So, I should warn you, I'm about to release a new short form essay called "Galapicon Valley and the Rise of Black Frankenstein" in about a week or so (it's currently under draft review).  Some people have asked for early access, so if you want to get early access you can do it here.  This essay is part one of a five part compilation of essays which together represent a kind of state of the union'ish essay that may just end up being the longest blog post in the history of the Internet.  I really don't know if anyone will read it, but I didn't think anyone would read the Cult Creation essay either and it now has over 40,000 views.

But before I post my next essay, I thought I would share my thinking on how I came up with the rules that I try to follow for writing any essay.  I'm interested in what you think, or if they can be improved.

Please step forward and enter my mind - A Founder's Contract

When I sat down to write the Black Frankenstein Essay I realized I needed a basic construct to refer back to when deciding what to say and what not to say in my essay.  I tried to remember what it felt like when I was 19 years old which is when I started my career as an entrepreneurs placing 2nd in my school’s business plan competition (mainly as a result of wearing my hair in a Samurai Warrior hairdo during the final presentation). 

I thought about what I would have wanted some old fart like me to tell the younger me. 

So even though I risk the ridicule of my friends for writing a short essay where I get into an argument with myself, I sat down and transported myself back to that time in my life and became my younger self.  Then I imagined that I had the license to ask my older self to agree to some basic constructs before advising me - The things that many first time entrepreneurs wish they could say to their mentors, but don’t because it’s too awkward to say.  But since I am me and I’m fine with offending me, I’ll say the things to my older self I wish I had said back then to my mentors. 

1. Skip the obvious pieces of advice and share the most hard fought, most valued lessons that you’ve learned over the years.  Act as if I’m a new soldier coming in to serve my first tour of duty and your a seasoned warrior that’s been on the ground for many tours.  Tell me where the land mines are, help me survive, help me win the battlefield; 
2. Hey me, do not bullshit me.  Do not augment your stories or re-write history in subtle ways that make yourself look good and will make me screw up; 
3. Give me actionable advice, not funny little stories that prove how cool you are and that you hang out with all of the other cool entrepreneurs; 
4. Remember where I am in my life - I have no money, no track record, a resume that couldn’t fill a page and an investor network that couldn’t fund a pizza party.  Don’t give me advice that you can do because you’re you.  Tell me things I can actually act upon; 
5. Please give me advice that is actually relevant to now.  If you go rambling on about how back in the day you could buy a snickers bar for twenty five cents, how your girlfriend wore leg warmers and how you used to break dance for money, I’m going to commit suicide and I’m taking you with me.  Don’t tell me how to raise money in the 80’s, 90’s, in the dot com boom or even how to raise it last year.  Tell me how to raise it now; 
6. Your legacy is me.  I know you think you're rich and accomplished and everything, but let’s be clear about one thing.  You’re an old fart and you can’t escape that fact.  I’m twice as smart as you, I have 3 times the energy and I work at 4 times the speed.  I want to suck your brain dry and then replace you.  If you really are a true entrepreneur, then you should respect my intentions, tell me what I want to know and accept your inevitable fate with dignity; 
7. Be clear and be complete.  I want everything.  Don’t leave out important connectors, precedents or the little things that make a big difference.  Don’t give me the stuff I could read in a book.  Give me the stuff that would never go in a book; 
8. Help me navigate the drama.  There’s a lot of stuff going on in the Valley.  There’s Y-Combinator, the Super Angels, the Investeratzi who just seem to follow the Super Angels, and the VCs.  It seems like we, as entrepreneurs, have to navigate pretty tricky waters.  Help me understand what’s real about my options and the pain/benefit of each.  I really want someone to help me cut through all of the over-dramatic bullshit that’s out there. 
9. Help my company, not yours.  Don’t give me advice that was only relevant to the companies that you created.  I don't give a flying hoot how cool it was to bookmark something for the first time.  Take the time to extract the concrete lessons that allow you to build up constructive, actionable nuggets that are abstracted away from your specifics. 
10. Understand the weight of your responsibility.  Remember, you’re not recommending a golf club to me, or a video game.  You’re giving me advice on the most important thing to me in the world right now.  I may actually do many of the things that you tell me, so please think through the things you say to me because I need to find people to trust, to believe in; and right now, you’re it.

