide should convey the essence of your story or message. The closing slide should have a strong call to action.

  • The beginning and ending slides of a pitch deck get viewed the longest, so make them count by delivering your core message.

  • If solving a problem, structure your story: who has the problem, why it’s a problem, then what your solution is.

  • Expect a lot of “no’s” from investors - it’s a numbers game. Don’t get discouraged.

  • Watch out for common investor objections that are really just excuses, like “Google could do this.” Stay focused on your mission and audience.

  • Only partners can say yes, so pitch to them directly.

  • Signs an investor is interested include asking who else is looking at the deal, requesting your cap table, and offering advice to improve your pitch.

  • Keep following up persistently with investors you like. It often takes several meetings for them to commit.

The key is perseverance through the “Dance of 100 No’s”, focusing on your mission and audience, and watching for signs of investor interest to know who is worth continuing to pursue.

  • Waze struggled to raise their Series B round of funding, getting rejections from dozens of VCs who didn’t believe in their global traction or business model.

  • Just as they were close to running out of cash, Google unexpectedly announced turn-by-turn navigation, hurting Waze’s pitch.

  • However, this spurred Microsoft to invest in Waze’s $30 million Series B out of fear that Google would someday cut off their map licensing. Qualcomm also invested.

  • Ury used FOMO (fear of missing out) to convince Qualcomm to invest at a $70 million valuation, despite their hesitation. He highlighted how they missed investing in Twitter at a $55 million valuation.

  • Negotiating term sheets is an unfair fight for first-time founders against experienced VCs. Get help reviewing terms from a lawyer or fellow founder.

  • There are 3 phases: term sheet discussion, actual term sheet issuance/negotiation before signing, and post-signing when you may still be able to bring in additional investors.

  • Even with a signed term sheet, keep momentum up to strengthen your position. The funding round isn’t done until the money is in the bank.

  • You can always renegotiate terms with existing investors if you get a better deal from a new investor. Wait for the no-shop period to expire first if needed.

  • Say “no” to deals you don’t want to get the terms you do want. Practice negotiating by speaking with investors who likely won’t invest.

  • Understand every aspect of the term sheet. Get help explaining parts you don’t understand.

  • Key terms: Investment amount, company valuation, liquidation preference, board seats, anti-dilution rights, voting/protective provisions, no-sale period, founders’ vesting.

  • Liquidation preference - non-participating 1x is common. Participating or higher multiples are worse for founders.

  • Anti-dilution - broad-based is common, full ratchet is bad for founders.

  • Founders’ vesting - aligns incentives and prevents a founder from leaving right after investment.

  • Negotiate legal expenses to a fixed amount. Don’t leave it open-ended.

The summary covers the main points about understanding term sheets, negotiating from a position of strength, and fighting for founder-friendly terms. Let me know if you need any part of the summary expanded on further.

  • Investors can move very slowly on deals if it is advantageous for them. They may want time to re-evaluate the deal or see if other investors are interested first.

  • However, investors will move extremely fast if they feel they are about to lose the deal. Competition and fear of missing out are powerful motivators.

  • Waze experienced this firsthand - the initial VC took a long time with the term sheet, but when Waze told them another VC was interested, they suddenly moved much faster to get the deal done.

  • Even after signing term sheets, the closing process can still take months. Investors may continue negotiating or make new demands, like Magma wanting to increase the funding amount for Waze.

  • The key learnings are: 1) VCs will move fast when a deal is at risk of being lost, and 2) They will forget about valuation or investment amount if they feel they could miss out on the deal.

  • Overall, expect investors to move slowly on your timeline, unless you create competition and scarcity that motivates them to speed up. Be prepared for ongoing negotiation even after signing a term sheet.

Here are a few key points on managing investors after fundraising:

  • Conflicts of interest can arise around liquidation events, share purchases, exits, new investors, etc. Founders and investors may have misaligned interests.

  • Be prepared to manage egos on both sides. Keep communication open. Have a good board of directors who can mediate if needed.

  • Investor updates are crucial - keep investors informed on progress, challenges, etc. Be transparent.

  • Involve investors in strategic decisions when appropriate. Get their input.

  • Treat all investors equally and fairly. Don’t play favorites.

  • Set clear expectations on level of involvement. Don’t micromanage but keep them engaged.

  • Foster personal relationships. Get to know your investors as people.

  • Be careful about taking on too much capital. More investors can mean more complexity.

  • Understand investor motivations may change over time as the company evolves.

  • Have a plan for managing future fundraising rounds. Keep perspective on long-term strategy.

  • Overall, align interests as much as possible. Work together towards shared goals of growth and success. But be prepared for some conflicts too.

Here are a few key points on managing investors and potential conflicts of interest:

  • During funding rounds, try to create investor demand/oversubscription so you can negotiate secondary share sales for yourself and employees as part of the deal. This provides liquidity without new money for the company.

  • Keep existing investors happy by providing regular, simple progress updates. Use visual graphs that show consistent growth over time.

  • When fundraising, getting a top-tier lead investor often attracts lots of followers. You can upsize the round, do an extension round at a higher valuation to bring in more investors, or divert new investors to future rounds.

  • Early stage investors often can’t follow on in later rounds due to fund size. Late stage investors have more capital to continue investing in successful companies.

