5 Must-Read Books for Early Stage Startups

Building a startup is hard. But it is also one of the most rewarding activities you can do. You learn a lot from it. I was lucky to have been able to work at some of the biggest tech startups in the past such as Uber and Gojek, where I saw the inner workings of decacorns who serve hundreds of millions of users (both companies now have gone IPO). I also have worked at an early stage venture builder, Enviu, building impactful startups from scratch. It was one of the most rewarding phase of my career. Building a startup from 0 to 1 (to borrow Peter Thiel) and from 1 to 100 (or 100000) has its own unique challenges. But there is one common lesson learned which I want to share with you.

Working in a startup, or building one, it is easy to think that it is all about action - and indeed, one of the mentality that a founder needs to have is bias for action - the ability and will to know when to stop thinking, planning and strategizing, and just go 'out there' to execute whatever is needed to bring your idea to reality. 'Think big, start small', 'Execute first, apologize later', 'analysis paralysis' are some of the well-known adages in startups. Everything is uncertain, so there is not much to gain by planning; learning by doing is the everyday norm. Yes, that is correct.

However, this bias-for-action attitude is most effective, when it is also combined with some understanding of best practices and basic knowledge. Without this, action will be unguided and could have far-reaching consequences: failing to validate your idea, not finding the right product market fit, burning lots of money inefficiently, feeling culture shock in your new startup environment, etc. What I learned is that there is actually a methodology for building startups. That is actually funny, right? Originally startups are supposed to break the conventional norms of the business world which have been so heavily systematized through decades of business school educations and traditional industry practices - and yet, by having a set of methodologies, it is as if startup is becoming a convention of its own. And let's admit it - it is. And that's okay. That doesn't kill the fun out of it.

Like all great and revolutionary ideas, startups start from a few changemakers who succeeded in breaking the status quo and introduce something new to the world. It was a genuine movement, not initiated by a preset theory or campaigning. Like an epidemic, it quickly starts to catch on to other people who also jump onboard until it becomes a big trend. When there are enough data points, or 'case studies' to learn from these successful (and not successful) startups, certain smart and observant people start to see universal patterns from the different cases, and they start to document the learnings and best practices and formulate methodologies that people can use. These learnings are then collected in books so future startups and founders can focus on building and validating their ideas rather than figuring out all the time on the 'how' of building startups. The methodologies are replicable and made to ensure maximum amount of success with the least amount of risk. By learning about these methodologies, founders can avoid the many traps of failure that are in the way to success and get ahead of the game.

So, enough talking, let's get down to the 5 most important books every aspiring founder / or those working in startups should read:

1.Start with Why by Simon Sinek

I recommend this book first, as it is a very inspiring read that makes you go back to the very basic of building a business, or an idea, or anything: the purpose. It will charge you with a fresh energy (and in startups you need lots of them). Simon says, every great companies started by going 'inside-out', that is, they started with a strong inner purpose. And these companies successfully live and communicate that purpose to their customers throughout their life span. By doing these, they are able to capture loyal customers that really not just buy your products, but also believe in you. The book said, people don't buy what you do, they buy why you do it. And not just customers. By having a strong purpose and becoming the embodiment of it, your startup can benefit in other ways: Employees don't work for you because what you do, they work because why you do it; Investors don't fund you because what you do, they fund because why you do it... and so on. It's not that the 'what' is not important - its very important, as also the other 'W's and 'H', but Simon says, start with Why first. He often puts Apple as an example. Their purpose can be stated as follows:

Everything we do, we believe in challenging the status quo. We believe in thinking differently.

The way we challenge the status quo is by making our products beautifully designed, simple to use and user-friendly.

And we happen to make great computers.

And Apple stick true to this purpose; products they built (Mac, iPod, iTunes, etc) are not just better than their competitors, they reshape the way the industry is. They challenge the status quo and design something altogether different. And by communicating that purpose to their audience, they are able to attract loyal customers who stay in for a long time. And there is science to it: by starting with why, we are reaching into the inner core of the human brain, the limbic part, which controls 'gut' feelings and loyalty.

2. Lean Startup by Eric Reis

Another oft-quoted book, but seldom read. At Enviu, it is one of the must reads as a venture builder. At startups I've worked in, it is how they do things everyday. I must confess, I also just started reading Lean Startup after diving for 2 years around the startup ocean. At that time I was thrilled by how these big tech companies do what they do, but also often confused. How people do things, the way top management think, the way projects are handled - it seemed very arbitrary, unstructured, chaotic. I have been 'educated' in the old traditional business way of project-management, operations-management, marketing-management, and other old-handed management methods. So I had to learn, adapt and adjust my way with considerable difficulty at first. It is only later, when I read this book, that I could understand why they do things the way they do it. Instead of being arbitrary projects, it is data-driven rapid experiments; instead of being unstructured decision making, it is pivot-or-proceed moments; instead of chaotic processes, it is build-measure-learn cycle all along. Had I read the book before I jumped into the company, I would have saved a lot of unnecessary headaches!

As Eric Reis said:

Startups success can be engineered by following the process, which means it can be learned, which means it can be taught

Learning the principles in this book will change your paradigm in building startups (the goal is continuous learning and discovery through experimentation), shift your focus to what matters the most (learn from customers), puts you into the right mindset when things are going rough (fail fast, fail often, fail cheap).

In Eric's words: “All innovation begins with vision. It’s what happens next that is critical.” Simon Sinek's Start with Why would be a great catalyst to begin your innovation journey with a strong and purposeful vision. As for 'what happens next' - the critical part - the Lean Startup book will do it for you.