Doing this made me remember what a cocky turd-ball I was when I was younger.  But are young entrepreneurs any different today?  In the end, it doesn't really matter how insensitive my 19 year old self was to my older self of today - if you can strip out the 'tude, you'll see that by following my younger self's request, real value would be created.  

And so even though I'm sorely tempted to kick my own self's ass, I promise to do my best to follow these principles.  I truly believe that by doing so, it ultimately provides more value and what's more, it keeps me on my toes and challenges me to keep in good enough brain shape to stay at the top of my game as an active founder.  

Steve.

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The things that can make a great founder may seem irrational, illogical and even sometimes ridiculous, but are nonetheless true.

I am currently the founder of famo.us

I have no way of telling you whether or not you are a founder. But I can share with you the traits I have noticed over the years. They are as follows:

• deep, hard fought confidence that can express itself in a range anywhere from quiet confidence to complete dickishness. I think in some super weird way, that there’s nothing wrong with being cocky ---> as long as you deserve it ;
• self-reliant to the point of masochistic behavior - I like people who like to learn about everything by doing, by trying it themselves and not only don’t need other people’s help, but can even scoff at the very thought of it;
• someone who, by default, challenges all thinking - I want the person that when they were a kid, they would say “Why, why, why, why” I can tell you this: when I have a kid and they begin asking why, they are in for a big shock and a very long conversation about everything;
• someone who has overcome their own worst fears - Every single person on earth is faced with their own difficult challenges. Whether you were beaten as a child, or you’ve been discriminated against or just that you never fit in at all - if you’ve overcome your own greatest fears you’re my kind of person, because compared to facing your own worst fears, startups are a cakewalk;
• not enchanted by other humans. I have very few people that I actually admire. I have found that people who are easily impressed or are affected by a lot of “mentors” or “heros” generally never become impressive people themselves;
• justifiably not easy to convince of anything - I like people who are not pushovers, who have a belief system, a credo of their own and ideas that they truly do believe because they can back them up with reasoning;
• paranoid, questioning themselves but malleable - in what may seem as direct opposition to what I just said above, I also want someone that’s malleable, who can listen to advice, who does question themselves and understands that as smart as they are, they can be 10 times smarter if they surround themselves with other people who’ve been down the road they are going;
• reality distortion field - Steve Jobs had it. The ability to make people believe in the impossible. It’s what can make a good employee a great one, a good product a superior one and an idea into an idea that changes the world;
• the JFK effect - to convince people to leave a perfectly good job to join you is difficult, to convince people to give you money is difficult, to see all of the possible moves you could take and make the right ones, the ones that make you a great company, takes someone who can move mountains;
• a killer inside. whenever I talk to a 18-20 year old founder who looks at me like they want to eat me, I get excited. In my very first interview ever, the CEO of the company asked me where I saw myself in five years and I said “taking over your job” He hired me on the spot;
• unafraid and in some cases even excited about failure. If you truly believe there is a way to success, then it is really only a matter of time. If you try all alternatives, then eventually you will reach the one that succeeds. Every failure is simply an elimination of one more alternative - which actually is one step closer to success;
• young enough to take the risks necessary to build a billion dollar company - I do not like old people, except for myself - and even then I question myself about that one sometimes. It takes a special kind of crazy to build a billion dollar company and most people lose that crazy over time. Fortunately, I’m as nut-balls as ever;
• a coder, or better yet an engineer - not being able to code in today’s world and trying to be founder is like trying to be an author without knowing how to read. No excuses;
• anal, with incredibly high standards - one of the best ways in the world to see how a company is going to do is look how they keep their office, look at their first people they hire, look at how they hold themselves against normal standards;
• the joy of being a complete spaz - I like to jam with someone and completely spaz out with them. It is the most raw and true form of passion there is;
• addiction - I like founders who aren’t even for a moment questioning their path. I want people who are addicted to startups and cannot even imagine getting a j.o.b.;
• weirdly divorced from money - great founders don’t even care about how poor they are now and don’t let short term personal finance situations affect their decisions. A great founder must believe, naturally, that they will be rich, that it is a foregone conclusion and therefore is not part of the decision making process at all;
• wizardry, apotheosis and the Jesus complex - a small, but palpable belief that either 1) you have the ability to move things with your mind and one day it will be discovered that you are a wizard, or 2) you will live forever, or at least you will participate in figuring out how to do so, or 3) you will die before the age of 40.  ...or any combination of these three things.