  • Manage investor expectations on exit timelines and valuations. Founders have a longer-term perspective than VC investors focused on fund returns.

  • Overall, maintain open and frequent communication with investors to align interests and prevent conflicts. Make them feel included in the journey.

  • Raising money takes a long time, often 6-12 months for a seed round. It takes time to craft your story and pitch deck and meet with investors. Delays can hurt the company as investors may renegotiate terms if progress stalls.

  • Keep talking to investors even during no-shop periods in case your current deal falls through. You can let new investors know you’re in a no-shop period that will expire soon.

  • Send monthly or bi-monthly one-page updates to all past and present investors to generate interest and maintain momentum. Show consistent progress over time.

  • Investors often play the role of being perpetually dissatisfied to motivate and push the CEO. Encouragement is often more effective than discouragement.

  • Manage your board of directors by avoiding surprises, steering discussions to obtain desired decisions, and defusing tensions by asking “What do you suggest?“.

  • Call board members ahead of meetings to prepare them, as they often won’t invest the time themselves despite having minimal companies in their portfolio.

  • Don’t surprise the board with major decisions at a meeting. Brief them individually beforehand so they feel included. Surprises lead to pushback.

  • Only report facts and possibilities accurately. Don’t overpromise deals or partnerships. Credibility is lost if progress isn’t made.

  • Manage board relationships carefully during a company crisis. Some may panic while others can provide support.

  • Down rounds can clean up the cap table by diluting non-supportive investors. New investors will likely top up founders to keep them motivated.

  • Expect rollercoaster highs and lows in fundraising. Focus on supportive investors who believe in the company long-term.

Here are a few key points on hiring and firing for startups:

  • Building the right team is critical, but also very challenging. Many startups fail due to having the wrong team dynamics or skills.

  • If the CEO knows within the first month that someone is not a good fit, they need to act quickly to remove that person. Otherwise top talent may leave, seeing the CEO as unwilling to make tough decisions.

  • When hiring, give yourself 30 days to evaluate the fit. Ask yourself - knowing what I know now, would I hire this person? If no, fire them the next day to avoid further damage.

  • Firing quickly preserves the startup’s culture and prevents resentments from festering. It’s better for all involved.

  • Conversely, if the answer is yes, consider giving that person a raise or added recognition. Reinforce those who are working out well.

  • Hiring and firing decisions fall heavily on the CEO/founders. Making the hard calls is part of the job. Put the company’s needs first.

  • Build a values-driven culture from day one. Seek those who align with your mission and values. Cultural fit matters tremendously.

  • When firing, be direct but compassionate. Offer severance if possible and references. Make it a clean break.

  • Learn from hiring mistakes. Adjust your recruiting and interview practices to surface any red flags earlier.

The bottom line is you must act decisively on team issues, for the good of the startup and all employees. The team makes or breaks the company.

Here are a few key points on firing fast in startups:

  • It’s important to have a clear process for letting people go quickly if they are not a good fit. This shows you value high performance and aligning with company culture/values.

  • Focus on firing fast when someone is truly detrimental to the team/company. Don’t fire quickly over small issues that could improve.

  • Get feedback from the team and other managers to confirm if someone should be let go. But don’t delay too long - act decisively if it’s clear.

  • When firing someone, be direct but compassionate. Explain why it’s not a fit, offer severance, give them time and help to transition out.

  • Don’t beat yourself up too much for a poor hiring decision. Making some mistakes is expected early on. Focus on learning and improving hiring going forward.

  • After firing someone, communicate to the team why it was necessary and reaffirm company values/culture. Restore team morale.

  • Keep hiring bar high. It’s better to leave a role open longer to find the right fit than to settle. Maintain high standards always.

The key is to balance acting decisively on mis-hires while treating people humanely and learning from mistakes. Speed with compassion.

Here are a few key points on hiring and firing employees:

  • Hire slowly and fire quickly. Don’t rush to hire, take your time to find the right fit. But if someone is clearly not working out, act swiftly to let them go.

  • Hire for culture fit. Skills can be taught, but values and work ethic cannot. Look for people whose values align with the company’s culture.

  • Check references thoroughly. Many candidates only provide references who will give glowing reviews. Try to find past coworkers or managers who can give an unbiased assessment.

  • Set clear expectations. Be very clear on responsibilities, goals, and performance metrics from day one. No surprises down the road.

  • Document performance issues. Keep a written record of any problems so there is evidence if you need to terminate employment.

  • Act fast on terminations. Once the decision is made to fire someone, do it quickly. Don’t drag it out.

  • Be humane about firings. Treat the person with dignity and respect, but be direct. Don’t sugarcoat the reasons.

  • Explain reasons for firing. Provide clear and honest feedback about why it didn’t work out. It can be a learning experience.

  • Check with HR/legal. Before firing, consult with HR and legal counsel to ensure proper procedures are followed.

Does this help summarize some key points on hiring and firing employees effectively? Let me know if you need any clarification or have additional questions.

Here are the key points from the summary:

  • Hiring is like going on a first date - you make snap judgments and then look for confirmation. This can lead to bias.

  • Instead of just interviewing the candidate, reach out to references, especially someone you trust who has worked with them before. Ask “Knowing what you know today, would you hire this person?”

  • Recognize your own biases as the hiring manager. Try to prove your first impressions wrong. Do a deep dive in the interview to really assess the candidate’s skills.

