Lessons from Jason Cohen

Jason Cohen, the founder of A Smart Bear, WP Engine, and other successful ventures, has shared a wealth of knowledge over the years through his popular blog, interviews, and talks. His insights, often drawn from his experiences as a four-time entrepreneur, offer practical and candid advice on building and scaling businesses.

On Startups and Strategy

On the nature of entrepreneurial advice: "It's wrong to ask which one's right... A better question is when is this advice applicable." [1] Cohen emphasizes that advice is context-dependent and that founders should question when a particular piece of advice is relevant to their specific situation rather than blindly following it. [1]
The illusion of a magic formula: Cohen doesn't believe in a guaranteed playbook for success. He asserts that every entrepreneur operates in their own unique context, and his goal is to help them ask the right questions for their own ventures. [2]
Don't fear being a second-mover: The first to market often makes public mistakes and gets burdened with legacy features. Competitors can learn from these errors without the associated baggage. [3][4]
Strategy vs. Goals: "To grow 2x this year” is a goal, not a strategy. A strategy involves analyzing facts about customers, competitors, and the market to inform your plan. [3]
The power of a niche: For a solo founder aiming for profitability without significant competition, a niche is often the best path. It allows you to be the best for a specific audience, charge more, and be profitable. [1]
The reality of early-stage startups: "Even at wildly successful startups, the first few years are gut-wrenching, uncertain, on the brink of collapse, where pessimism is realism, and yet optimism is required." [5]
Product-market fit is a feeling of change: You know you have product-market fit when the struggle shifts from scrambling for business to struggling to keep up with demand. [3]
The importance of continuous customer development: Even after finding success, it's crucial to keep learning from your customers. [1]
On co-founders: Having a co-founder can be a "high-beta choice," potentially leading to greater success or significant problems. Statistically, most successful companies have co-founders, but co-founder conflict is also a primary reason for failure. [4]
The journey of a startup: "It's a torturous chaos until it isn't." [5] This captures the tumultuous and uncertain nature of the early stages of a startup.

On Bootstrapping and Funding

Bootstrapping provides confidence: Knowing how much money you'll make next month gives you the confidence to quit your day job and fully invest in your startup. [1]
Bootstrappers should obsess over ARPU (Average Revenue Per User): To become self-sufficient, a bootstrapped founder needs to generate enough income to cover living and basic business expenses. Focusing on a healthy ARPU is key to achieving this. [3]
The power of annual plans for cash flow: For bootstrapped companies, offering annual plans can significantly increase cash flow, enabling more spending on marketing and growth. [1][3]
When to consider raising funds: Cohen bootstrapped WP Engine for two years until the unit economics were strong and the market proved to be larger than anticipated. This was the point where raising capital made sense to accelerate growth. [1]
Don't aim to build a billion-dollar company by bootstrapping: The growth trajectory required for a billion-dollar valuation is nearly impossible to achieve without external funding. [1]

On Pricing

Pricing determines your business model: Pricing is not an afterthought; it is fundamentally linked to your brand, product, and how you acquire customers. It should be considered from the very beginning. [6][7]
Talk about price in customer development: Contrary to common advice, discussing price during customer interviews is crucial to determine product-market fit. [6]
The 10x price increase question: "If you were forced to increase your prices by 10x, what would you have to do to justify it?" This thought experiment forces you to reconsider your product's positioning, brand, and design. [8]
Your price dictates your customer service: A $1/month product cannot afford customer service and must be self-service, which has direct implications for the product you build. [6]
Refusing to discount can lead to a better business: While discounting is a common sales tactic, holding firm on your price can attract customers who value your product more and lead to a more sustainable business model. [7][9]