4:20 - (principle: transparency)

It's called many things in many of the companies I have influenced.  Powerset called it "4:20" or "Beer:20;” Virgance, Carrotmob and 1BOG call it "naked lunch;” Serious Business called it "beer Fridays;" and I think Crowdflower calls it "demo Fridays".  

At Powerset, where I started it, it went something like this.  

We initially tried to have it at 4pm, but for some reason the Data Center team and the Tools team needed 20 minutes to "prepare" uhm hmmm... then once everyone was "prepared" we would generally herd them into the game room and give them some beers.  Chris Van Pelt, now founder at Crowdflower, would often start the meeting off with a magic show.  Yes, a real magic show.  Generally he would try to involve some small explosion or two.  Then with the crowd warmed up, one of our employees would demo something awesome that they worked on that week - sometimes it was technical, sometimes it was just talking about whether or not we were looking at an east coast “Tornado” style foosball table or a west coast table.  

Once the demos were done and the the applause stopped, I would sit down on what was called the hot seat.  It was a sort of red stool thing.  

During this time, there were only two rules: 

1. Anyone could ask any question.
2. I had to answer.  

And let me tell you, they would unleash on me.  Some of the questions were stupid at first, like "when was the last time you cried?" or "how much money is in your bank account?" or even "when did you lose your virginity?" to which my responses were 1) I had to admit that sometime a really good dish of heuvos rancheros made me tear up, 2) I didn't know because my wife takes care of that stuff and 3) HR VIOLATION!...  

But after the initial silliness was done, we would really get into it and everyone from the most senior engineer to the most junior office manager piped in.  The point of 4:20 was that it was a time for us to share our successes through our demos and to maintain and sometimes strengthen the bond between me and everyone else in the company.  

In order to succeed, you need to build an incredibly tight unit.  There will be times when you will need to ask each and every person on your team to make sacrifices, whether the sacrifice be time at work as opposed to time at home, or helping another engineer whose code blew up the data center and accidentally launched a Russian nuke into orbit or even asking your team to build something over from scratch because you, late last night, decided to completely change direction.  

The degree to which your team is willing to respond to your call affects your ability to succeed perhaps more than any other factor in a startup. If these folks are going to follow you, then you must serve them well.  The best way to do that is to understand that while you are their leader and you will ultimately make all of the tough choices, you are not above questioning.  In fact, you should go into it with the perspective that you deserve and demand to be questioned.  

It will make you stronger because you will know that you have to prepare.  It will make you team stronger too, because it will give them a real sense that the company is theirs as much as it is yours.  Lastly, it will make the whole company stronger as a unit, as a cult, because you will no longer have any sense of "management," of "them" or of "they" to blame.  Your cult's battle cry should embody the sense that you and your team are one and that your success or failure is completely owned by all.  

Your battle cry: "We are They.  They are We. And We Will Conquer."  

(note: you may also shout “We Are Sparta!” during any battle cry, as it is always considered appropriate to do so).

Know Your Worst Case Scenario - (principle: you are being interviewed)

By the time any candidate gets to you, they are going to have lots of questions.  One of them is going to be "what's the worst case scenario?"  