  • Don’t be afraid to challenge candidates - great people want to work at great companies with great coworkers.

  • Great leaders aren’t afraid to hire people smarter than themselves. Average leaders build average teams.

  • You don’t need industry experience to be a great CEO. You need qualities like persistence, leadership, listening to customers, decisiveness, team-building.

  • The Harvard study found 4 key behaviors of successful CEOs: fast/confident decision-making, engaging stakeholders, adapting proactively, and delivering reliably.

The key is self-awareness of biases, thorough candidate assessment, and understanding the qualities that make a great leader/team. Hiring the right people is crucial to building a successful company.

Here are the key points from the text:

  • Successful CEOs balance four key behaviors: decisiveness, engaging stakeholders, adaptability, and reliability. Overdoing any one can be problematic.

  • Managers are critical - many employees leave due to their manager. Training managers and replacing bad managers is key.

  • Training is critical, especially when growing quickly. Lack of training for new hires is a common issue.

  • Founding teams often change over time. Separating a founder is difficult but sometimes necessary. Equity, legal issues, and potential non-executive roles need consideration.

  • When structuring a founders’ agreement, think from the perspective of the founder who stays - longer vesting periods, defined separation process, veto power, and generosity to departing founders are important.

  • Finding a cofounder is challenging - look to those you’ve worked with before or know well. The key is who would choose to work with you, not just who you’d choose.

  • As creators of a product, we are not first-time users and can’t easily recreate that experience. Understanding the first-time user experience is critical since most users will be first-timers.

  • People check their phones frequently but only actively use a small number of apps. Many downloaded apps are never used.

  • Users employ apps in very different ways. We tend to think others will use a product like we do, but we are just a sample of one. Observe how diverse users actually utilize your product.

  • First experiences, like a first kiss, are unique and can’t be recreated. The thrill of initial use is powerful.

  • Products often start by scratching an itch of the founder. But other users will have different needs and motivations.

  • Continuously put yourself in the shoes of new users and observe how they experience your product for the first time. Their perspective will differ from yours.

The key is to humbly recognize you don’t represent all users and continually strive to understand diverse motivations, needs and behaviors. Observing real-world usage is enlightening.

  • There are different categories of users: innovators, early adopters, early majority, late majority. They have very different attitudes toward trying new things.

  • Innovators and early adopters are willing to try new things and deal with issues. Early majority hates change, needs simplicity, and needs hand-holding.

  • There is a huge gap between early adopters and early majority. Crossing this “chasm” requires extreme simplicity.

  • Must observe and talk to users to understand their behaviors and mindsets, which are very different across categories.

  • Similar segmentation exists in B2B - some are innovators, some require references before adopting.

  • Within a B2B organization, employees behave like consumer categories.

  • Some gender differences exist in user attitudes and needs. Must observe and understand these too.

  • Bottom line: must deeply understand user behaviors across categories, B2B/B2C, and genders to create simplicity that allows crossing the chasm to mass adoption.

  • Understanding user needs and mindsets is critical for product success, but it can be challenging. Factors like gender, geography, and frequency of use impact how different users experience a product.

  • Women often have different safety concerns than men when using public transportation, so a male product manager may overlook these if not considering a female perspective.

  • Geographic differences impact user needs - e.g. package delivery is a much bigger issue in Israel than the US. Even when the core problem is the same across geographies, differences exist - e.g. German and Brazilian Waze users have different behaviors around reporting speed traps.

  • Focus on regular users and their limited feature use - people stick to only 2-5 features in their most-used apps. Too many features creates complexity and drives users away.

  • Keep the consumer-facing side of an app simple, even if the backend needs to be complex to enable that simplicity. Remove rarely-used features over time.

  • Adding features expands the addressable market (e.g. taxi drivers), but too many creates complexity. Prioritize the features that matter most to your core users.

Here are the key points from the passage:

  • With a new app, you can’t assume users will read instructions or provide information readily. They may not know what the app does yet.

  • Early Waze employees would drive around mapping roads and turns that weren’t yet on the map, to help build it out. This required a lot of repetitive driving to log the data.

  • Getting frustrated when an app doesn’t understand you as a user means the designers likely misunderstood their users. Watching real users is key.

  • When designing features, anticipate creative usage beyond your initial intent. For Waze’s map chat, they saw it used for illegal purposes like ticket scalping.

  • Different user groups like early adopters and early majority behave differently. Design flows accordingly to increase conversion from first use to regular use.

In summary, deeply understand your users by observing them directly, expect creative usage of features, design for different user groups, and minimize user frustration by not making incorrect assumptions.

Here is a summary of the key points about figuring out product-market fit:

  • Product-market fit (PMF) is critical - if you achieve it, your chances of success are much higher. If not, you will likely fail.

  • PMF is about creating value for users. If you create great value for many users, you will be very successful.

  • Getting to PMF requires many iterations and failures before getting it right. It typically takes 3-5 years for successful companies.

  • Many startups believe they have PMF but actually don’t. The key metric is retention - are users coming back? This indicates you are creating value.

  • Measure retention over time to assess if you truly have PMF. Don’t rely on your own perception, which can be misleading.

  • Bring in objective outsiders to evaluate if you have achieved PMF. Their fresh perspective is often more accurate.