On Marketing and Sales

Go deep on one marketing strategy: Instead of spreading your efforts thin across multiple channels, focus on mastering one marketing strategy that you already know well. [9]
Honesty is more profitable than deceit: Being transparent and honest in your business dealings builds trust and is ultimately a more profitable long-term strategy. [2]
The best validation is a paying customer: Before building a product, ask potential customers if they would write a check for it today. This is the strongest signal of validation. [10]
"ROI" is the wrong way to sell your product: While customers may ask for ROI calculations, it's often not the real driver of their purchasing decision. Focus on the core value and problem you are solving. [7]

On Company Culture and Hiring

Define your culture intentionally: Every startup has a culture, but it's up to the founders to decide what that culture is. This defined culture then becomes the benchmark for hiring compatible employees. [11]
Hire for aptitude, not just skills: It's better to hire a talented individual who can learn your specific technology stack than a mediocre one who already knows it. [11]
The evolving role of the CEO: As a company grows, the CEO's role changes. At 12-15 employees, a natural breakpoint occurs, and by 30-70 employees, the CEO should primarily be managing managers. [3]
Hire people better than you: The CEO's job is to hire individuals who are more skilled in their respective areas than the CEO is. This is how the company improves. [4]
Creating a great place to work is a major accomplishment: Cohen considers building a company where employees are happy to be a significant achievement. [11]

On Personal Growth and Mindset

The drive is ingrained, but the skills are learned: While some people have an innate entrepreneurial drive, the skills required to build and manage a company are acquired through experience. [11]
Embrace the beginner's mind: Even on your second or third venture, it's crucial to approach it with the mindset that you still have everything to learn. Thinking you know everything is a common pitfall. [4]
Learn to ignore unconstructive criticism: This is a skill Cohen wishes he possessed. [11]
Understand what makes you tick: Knowing your personal motivations and what brings you happiness is key to pursuing fulfilling challenges. [11]
Failure is a learning opportunity: Even if a startup fails, the experience gained is invaluable and cannot be bought or taught in a classroom. [12]
The pain of selling a company: Many founders experience a sense of loss after selling their company, but not selling can sometimes be worse. [9]

More Learnings from Jason Cohen

On recurring revenue: If you have a recurring revenue model, you must also deliver value in a recurring pattern. [1]
Don't confuse deliberation with progress: Sometimes, more discussion doesn't lead to a better decision. It's important to recognize when to stop deliberating and start doing. [4]
On delegation: You should delegate tasks you are terrible at and just okay at. The real challenge is hiring and managing people for roles you don't understand yourself. [4]
The danger of low-knowledge, high-confidence theories: Avoid making snap judgments and instead foster a culture of deliberate and informed decision-making. [4]
Small companies have advantages: While larger companies have more resources, small companies can leverage their speed and agility. [4]
The "Rich vs. King" dilemma: Entrepreneurs often face a choice between being "rich" (selling the company for a financial windfall) or "king" (maintaining control and running the business long-term). This is a personal choice with no right answer. [12]
On being a solo founder: Cohen started Smart Bear alone and describes it as a "long lonely road." He doesn't necessarily recommend it. [12]
Flexibility is key in the early days: In the beginning, you need to be more flexible with customers to get people using your product. This will change as the company matures. [12]
Your customers can be a source of pricing advice: When you have a strong, transparent relationship with your customers, you can ask for their input on what you should charge. [12]
Start charging immediately: Cohen is a proponent of the "lean startup" philosophy of charging for your product from the start, rather than relying on a "free users first, monetization later" model. [12]
On impostor syndrome: It's a common feeling among entrepreneurs. Cohen has written about his own experiences with feeling like a fraud. [2][9]
A business always takes more money than you expect: Even when you account for this fact, be prepared for unexpected costs. [9]
Software scaling is more than just architecture: As you scale, new and more difficult problems will emerge that didn't exist at a smaller scale. [9]
Translate between the "languages" of customers, product, and business: Ensure that customer desires, product features, and business goals are aligned and understood across the company. [9]
The only sure way to fail is to not try: Pushing through the pain and uncertainty is essential for any chance of success. [5]

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