DO NOT MESS THIS UP!

You need to demonstrate that you have taken a realistic, rational and logical look at this case.  For many engineers at Powerset, they would actually make me walk them through blow by blow what the worst case would look like, and to describe the financial implications, reputation implications and technology usage implications as it related to them.  On many occasions this even involved building a spreadsheet with them and walking through my logic, it sometimes even involved providing proof of things such as "each engineering head was worth $1 to $2 million."  

Many of the engineers at Powerset still probably remember my worst case with them, because I often used it as my primary selling point when I went to hire them.  I built my worst case scenario based on simple and logical truths that had been constructed purposely from the very outset of the company.  Here it is:  "the worst case scenario of Powerset is better than the middle case, and in some cases the best case, scenario of the other startups that are trying to hire you.  Because: 

1. We have a killer team, that team has intrinsic value no matter what, and the network of relationships you will build in this company will last you a lifetime
2. You will enjoy working with our team because we only hire A-level engineers like you, and you know how hard it is to get a gig here
3. The technology we are building is novel: we are building a search engine from scratch and the problems we face will challenge your engineering skills more than any company that is trying to hire you.
4. If you join us, you will have a very real impact on something important; we are not some web 2.0 Rackojoo company flipping bits for ad sales.
5. The worst case scenario financially is that we simply run out of money (which by the way will take 2 years at least based on what we have already raised) so the worst case is that for two years you get all of the above and then we sell for about $100 million which would mean every person in the company could put a down payment on a new house
6. From a reputation standpoint, the worst case is that you are here for two years, getting a full salary and then you will a) have the pedigree of being part of a well-known startup and b) you will be one of the most sought after engineers on the planet because you will have had experience in either Search, Ruby or Computational Linguistics which are going to be skills nearly every company in the world will be seeking in two years or less.  

If you analyze my worst case scenario, you'll notice that in most of it I simply restate what the candidate already knew in their mind.  Really the only new piece of information in the whole statement was the estimate for how much we would go for if we sold the company and that was simply based on an estimate that any engineer could derive simply by doing a Google search on the value per engineering head in an acquisition.  

In short, I made sure that while my statements were bold, and perhaps may seem cocky, they really weren't.  They were logical and rational conclusions based on simple and well-backed assertions.  I will have to say that not all engineers agreed with me, but every single person appreciated that I didn't say something stupid like "trust me.... it's going to be awesome.... I swear."  

No matter what your response is to this question, you need to be able to nail it.  While you may be less inclined to be as bold as I was in my statement, my point is separate.  Take the time to come up with an answer you believe in.  I believed in mine and I think it showed through when people talked to me, and that made all of the difference in the world.

One Mile Rule - (principles: try new shit all of the time)

While at Powerset, we had heard Facebook was paying people more if they lived within one mile of the office.  So we did it too, just to see what would happen.  

All I can say is WOW!  

We paid people on average about $1,500 more per month.  What happened was the people that moved: 

1. No longer had a commute, so
each person captured hours back for their life
2. They were happier because they had less road rage and less drama in their lives
3. The spouses, girlfriends, boyfriends and pets were much happier
4. They stayed longer at the office because they knew they could always just run home
5. They were much more productive
6. Once some people did it, other copied and
7. We got way more value each month than the $1,500 per person we paid.  

The way it made the team gel, the productivity gains and just the sense that everyone was kind of living the same life mattered.  It had a much larger impact that I initially thought.  You could implement this anyway you want, but I always recommend it.  If you don't have money, offer equity, hell offer bigger monitors.  Make the benefit real, but make it attractive for everyone to live nearby.

Offer them the Peter Thiel Deal (principle: try new shit all the time)

I remember at a board meeting at Powerset Peter Thiel asked us how the morale of the company was going.  Like all founders at board meetings, we said it was going great.

Peter said “let’s prove it.”