Followup reading: The Startup Owner Manual (the precursor of Lean Startup), Running Lean (a more practical step-by-step approach to implement Lean Startup), Value Proposition Design (a more fun, visual and creative approach to early stage validation).

3. Crossing the Chasm by Geoffrey Moore

In this book, Geoffrey Moore introduced what is probably one of the most quoted concept in startup, early adopters, or the customers who adopt your product in the beginning, faster and earlier than anyone else. It is part of the Technology Adoption Life Cycle framework, which can serve as a visual roadmap of your startup journey. He breaks down the distinct characteristics of each stage and the profiles, as well as the strategy to handle the challenges in each stage. And also most importantly, how to "cross the chasm" - a difficult stage before you can find the way to mainstream customer.

Geoffrey argues that "there is something fundamentally different between a sale to an early adopter and a sale to the early majority" and knowing how to approach each segment is the key. Although this book is written for the B2B tech market, its application is universal and far-reaching. It will help founders and teams to develop a common language when building their startup, researching their customers, designing and analyzing their marketing campaign, etc. It will help you to avoid a common mistake: going after the mainstream market right away, spending huge amount of resources and money, before even getting your early adopter. When building startups at Enviu, the principles of early adopters really helped us as a team of venture builders manage the uncertainties in early stage startups and make clear strategic choices to focus on the right things at the right time.

4. The Mom Test by Rob Fitzpatrick

A short book (only around 130 pages), but packed with very useful and practical tips in your early research process of getting to know your customers and validating the need for your solution. In doing customer research interviews, we often come with our biases and drag answers that we want to hear, not truths that we need to hear. And it is very understandable. As founders, we have to be passionate about our idea - otherwise we will not be able to have the stamina to build it all the way through. We expend a lot of energy and we're very insecure when people tell us our idea is bad. But when it comes to validating our idea in front of customers, we should be able to distance ourselves from all of that. This is very difficult. Rob Fitzpatrick gives clear tips on how to ask questions to customers that can help you avoid those traps, with the concept of 'the Mom Test':

1. Talk about their life instead of your idea

2. Ask about specifics in the past instead of generics or opinions about the future

3. Talk less and listen more

The intention of customer research should be to learn about the customer, their preferences, their gains and pain points, not to gain an affirmation of your product idea. It should be customer-focused, not product-focused. Throughout my career, I've done both types of customer researches, and the result is strikingly different. Conventional customer surveys, for example, often hold serious biases which is hidden in the way we design the questions. To take an example from my past work, when researching about the sustainability level of a certain group of people, we'd asked them, "How sustainable are you?" - and give them an option ranging from "not sustainable" to "very sustainable". The answer can easily mislead us because they will be opinions, not facts. And, as the book said, "Rule of thumb: Opinions are worthless.". What could've been asked to get nearer to the truth is "What sustainable actions have you undertaken in the past month?". It is surprising that people can rate themselves as "very sustainable", but in real life, they didn't do anything that prove they are acting out a sustainable lifestyle. Doing that simple shift in designing your research question will go miles in telling whether the people you are researching are your customer or not. This book is abound with other examples that could be very eye-opening and also very practical during your customer research phase.

5. Mastering the VC Game by Jeff Bussgang

This is an exciting and engaging book that will open you to the world of Venture Capital from someone who's been both a VC-funded founder and a founder-backing VC. Approaching and pitching to a VC can often be a scary and intimidating activity. I've gone through many pitching to VCs and funders and the next one could still feel as intimidating as the previous one. Taking in bad news that they're not interested can also be hard (and confusing, as you don't know where you've gone wrong or how to improve). Except for a few successful pitches that ended in some funding, the majority of my pitches in the past haven't landed into anything. I've also done mistakes such as pitching too early or pitching to VCs that are just on a different game (e.g. they're oriented towards high profit margins, we're more impact-driven).

This book helps in getting founders avoid those difficult moments as it shares openly the way VC operates and thinks from the inside, the typical profiles of the partners, principals, and associates who work for VCs, what motivates them, and even up to their business model, how they're getting funded (yes, VCs also have funders!) and paid (yes, the people working there are also getting paid salaries, and thus have their own interests). Like startups, VCs too have their own challenges, and the people working in VCs are also humans. All this information in the book helps in 'closing the gap' a bit and will make you feel more at ease when approaching and pitching to VCs.

Even though pitching to a VC should be a later stage activity for your startup, I would still recommend to read this book early on as it would give your more confidence in knowing the road map and ecosystem ahead. It will also inspire you as it tells stories about startups that have successfully went from idea to startup to VC-funding to IPO to the moon.. just kidding (except maybe a space-tech startup could actually do that). It also gives some practical tips such as how to approach a VC (spoiler: the book recommends not cold-emailing, but direct personal approach - by finding close connections, do networking, etc), what makes a VC say yes to a pitch, and what makes them say no, and other tips that will help you prepare for your next pitch and get that much coveted headline "Startup X funded $M by X Ventures..." (actually, its getting quite boring nowadays..).

I hope this list helps a bit. I know, reading doesn't solve everything. As Eric Reis said, "Reading is good, action is better." The critical thing after we absorb all these mental superfoods and get inspired, is to translate what we've read into real life actions, to really make our ideas and startups happen and grow. And that could be another challenge of its own.

If you're an early stage founder (or an aspiring one) and you're currently struggling or stuck with your idea or startup, and would like to have a sparring partner to discuss and try to resolve them, I'd be more than happy to chat with you - just drop me a message.

Happy reading!