  • Keep iterating and improving the product even after initial PMF to expand the value created. PMF is not a one-time event but an ongoing process.

  • The product should not change much after PMF in terms of core value provided to users. But the business model, scalability, etc. will continue evolving.

There are clear metrics to measure if you have reached product-market fit (PMF): conversion rate and retention rate. Conversion rate measures the percentage of first-time users who find value in your product. Retention rate measures the percentage of users who continue using the product over time.

To improve these metrics, consider the user funnel. At each step of the funnel, there are barriers where users may drop off. Identify the biggest barriers by speaking with users who failed at that step and asking why. Then focus on removing or simplifying the biggest barriers first. Don’t be afraid to upset some users in the process - fast progress towards PMF is more important.

There are four ways to address barriers: remove or postpone them, simplify them, improve copy/instructions, and use visual design to guide users. Measure after each iteration to see if you have improved the conversion or retention rates. Getting to PMF requires focusing on the metrics and truly understanding your users.

Here are the key points from the text:

  • Watch and listen to new users trying your product for the first time. Don’t provide any guidance - just observe them and then ask why they did certain things. This gives insight into usability and conversion.

  • Users need to get instant validation or gratification from using your product in the first few tries. If it accurately reflects their experience (e.g. reporting traffic jams), it builds credibility.

  • Simplicity and having fewer features is better. Look at which features people actually use and which ones, if removed, would make them stop using the product. Those are the critical features to focus on.

  • Test removing features to see if people complain. If they do, it’s a critical feature. If not, it may not be needed.

  • Continually test and experiment with different versions of your product until you find what resonates with users and provides product-market fit. Waze went through dozens of iterations before getting it right.

Here are a few key points summarizing the text:

  • Product/market fit (PMF) is when a product solves a real problem for a specific set of users. It’s an iterative process of talking to users, building features, testing, and learning.

  • Reaching initial PMF is just the beginning - you often have to reinvent and find PMF again as the market changes. Waze and Pontera had to pivot multiple times.

  • “Good enough” depends on the market. A feature that seems good enough in one country may not work in another due to cultural or infrastructural differences. Waze reached “good enough” in many countries but not Japan.

  • You have to continually question assumptions and test new features with users. Just because a feature seems like a good idea to you doesn’t mean users will actually use or value it. Waze’s gamification features didn’t drive engagement as expected.

  • Finding PMF requires trying lots of experiments, being nimble, and constantly learning from user feedback. It’s an ongoing process of refinement, not a one-time event.

Here are the key points on making money and developing a business model and plan:

  • Building a business model involves figuring out how you will make money - what will customers pay for and how much. This will likely involve some trial and error.

  • A business plan refers to how much of the business model you will sell and when - laying out expected revenues and expenses over time. Plans often optimistically forecast revenue growth.

  • Reality is usually much harder and slower than the business plan. Focus first on finding product/market fit.

  • Exceptions where you need a business model and plan earlier:

  1. If customers will pay from the start, then figuring out the business model happens concurrently with finding product/market fit.

  2. You need some business model and plan to raise funding.

  • Start by understanding what pricing the market will bear, then see if you can build a profitable model around that. Don’t start with your costs and add a markup.

  • Understand what drives value for the customer and link pricing to that value. Look at common pricing models and metrics in your industry.

  • Building the business model and plan will be an iterative process with lots of failures. Stay flexible and keep evolving based on market feedback.

  • Focus first on finding product/market fit before scaling the business model. Premature scaling is a common mistake.

  • When building a business model, start by ensuring you are creating enough value that users are willing to pay. Then determine how they will pay and how much.

  • A good business model has 3 components:

  1. A simple story explaining how you’ll make money.

  2. A formula to calculate lifetime value (LTV) of a customer versus customer acquisition cost (CAC) to ensure profitability.

  3. An assumption it will take about 3 years to refine the model.

  • Pricing should be 10-25% of the value created for customers. Recurring revenue models are generally better than one-time fees.

  • Subscription models are preferable as they force focusing on product-market fit, lead to higher lifetime value, and recurring revenue.

  • Common business models: paid apps, freemium models, selling data, advertising, transaction fees, B2B models.

  • The best model creates recurring revenue and aligns incentives so company success leads to user success.

The key is creating value for users that translates into a sustainable and profitable business model over time.

  • Moovit makes money by selling map and traffic data to transportation authorities and operators. This helps them plan routes and schedules more efficiently.

  • For consumer apps with hardware, you have two options - subsidize the hardware with a subscription fee, or charge for the hardware upfront. Subsidizing the hardware creates recurring revenue which is preferable if you have the cash flow. But you may need significant funding to cover the hardware costs as you scale.

  • For B2B SaaS, recurring fees like per user or usage fees are best. Focus on maximizing long-term revenue while keeping the model simple.

  • For B2B hardware, price based on value created and market competitiveness, not just COGS. Add recurring revenue streams like support contracts. If possible, convert to a SaaS model.

  • For B2B hardware + SaaS, focus on converting to a SaaS model if you can bear the hardware costs.

  • Focus your value proposition on helping customers make money rather than save money. The potential is unlimited compared to just reducing costs. But the sales cycle may be longer to prove the value.

  • The author initially thought Waze’s business model of selling data to governments would work well, based on some early customer wins like a deal with Apple.

  • However, he soon realized the sales cycles were too long and governmental customers too slow-moving compared to consumers.