What we did is offer the following: 

1. Anyone can voluntarily, permanently reduce their salary by one or more strata levels,
2. For each competency level forfeited you get XX,XXX more ESOP shares.

By doing this we hypothesized that we could actually measure the excitement in the company by how many people took us up on the offer. To our great relief, a lot of people did.  The company benefited by getting an improved information state at a critical moment in the company (like right before you ask them to walk into fire) and we also got to save cash flow.  The employees benefited in that those that volunteered to do this got a lot of extra stock.  Stock they may have either never gotten or would have had to wait years for as they moved up the ladder.  We even had some employees attempt to give up their entire salary - we had to tell them that legally we had to pay them minimum wage - so that's what they did.  It really felt good to have these types of problems.

Double Unanimous (principle: team ownership)

Although many confuse this with the founder’s veto practice, it isn't the same.  

It's the inverse.  

Not getting a veto is a passive event, getting a unanimous "yes" is an active event.  Thus, in order to get an employment offer a candidate must actually not only not get a veto, but also get a double unanimous "yes" vote.   

The reason I recommend this is that the motivation for vetoing and the motivation for actively saying "yes" is different.   

Giving veto rights is equivalent to giving protective rights to existing employees.   

Making them all say "yes" gives them responsibility and ownership over the decision to add a new person to the team.  If the person winds up not fitting in or not being competent, then everyone takes responsibility.  Thus when mistakes happen, which they will, the entire team takes ownership and the team gets stronger as a result.  

Beyond the impacts to the team, there is a dramatic impact on the candidate.  Imagine what it feels like for them.  They interview for a week, to get to TBYB and then have to work for a month to get employment.  At first blush it looks like a great way to not get people applying to work for you, but the effect is actually the opposite.  If you were an A-level player and you knew the process involved in joining was this difficult, then you would have a high degree of confidence that the people who made it through this process were rockstars and thus you would want to work with them.  If you ask most rockstar engineers what they worry about most when joining a company, the answer is consistent, they want to work with other rockstars on really interesting projects.  B-Level engineers generally have the exact opposite reaction - complaining about how difficult the interview process is.  They generally shy away from companies with strict hiring policies.  Let them - you will benefit more.  Now imagine what C-level people think of it.

Finally, imagine what it feels like once a person makes it through TBYB and gets an offer for employment.  Double Unanimous is a right of passage and every person that gets an offer to become an employee is aware what got them there.  For any person that makes it to this point, it creates an incredible sense of empowerment and affirmation that they are the best in their class.  

The last effect that it has is that it changes the dynamic between you and the candidate when it comes to the all important founder/candidate meeting.  In short it makes your job much easier.

They are on top of the world because they just made it through their right of passage and passed.  It is and should be one of the highlights of their career to have made it.  So who is going to say no to an employment offer at that point?

The end result is that the acceptance rate to employment offers is incredibly high when using this technique.  It makes your budgeting and HR spreadsheets much more predictable, thus making you look good, but more importantly it makes you look like a brilliant rockstar cult leader. The truth is that by installing this process, you ensure victory.  It reduces the dependency of the cult of your individual founder cult of personality and utilizes the power of your team - the real cult of personality.

Founder's Veto - (principle: team ownership)  

When building a team, the pathway to TBYB and ultimately employment should be simple.  Up until about 50 employees, all employees must be voted into both TBYB and employment without any vetos.  

1. By giving everyone who interviews before and during TBYB the same founder's right to veto, you are empowering them with a sense of ownership in the company.  What you will find is that your A-level employees will be twice as hard to convince as you for new employees and when someone does get voted in, the level of excitement is high and stays high for that individual.  
2. Giving the founder's veto right will not only ensure the competence of each employee, it will enable you to protect your culture with an iron fist.  In fact, of the times I've personally implemented TBYB, the most common reason why people don't make it through is actually not competence, it's culture. Weeding out people who are not a cultural fit is equally important to maintaining A-level competency.  
3. It protects against founders making stupid decisions.  One time, not me, but another founder in one of my companies, thought it would be a good idea for one of his direct family members to interview. Now that’s fine in most cases, but what was interesting was that my personal opinion was that this person was nowhere near qualified, but I let them go into the process anyway.

