Founding Journey
Posts
2 Types of Startup Mistakes

2 Types of Startup Mistakes

And whether you should outsource or build internally

Michael Houck
April 16, 2024

Hey y’all — we had a breakthrough last week with Megaphone, my social media growth platform.

It led to over 75 new creators joining in ~10 days and X and LinkedIn posts doing millions more impressions than expected (see here and here for examples from my account).

If you’ve been thinking of giving it a shot, now’s a great time to jump in.

Anyway here’s today at a glance:

Opportunity → Investor Update SaaS

Framework → Outsource of Build

Tool → Shortform

Trend → Off-Label ChatGPT

Quote → Two Types of Startup Mistakes

PS — Become a member to get access to my founder membership including an engaged community, fundraising support, fireside chats and more.

🔗 Houck’s Picks

My favorite finds of the week.

Fundraising

TLDR on why investors invested in Wiz (Link)
Where OpenAI’s startup fund is putting it’s money (Link)
A hack to use when asking people to intro you to investors (Link)
How a16z is allocating their $7.2B new fund (Link)
Why Naval isn’t growing Airchat at all costs (Link)

Growth

The exact flywheel that scaled this SaaS co from $2k to $98k MRR in 12 months (Link)
Big revenue numbers don’t need to lead to profits right away (Link)

ICYMI

Drippi makes it easy to scrape leads from Twitter in seconds. Get their guide on how to close 10+ clients/month on Twitter.*
20 years of juicy startup and life knowledge (Link)
A 10-second MBA (Link)
Why Humane’s wearable AI is DOA (Link)
How much money you need saved to quit your job and start a company (Link)

💡 Opportunity: Investor Update SaaS

Good investor updates only have a few things, but take a good amount of time for founders to put together. Here’s my template.

Section	TLDR
Asks	What the founders need help with
Metrics	How the business is doing
Lowlights	What didn’t go well this month
Highlights	What did go well
Priorities	What the focus will be this month

Some founders justify the time by saying it helps them think clearly and be honest with themselves about how their business is doing because they have to be accountable to what they write.

I can understand this mindset, but they should be able to do that anyway.

As a result I love the idea of a simple SaaS tool that automates investor updates. Full automation will probably be impossible (and not desired — founders will want final approval / control over how they communicate with their investors) but a tool that creates a draft for you would be useful.

Read on X

The data needed to automate them is spread out between a few tools and would require AI to draft summaries and offer a list of options for most sections, but it could be done:

Section	TLDR	Data From
Asks	What the founders need help with	Email, Slack
Metrics	How the business is doing	Stripe, product analytics tools, etc.
Lowlights	What didn’t go well this month	Email, Slack, Stripe, product analytics
Highlights	What did go well	Email, Slack, Stripe, product analytics
Priorities	What the focus will be this month	Email, Slack, Stripe, product analytics

Cabal is in a great position to build this, but seem to be expanding their product in other directions instead.

🧠 Framework: Outsource or Build Internally

Limited resources make founders consider all-in-one solutions from third-party agencies that sound good on paper but, as David Perell outlines, this is often a mistake:

A better approach is to outsource only when the specific job that provider will be responsible for is singular and clearly defined with equally clear goals.

For example, Sahil Bloom launched Landed this week. I love services like this because they just do one thing (sourcing and vetting international marketing talent, in this case) which lets them focus on doing it well.

Identify the parts of your startup that need attention (and you don’t have the skillset on the team to lead them) and consider outsourcing those specific things, not more. Providers who try to upsell you on more are giving off a red flag, not a benefit for you.

🛠 Tool: Shortform

If you think “I can’t learn from book summaries'', you’ve been using the wrong ones.

With Shortform, you get insights that go beyond the typical 1-pager by offering chapter breakdowns, well-researched commentary and analysis, connections to other books and counter-arguments, and even interactive exercises. Instead of spending days (or weeks) on a single book, use that time to master entire subjects.

The first 500 people who sign up get a free trial or get 20% off an annual subscription.*

📈 Trend: Off Label ChatGPT

Eventually foundational models will give way to AGI, and the idea of having apps for specific use cases may become outdated.

But not today.

In the meantime a ChatGPT “wrapper” that is built with specific instructions and, ideally, custom datasets can be a very viable and defensible business.

Olivia from a16z thinks so too:

Read on X

There are countless verticals where one of these has the potential to be massive.

More interestingly, this trend implies marketplaces to review and decide between various options for each “job” as well as infrastructure startups to let these tools talk to one another.

The latter is a market that Zapier could take if they move fast enough, but legacy UX costs from non-AI tools may make an AI-native competitor viable.

💬 Quote: Two Types of Startup Mistakes

Founders are the fuel that makes their startup move.

I’ve never been able to tolerate excuses from founders who are not in the details about absolutely every part of their startup and broader market.

You simply must be obsessed with collecting the insights to build a great product.

Any inaction is a massive red flag for whether the founder will be able to stay on top of things for the long haul. Those are the types of mistakes you don’t overcome.