  • After much internal debate, they landed on an advertising-based model which proved more successful.

  • They validated this through a rapid prototype in Israel, and saw quick adoption that confirmed it was the right model.

  • The author learned that the business model journey never really ends - even once something is working, you need to continually refine and scale it over time.

  • With his next company Moovit, the author realized that copying Waze’s ad model wouldn’t work due to different user behavior.

  • The key takeaway is that the right business model will be the one that works in practice when tested with real customers, not just what seems logical on paper. It requires continuously testing and iterating.

Here are a few key points on building a business plan:

  • The business plan is a 5-year forecasted P&L that starts with objectives like number of customers, users, etc.

  • It models key metrics like new users per quarter, churn rate, conversion to paying users, and ARPU (average revenue per user). This builds out the revenue model.

  • The model assumptions need to make sense - look at them closely along with the 5-year bottom line results.

  • Consider if the 5-year projection is worth your time and effort - does it aim high enough in terms of growth, revenue, etc?

  • A good model may look weak to investors seeking a unicorn, but could be very successful in reality. Steady growth and profitability matters.

  • Focus on customer LTV over CAC as a key metric. Can you get this ratio above 3? That makes funding easier.

  • The business plan forecasts and models your business assumptions. Review it critically before committing years of effort.

In summary, the business plan models your business and revenue assumptions to project future growth and profitability. Assess the assumptions and resulting metrics to determine if the opportunity is worth pursuing.

Here are the key points on when to start your go-to-market (GTM) journey:

  • For B2C startups, start your GTM as soon as you have product/market fit (PMF), but not before. You need PMF before scaling growth, otherwise you’ll be wasting resources trying to get traction for a product people don’t want.

  • For B2B startups, you can start initial GTM before full PMF, doing things like building your sales pipeline. But you still need strong signals of PMF before aggressively pursuing growth.

  • Don’t wait until you have a “perfect” product to start GTM. Be willing to iterate on marketing as you iterate on product. But have enough validation that people fundamentally want your product.

  • The GTM journey will likely be long and require ongoing optimization as you learn more about customer acquisition. Be prepared to experiment and fail as you figure out effective marketing.

  • Key metrics to look for before heavy GTM investment: strong retention, organic word of mouth, repeat purchases/usage, enthusiastic customer feedback. Those indicate you’re ready to scale.

In summary, don’t wait too long before starting GTM, but don’t jump into aggressive user acquisition until you have clear signals people want your product. Be ready to continually test and refine your growth strategies.

  • Product/market fit (PMF) is critical before focusing on growth. Without PMF, you’ll have high churn as users won’t find your product useful.

  • PMF and business model can be developed together in B2B, but growth comes after figuring these out. In B2C, you can focus on growth before the business model if you have high frequency of use.

  • Word of mouth (WOM) marketing is extremely powerful for high frequency products once you reach critical mass of users. It leads to viral, exponential growth.

  • Frequency of use determines your startup strategy. High frequency means focus on PMF then growth before business model. Low frequency means PMF, then business model, then growth.

  • Marketing has two key roles: 1) Learn user needs to define product, market, pricing. 2) Promotion to bring users/customers.

  • Important to hire the right marketing leader at the right time for either PMF or growth stage.

  • Promotion activities can be done by marketing or business development teams. Key is to have coordination between the teams.

Here are the key points on companies choosing between marketing and business development capabilities to acquire customers:

  • Bringing users/customers is the most critical capability. Regardless of direct (marketing) or indirect (BD) approach, you need to start with direct user acquisition.

  • Marketing is about bringing users one at a time through PR, online/offline tactics, referrals, etc.

  • BD is about bringing groups of users through partnerships with other companies/entities. Conversion rates are 5-10% vs 25-75% for marketing.

  • BD takes patience - most activities won’t deliver results. The few that do can have big impact but it’s hard to predict and replicate.

  • Case studies: Telefonica’s LATAM campaign disappointing despite big reach. 3 Italy SMS blast hugely successful but hard to replicate.

  • Need both BD and marketing. BD to tap into networks/groups, marketing to directly acquire users. Ratio depends on the specifics of the company and offering.

  • Main takeaway: companies must focus on directly acquiring users, whether through marketing and/or BD. Relying solely on partners to promote you rarely works.

  • Big Deals (BDs) for acquiring users are rare but can be very impactful when they happen. Think of them like hitting a half-court shot in basketball - high risk, high reward.

  • Startups often cannot help each other acquire users because they are competing for the same users. Don’t expect partnerships with other startups to help grow your user base.

  • To acquire users (B2C) you need to identify who your target users are and where to reach them. Then you can experiment with different promotional channels like online ads, social media influencers, offline promotions, PR, and traditional advertising.

  • Measure cost per acquired user (CAC), first-time value per user (FTV), and lifetime value per user (LTV). If FTV > CAC you are acquiring users profitably. Aim for FTV to be at least 3x CAC.

  • Getting PR and media coverage can establish credibility but its impact on user growth varies. PR firms can help get placements.

  • Growth takes trying many approaches persistently. Double down on what shows traction, cut what doesn’t. There is no one perfect channel.

Here are a few key points on going global with a startup:

  • Timing is crucial - don’t go global too early before product-market fit, but also don’t wait too long after establishing product-market fit in your initial market. Expanding earlier can spread resources too thin, while expanding later allows competitors to gain traction.