I wanted to see if what I thought was a clear veto would occur.  It did, but that’s not why I bring it up.  The person that pulled the veto was our most junior engineer at the time.  It was one of the proudest moments I had during the process of building my team.  In the face of the power of a founder, I had created a process that made a junior employee not only feel like they had a right to stand up against a founder, but that I actually gave them that power and they used it - ultimately to protect the team.  That one moment let other junior engineers and even non-technical employees know that when it came to adding a new person to the team, they had the power, the same exact power as a founder, to protect their team.  Other instances followed and I can say with certainty that the veto was never a bad decision.

Try Before You Buy (TBYB) - (principles: interviews don't work and hire slowly and fire quickly)  

After building so many companies, I now advise that, for as many people as possible, candidates are never hired after being interviewed.  

I urge founders to offer people a one-month, auto-terminating, consulting contract that pays the person the exact amount of cash and equity (but in NSOs instead of ISOs) that the  person would get if they were an employee.  

During the month, the team, including people that didn't get to interview with them, would be able to interact with that person.  After a full month, everyone in the company would at least have a strong opinion on whether or not the person was a cultural fit and the team that directly interacted with the person would have a strong opinion on the competency of the person.  

At the end of the month, I had three options:

1. Let the contract expire without giving them an employment offer. 

Notice, in this case I set myself and the candidate up so that the default was they were terminated, so the candidate who doesn't get an offer doesn't have to go through any embarrassing situation - they could simply claim they let the contract expire, minimizing the impact on the team and them. In reality you are firing this person, but this way there are no worries of getting into a lawsuit for wrongful termination or anything like that - really only employees can sue for that kind of stuff, and believe me... it is a real risk when you are firing someone these days.  
2. I may simply offer to hire the person and then offer to convert their NSOs earned as a signing bonus of ISO or RSPA 83b'd stock.
3. I may make adjustments to their offer.  It is not uncommon to love a candidate, think they are competent, but either under-assess or over-assess their skill level.  In many cases, I have seen a person come into their try-before-you-buy contract assessed at a Junior 1 level, but after one month, their team tells me the person is really a Junior 3.  Only one time have I had it go the other way... but in all cases the candidate accepted the changed assessment.  

TBYB is perhaps one of my most powerful tools.  It lets you slow down the hiring process, speed up the firing process (or rather the termination process) and it let's you use interviews not as a hiring decision, but rather as one gate in a multi-gating process of a candidate getting an offer letter.

Role of the Press - I'm still figuring this one out.  

I can't argue with the fact that a good TechCrunch article can help attract a lot of applicants, but I'm not convinced that it is anything other than filling your own affirmation cup.  When Powerset first announced itself, I admit that I was very happy to see how much VB and TC hyped us up.  It got us a lot of attention and a lot of people applying to the company - plus it felt really good.  

After our first TC article we were getting almost 1,000 people a week applying.  However, as time went on, I found myself hating the press we were getting, and we were getting a lot.  It ended up really just screwing up my interviewing process.  Engineers are by nature skeptical people.  All of the press hype actually only made convincing them harder to do... there's some sort of weird anti-correlation between press hype and ease of convincing an A-level engineer that your technology is real.

I do have to admit I did support our hyped up press strategy in the beginning, but after a year of it, it ended up being a huge pain in the ass.  

I think there is just too much hype in the world.  The press, who needs to get page views to make money, is forced to sensationalize their stories.  It's easy for founders to take advantage of this and too often I see founders fall into the trap of going after glory, fame and power rather than going after what they should - which is simply building something awesome.  

While I think that TC and VB can be used to attract talent, be wary of this tactic as it can often be the crutch of the second-hander.  (re. Ayn Rand)