If you missed Startup School 2014, the videos are now on YouTube.
Notes from the 10th anniversary of Startup School:
Are entrepreneurs made or born? According to Ron Conway, who has invested in over 700 companies with SVAngel, good entrepreneurs are born with certain traits:
1. Strong work ethic
In Ron’s words, being a founder is a vocation. Your company becomes your religion, and it always ends up coming first. So before you start a startup you need to ask yourself “Am I willing to work 24/7?” “Am I willing to sacrifice?”
On cofounders: Starting a company is so hard that there are very few successful startups with solo founders. As an investor, it’s important to know how founders interact with each other. The cofounder relationship cannot be forced. Most founding teams were collaborating, came up with an idea and decided to build it together. Paul Graham summed up the conversation saying: “You don’t just want to work on interesting problems, you want to work on interesting problems with people.”
What do the best founders do? They have to be rifle-focused on the product and nothing else. “Focus on the product and business follows.”
During her time as an investment banker on Wall Street, Danae Ringelmann found her inspiration for Indiegogo when she produced a play for famous playwright Arthur Miller and couldn’t successfully help him raise money for it from investors.
Feeling rejected by the “gatekeepers of capital,” Danae sought to democratize access to capital and founded what eventually became Indiegogo.
Danae looked back at her six years at Indiegogo and gave founders three important things to consider as you grow a company:
Know your WHY. Understand WHY you do what you do. Dig into what is driving you to solve the problem you’ve set out to solve. Indiegogo’s mission was to democratize access to capital because its founders believed the world should be more fair. Being driven by a clear WHY helps get you through tough times, guides strategy, makes hiring easier and attracts passionate users.
Be intentional with culture. Define your values at the very beginning so everyone is aligned with the company’s mission. When hiring, seek to bring together people who have a variety of backgrounds, ideas, experiences and perspectives. But they should all align on values. Just as you track other metrics (users, revenue), you should keep track of your company culture metrics. Some ways to measure this are eNPS (happiness) and OKR (productivity) scores.
Technology is a means, not an end. Define a problem and use technology to build something the world really needs.
If there’s one thing to know about life strategy, it’s that there is no perfect next move. From working on side projects at Stanford to working at Google and eventually founding Instagram, Kevin Systrom urged the Startup School audience to “have a bias toward action.” Keep moving, learning and making progress.
In terms of technical skill, you don’t have to be the best – you just need to know enough to be dangerous. When working on a startup, entrepreneurs learn the leadership, teamwork and engineering skills they need to run a company. You can’t expect to have the best idea or know everything going into the process.
When founding a social media company, Kevin stressed that Instagram’s #1 value was “community first.” Instagram’s first hire was a community manager, and the users of the photo-sharing app are what made it so successful.
Despite founding the Facebook for professionals (or the “Friendster for professionals” as investors called it back in the day), Reid Hoffman advises entrepreneurs to stay away from starting a derivative business (Airbnb for Dogs, Uber for X). Instead of seeking direct competition, do something contrarian and enter a space with little to no noise. Reid founded LinkedIn in 2003 when there wasn’t much social media.
Now an investor at Greylock Partners, Reid divulged several questions he asks startups looking to raise funds. Can it scale to hundreds of millions of people? Is this a capable team? Reid asks, “Is this how the world should be? Is the initial plan a good shot at changing how it works?”
An important lesson to entrepreneurs fundraising is to only raise as much money as you need. Founders are tempted to raise the largest Series A round, but forget they might be sacrificing quantity over quality. Even if it means taking funding from an investor who gives the lowest valuation, choose your investors for the guidance they will provide.
On stage with Jim Goetz from Sequoia Capital, Jan Koum talked about the early days of WhatsApp. “I don’t think I ever decided to start a company,” said Jan. He built a product he wanted to use himself and realized other people wanted it too and were willing to pay for it.
For a long time, the WhatsApp team stayed under the radar intentionally so they could focus on product. They ignored press and countless emails from top tier Sand Hill Road investors before accepting Sequoia’s term sheet.
In fact, WhatsApp was not pressured to fundraise at all. “We were able to choose our partners because we had revenue.” WhatsApp charged users $0.99/month, and was self-funded.
An “unconventional background”: If you think you have an “unconventional background” for a startup founder, you’re probably wrong. After dropping out of San Jose State University to work at Yahoo in 1998, Jan probably didn’t fit the bill of the typical Silicon Valley entrepreneur. By spending over 9 years as an engineer at Yahoo in its growth stages, Jan developed the chops to build WhatsApp.