  • Prioritize markets carefully based on size, cultural fit, geographic proximity, etc. Start with markets that are most similar and accessible to your initial market.

  • Adapt the product and marketing for each new market - don’t just translate, but truly localize. Understand local norms, regulations, user preferences, etc.

  • Hire local talent or partner with local companies. Don’t try to manage overseas teams entirely remotely. Have local expertise.

  • Consider a land-and-expand strategy. Start with a small initial offering or customer segment as a beachhead before expanding.

  • Leverage economies of scale in ops, but maintain local autonomy for each business unit. Balance global efficiency with local flexibility.

  • Secure adequate funding for the added complexity and costs of going global. It will take longer and cost more than you expect.

  • Move fast enough to capitalize on product-market fit momentum, but not so fast that quality suffers. Pace yourself.

In summary, going global requires careful timing, localization, on-the-ground support, incremental expansion, and funding to do it right. Move decisively but thoughtfully.

  • If you want to become a global market leader, you need to define a strategy beyond just your home market.

  • Key markets to target beyond the obvious US, China, etc. are Brazil, India, Indonesia, Mexico - large populations but easier wins.

  • If you’re in a small market, think global from day one after just 2-3 product iterations.

  • If you’re in a large market like the US, focus locally first before expanding globally.

  • Move to global expansion before it’s too late - around 5 years in - or you risk missing the opportunity.

  • Choose target markets that are large but easier to win - good PR, low competition, low CAC. Avoid the hardest markets like US and China initially.

  • Going after easier wins like Brazil, Mexico first is a better strategy than tackling harder markets like the UK upfront. This allows you to gain traction and funding for wider expansion.

  • If you don’t go global early enough, you risk missing the opportunity entirely and only being able to expand through M&A later.

Here are the key points in summarizing the chapter on startup exits:

  • The exit is the culmination of the startup journey, but also the beginning of a new journey. It should be planned for from the beginning.

  • There are several exit options - IPO, acquisition, secondary sale. Each has pros and cons to weigh.

  • Acquisitions usually yield the highest returns, but require finding the right buyer who sees strategic value. Need to balance quick exit vs maximizing value.

  • IPOs can maximize value long-term but require prolonged reporting and compliance. Also dependent on market conditions.

  • Secondary sales provide liquidity before an IPO or acquisition. Good for early investors and employees.

  • Exits take time to negotiate and complete. Important to maintain business momentum during the process.

  • Founders must decide their role post-exit - stay on, retain shares, start something new. Their legacy will continue.

  • Successful exits set up founders for their next challenges. The journey continues in new ways.

  • Moovit had already gotten approval from all shareholders to sell the company, but Intel insisted that ex-employees who held shares also sign off. This required tracking down 70 ex-employees over a weekend to get their approval.

  • Nir Erez found calling each ex-employee individually to share the news to be incredibly rewarding. It allowed each person to have a private moment to celebrate their life-changing windfall from being part of the journey.

  • The exit was an emotional rollercoaster for Nir - feeling pride, concern, luck, reward all at once. It made him think about the impact on his life, his future, all the people involved, and his next startup.

  • Nothing can fully prepare you for the emotions of your first exit. Nir recommends finding mentors who have experienced an exit to provide perspective.

  • The “WOW” factor was the record price paid, changing the world, pride for Israel, and the personal wealth generated. But the company also stopped being yours after an acquisition.

  • Nir ranks the order of importance post-exit as: yourself, your family, your employees, and then others like the board and shareholders.

  • The exit process is an emotional rollercoaster with extreme highs and lows. Managing expectations is important.

  • Waze received an acquisition offer for $400 million from Google, but turned it down because they thought they could do better.

  • The Waze founders had set a goal of getting acquired for at least $1 billion.

  • They later received an offer for $1 billion, mostly in stock, from a major US company. The founders were ready to accept it since it would be life-changing money for them and the employees.

  • However, the acquirer then required relocating most employees to the US, which Waze refused. Negotiations stalled as a result.

  • Around this time, rumors surfaced that Facebook was acquiring Waze for $1 billion, though that deal was also stuck.

  • Finally, Google came back with an improved all-cash offer of $1.15 billion that allowed Waze to remain in Israel.

  • For the author, the acquisition quest became very personal once large sums of money were on the table, as it would profoundly impact his life and family. But personal does not mean rational - his gut feel was more important than logic in deciding.

  • Waze was in acquisition talks with multiple companies, including Facebook and Google. They initially had a deal with the first buyer but it fell through.

  • Google emerged as the best acquirer since they were a competitor and understood Waze’s business. The acquisition happened very quickly, with due diligence done in just 1 week (though it ended up being 10 days).

  • During due diligence, Google tested Waze’s mapping capabilities by asking for maps from different countries. Waze strategically provided their best map of Malaysia, which impressed Google.

  • Google wanted Waze to terminate their partnership agreements in various countries. Waze negotiated for this to happen post-acquisition to avoid early termination fees.

  • Google required key employees to stay on. Waze created retention packages to keep nearly everyone for a period of time after acquisition.

  • Two early Waze employees passed away. Waze set up a trust fund so their equity would continue, making their spouses millionaires after the acquisition.

  • About 75% of Waze employees had equity and benefited financially from the acquisition, including junior staff and the janitor.

Here are a few key points about whether to hire an investment banker when negotiating an M&A deal:

  • Investment bankers can help find potential acquirers, negotiate the deal, and advise on valuation and deal structure. They have relationships, experience, and expertise that can be very valuable.

  • However, investment bankers work on commission, typically 4-5% of the deal value. This means hiring one will directly reduce the amount the founders/investors receive from the deal.

  • Investment bankers may push for a quick deal or prioritize their commission over getting the best price. As the founders, you need to drive the process based on what’s best for the company.

  • For large/complex deals, the benefits investment bankers provide may outweigh the costs. But for smaller or more straightforward deals, you may not need to hire one.

  • Talk to founders who have sold companies before and get their input on whether to hire a banker or not. Also consider hiring an M&A lawyer to help negotiate the deal.

  • If you do hire a banker, be very selective. Make sure they have relevant experience and will prioritize your interests. Check references thoroughly.

In summary, hiring an investment banker can provide valuable expertise but also reduces your payout. Carefully consider whether the costs outweigh the benefits for your specific deal situation and company size. Make sure to drive the process based on your goals.

  • Hiring an investment banker can help create competitive bidding and buy more time to get better offers. They can also negotiate more aggressively than you can. Bring them in when you are open to considering offers at 2x your last valuation.

  • Don’t bring in a banker after you already have an offer on the table that you want to accept. They won’t be able to create competition at that point.

  • The deal has 3 main aspects: the mutual future vision, the deal terms, and your personal situation. Align on the future vision first before discussing dollars.

  • Retention packages are used to keep key employees during the integration period. They can range from 5-50% of the deal value. Make sure the package is large enough to retain who you need.

  • “Earn outs” tie part of the deal value to future performance goals. “Holdbacks” keep some funds in escrow until certain conditions are met by the seller.

  • Consider the deal from your shareholders’ and employees’ perspectives too. Prioritize your family, employees, then investors.

  • Different types of deal consideration like cash, public stock, or private stock have very different timelines for liquidity. Understand the differences.

Here are the key points I gathered from your detailed summary:

  • Earn-outs and holdbacks in M&A deals can be risky and uncertain for the startup being acquired. The future payouts are not guaranteed.

  • The acquiring company holds a lot of power over whether earn-out targets get met. They control strategy and budgets going forward.

  • Startups often cannot accurately forecast growth and targets 3+ years out. The earn-out objectives may become irrelevant.

  • Earn-outs reward all shareholders, but the founders/employees take on most of the risk of meeting the future targets.

  • Holdbacks place some of the acquisition proceeds in escrow to handle potential lawsuits down the road. This money may never get fully released.

  • With an acquisition of just 70-75% of the company, there is uncertainty around liquidity and future exit options for remaining minority shareholders.

  • It’s critical to get financial, tax and legal advisors involved early to optimize deal structure for tax efficiency.

  • There are inherent conflicts of interest between founders, employees, investors and the buyer. A neutral party should handle negotiations.

  • Overall, founders should be cautious about earn-outs and holdbacks, seek to reward employees generously, and get experienced advisors involved early on.

  • As the startup founder negotiating an acquisition, you may have different interests than the corporate buyer or your investors. You need to manage these different agendas.

  • Your investors want to maximize their return, but you need to balance that with retaining your team and being successful after the acquisition. Leave room to negotiate with all parties.

  • After the deal closes, immediately communicate with employees about what it means for them and start planning the transition with your new bosses. Reassure your team during this uncertain time.

  • In the first 100 days, define objectives, plans, budgets, compensation, and retention packages. You’re now running a division within a larger company, not just a startup.

  • The corporate bureaucracy and processes will likely frustrate you. You may regret the deal at first. Try to stick it out for 1-2 years, earn your retention package, and then consider leaving.

  • Your word and commitment to your team still counts, so try to deliver the expected results during the transition period.

Here are the key points I gathered from summarizing your response:

  • There are no inherently right or wrong decisions, just choices to be made and lived with.

  • Accepting an acquisition offer requires committing to stay on, which can be challenging. Negotiate retention terms wisely.

  • The transition from pre-acquisition to post-acquisition brings major life changes, happening in distinct periods.

  • Key takeaways include: consider the deal positively if life-changing and you like the post-acquisition outlook; consider team, users, today and tomorrow; a better deal takes time to “bake”; expect an extreme transition.

  • The book aims to help entrepreneurs succeed by sharing insights from the Waze journey and startup best practices.

  • Main topics covered: fail fast and try more; no bad ideas; understand different users; product-market fit is everything; people are your startup’s DNA; hire and fire right; prepare for exits.

Please let me know if I accurately summarized the key points and takeaways from your response. I aimed to extract the core advice around decisions, commitment, transitions, and key lessons from the book.

Here are a few key points to summarize the main ideas from the passage:

  • The author thanks his co-editor, CEOs, team members, family, and others who supported him in writing and publishing the book. He is grateful for their partnership, expertise, and willingness to take risks to make a difference.

  • His parents, especially his father, were major inspirations and mentors for following his dreams and constantly trying. His mother encouraged him to write this book.

  • Readers, users, and audience members helped improve his lectures and workshops through their questions and feedback.