Even if all you have are some parts to put together a makeshift prototype, it’s worth taking that first step towards making your vision a reality. The first version of the Pebble smartwatch was a cell phone screen and Arduino.
With a team of engineers and industrial designers, a 3D printed watch with working electronics became a branded smartwatch called the inPulse.
With a working prototype and limited access to funding as college students at the University of Waterloo, Eric and his team participated in numerous pitch competitions. When you don’t have VC money to fund your project, be scrappy and creative. When Pebble couldn’t get VC funding after their YC demo day, they turned to Kickstarter and became one of the largest funded projects on the crowdfunding platform ever. In 30 days, Pebble got over $10 million and 70,000 customers through Kickstarter.
In his first public interview post-Groupon, Andrew Mason talked about his path from The Point to Groupon to Detour. Groupon started as a side project at Andrew’s first company The Point, but almost immediately after launching, Groupon started growing exponentially and the team decided it was time to shift their focus to the group buying “coupon” site. Groupon became the fastest growing company in history.
While Groupon was the first mover in group deals, it was an easily replicable business. Rapid feedback loops were essential to the growing the business – the team was pushing out new versions as quickly as possible. To enter new markets, Groupon was receptive to making acquisitions.
On both acquiring and getting acquired, Andrew had a lot of lessons to share. When acquiring companies, it is essential that the acquihires have the same values as the CEO. In the face of rapid growth, it is unsurprising that tech giants approached Groupon to acquire them. But if you think your company will keep growing exponentially, keep growing and don’t sell.
On exiting to the public markets, Andrew thinks that going public is awful and Groupon would have been better off if it hadn’t done so. A lot of time is wasted on financial reporting and the incentive to think short term is incredibly strong. Releasing performance on your company every quarter wastes time and forces your company to think in the short term.
The founders of CloudFlare had insights on finding cofounders and hiring. Instead of thinking about who should be your CEO, COO and CTO, think of it like you’re hiring the best salesperson, organizational manager and top-notch engineer. “If you’re cofounders and you’re fighting about who does what, you’re probably in the wrong founding team,” said Matthew Prince. “We asked, ‘Do we cover a lot of surface area? Do we have complementary skill sets? Do we trust each other,” said Michelle Zatlyn.
In terms of what to look for in your employees, hire people with great adjacent experiences over someone who has done exactly what the role is set up for. If someone has deep experience in the role they are looking for, they may not be as open minded to thinking creatively and may forget to check their assumptions.
Even in a terrible market, don’t give up. Since it’s founding, Jawbone has had a number of near death experiences that could have closed its doors for good. After the market crash in 2001, funding was extremely limited and building a hardware company was capital intensive. Founder Hosain Rahman kept the lights on with DARPA funding in Jawbone’s early days.
The first Jawbone headset was built in 2003, and thanks to brutal feedback from a panel of design experts (including Steve Jobs), Hosain and the team realized they could no longer compromise the product to meet an aggressive product release timetable. They focused on the product’s problem areas and went from $0-70M revenue in one year. “When you focus ruthlessly…you can transform your business overnight,” urged Hosain.
A critical time for Jawbone was the transition to the Internet of Things, on top of being an electronics company. Jawbone’s team had translated what they learned in headsets and sensors to health, creating what would become the top selling Jawbone Up.
You can’t learn how to be an entrepreneur until you try it, and don’t give up. Before Justin.tv and Twitch, Emmett Shear and Justin Kan built six different startup ideas in one and a half years. “ADD prevents you from succeeding, but we learned a lot about coding,” said Emmett. Though none of those initial ideas took off, the team gained programming and prototyping skills and learned what it would take to eventually run and scale Twitch.
Emmett highlighted the skills founders themselves should have:
Know the product and engineering behind it. Have the technical skills to understand how your product is built and know how to communicate effectively with your engineering team.
Know how to scale. The first step is building a great product, but the next step is to keep growing your user base. A great product is nothing without its customers.
Know how to hire and manage. Once you find the right employees for your company who are talented and committed, it’s important to know how to motivate them and cultivate company culture.
And last but not least, know how to talk to your customers. One of Twitch’s greatest strengths was figuring out customer needs and cycling through feedback to constantly improve the product.
– Kat Mañalac and Natalie Luu