  • The journey of creating successful startups and writing this book would not have been possible without the contributions of many people over the years. Their belief in him and his vision empowered the author to keep pursuing his goals.

  • He hopes the book will enrich readers and help them become more successful in following their own dreams and disrupting inefficient markets. The author is thankful to all who played a role along the way.

Here are some key points summarizing the discussion about business reactions, tracking drivers, making driving apps, Waze, exit strategies, fundraising, hiring/firing, and managing startups:

  • Business reactions to problems include finding solutions, pivoting business models, adapting to change, and being resilient. Tracking driver GPS data allowed companies to develop popular driving apps.

  • Waze was started to solve daily driving problems and disrupted navigation apps by crowdsourcing data. Its exit to Google shows how startups can successfully get acquired.

  • Fundraising requires persistence, storytelling, and aligning interests with investors. Hiring/firing the right people preserves a startup’s culture. Managing startups involves focusing on product-market fit, scaling thoughtfully, and engaging users.

  • Startups must be flexible, keep improving products, build the right team, and create value for users. Failure is part of the journey and provides learning opportunities. With the right strategy and execution, startups can positively disrupt industries.

Ads and Media Aggregators: Advertising and media aggregation platforms like Google and Facebook have disrupted traditional media and advertising. Their data-driven targeted advertising is very effective.

Medical Services and Startups: Healthcare has seen disruption from startups offering telemedicine, AI diagnosis, genomic testing, etc. These can improve access and lower costs but face regulatory hurdles.

Mentorship Programs: Mentorship is valuable for startup founders to get advice from experienced entrepreneurs. Accelerators and incubators provide structured mentorship.

Mergers and Acquisitions: M&A is common in tech as larger companies acquire startups for their technology, talent, or users. M&A deals require careful negotiation and awareness of company culture fit.

Globalization: Startups need to adapt products and marketing for new geographies and cultures. Local partners can help, but global vision needs to come from founders.

Managing Investors: Maintain transparency with investors, clearly communicate progress, and don’t surprise them. Manage their expectations through ups and downs.

Taking Care of Yourself: Entrepreneurship is stressful. It’s important to rest, maintain perspective, and care for mental and physical health.

Product-Market Fit: Achieving PMF validates core value proposition. Requires simplicity, solving user problems, and ignoring perfectionism. Data informs but doesn’t give full picture.

Fundraising:pitch compelling vision and mission, convey traction, build relationships over time. Have clear objectives and milestones for use of funds.

Failure: Treat failure as learning opportunity. Fail fast and recover quickly. Reflect on what went wrong and make changes. Stay optimistic.

Hiring and Firing: Hire slowly, fire quickly based on culture fit and results. Give clear expectations and feedback. Don’t compromise on core values.

Phases of Startups: Ideation, team building, PMF, scaling/growth have distinct challenges. Build the right team for each phase. Stay nimble.

Let me know if you would like me to expand on any part of the summary.

Orel Cohen

An entrepreneur by nature, Orel has vast experience in marketing, business development, sales, and strategic planning across various industries such as high-tech, education, media, and finance. Orel holds an MBA in business strategy from Recanati Business School, and a bachelor’s degree in economics and management from Tel Aviv University.

Orel is a cofounder at StartupRules, a company dedicated to assisting early-stage start-ups in creating scalable, efficient operations. He has contributed to the development of dozens of start-up companies.

In his free time, Orel enjoys traveling the world, snowboarding, and scuba diving.

Twitter: @orelcohen

Table of Contents



Part I: It All Starts with Why

1 Identify BIG Problems That Many People Have—Especially NOW

2 Solve a Problem in a Way That Creates Massive Value

3 Solve Problems for Real People—Keep It Simple!

4 Fall in Love with the Problem, Not the Solution

Part II: Go to Market and Get Big Fast

5 Identify Your Beachhead Market

6 Build a Product That Sells Itself—Strive for the WOW!

7 Offer Your Product for Free or Freemium

8 Leverage Viral Marketing and Word of Mouth

9 Make It a Habit

10 Keep Moving Forward: The 20 Percent Rule

Part III: Get the Right Partners

11 Align with Investors Who Share Your Vision

12 Surround Yourself with Believers

13 Partner with Big Companies the Smart Way

Part IV: Scale Your Success

14 Have a Clear Vision for the Endgame

15 Make It Easy for People to Say Yes

16 Accept That with Success Comes Complexity

17 Find a Balance between Leading and Listening

18 Always Stay True to Your Mission

Part V: Build a Unicorn from Scratch

19 Add Fuel to Growth: Raise Mega Success Capital

20 Maintain Control as Long as You Can

21 Know If and When It Is Time to Sell Your Start-Up

Part VI: Prevail through Hard Times

22 Dealing with Down Rounds and Distress

23 Managing and Motivating in Hard Times

24 Surviving an Economic Downturn

Part VII: Paying It Forward

25 Teach Others How to Fish

Afterword: What Got You Here Won’t Get You There

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Copyright Copyright © 2022 Uri Levine and Orel Cohen

All rights reserved

No part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording, or otherwise), without the prior permission of the publisher. Requests for permission should be directed to, or mailed to Permissions, Harvard Business School Publishing, 60 Harvard Way, Boston, Massachusetts 02163.

First eBook Edition: September 2022

ISBN: 978-1-64782-452-2
eISBN: 978-1-64782-453-9

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