By Sarah Kessler
There are no rules to naming a startup. And most entrepreneurs do assume that the name they choose will change before their businesses really start to gain momentum.
Consequently, it doesn’t shock us that some of our favorite startups were sired by picking names out of hats, by throwing out odd proper nouns that might be cheap domain names and by haphazardly removing vowels.
Ever wonder what a “Twitter” is, or who the “Hipmunk” is? We’ve asked nine startups to share the story behind their names.
1. Twitter
The name Twitter was picked out of a hat. A small group of employees from Odeo, the San Francisco podcasting startup where Twitter initially began, had a brainstorming session. They were trying to come up with names that fit with the theme of a mobile phone buzzing an update in your pocket.
After narrowing down the options (which included Jitter and Twitter), they wrote them down, put them in a hat, and let fate decide. Fate decided on Twitter (because clearly asking someone if they saw your latest "jeep" is just weird).
2. Foursquare
Dodgeball, Dennis Crowley’s first attempt at social networking for mobile phones, was acquired by Google in 2005. When Google killed the project, Crowley founded an improved location-based social game he named Foursquare. Does Dennis Crowley have some sort of unresolved childhood issues relating to playground games?
As it turns out, no he doesn’t. “Dennis chose to name both companies after playground games because they were both designed to be fun and playful,” said Foursquare’s PR manager in an email. Apparently, Foursquare was always Crowley’s first choice, but the domain name wasn’t available at the time he founded Dodgeball.
3. Aardvark
Aardvark has been a sleek website where users can type or email their questions, to then be answered by the appropriate people in their own social networks. But co-founder Max Ventilla’s idea began as a chat buddy that could intermediate conversations with people you know online.
There were advantages to having this name at the top of the buddy list, a spot which was occupied on Ventilla’s buddy roster by his friend Aaron. Alphabetically speaking, there aren’t many options that trump Aaron. “Aardvark” is one of the few names that could shoulder him out.
Other factors the name had going for it were its ability to conjugate the invented active verb “vark,” and being an animal that people recognized but typically didn’t have strong associations with.
“We also felt that an animal had the right positioning as helpful but not perfect,” said Ventilla in an email. “If we chose a human or a robot mascot people would spend their time trying to make it look stupid, but they’d cut an animal more slack.”
Google recently announced it would soon shutter Aardvark. Users have until Sept. 30 to retrieve their data.
4. Spotify
Spotify founders Daniel Ek and Martin Lorentzon crossed “spot” and “identify” when they named their digital music service.
5. Twilio
“In the early days of the company, the name doesn’t really matter for anything. You always assume you’ll change it later...You should be able to own a word for your company. You should not have any baggage associated with the name.
“What we started doing is saying, we want to invent a word, we know that, so let’s just start making syllables without faces and when we have something that sounds good, check and see if the domain name is available ... We’d just make these weird sounds and then run to the computer and see if it was available. We bought the domain name for $7.”
6. Zynga
Zynga is named after CEO Mark Pincus’s late American Bulldog, Zinga. The name means African warrior princess.
7. Etsy
From a spokesperson:
The origin of the word "Etsy" is shrouded in mystery. Only our founder Rob Kalin knows for sure, and he often throws out red herrings. Some widely-publicized (and certainly fabricated) versions of the story include: a reference to a magic word in a Fellini film, the name of his grandmother's favorite childhood pet, and something about a Unix directory, I think it's "/etc," pronounced “et-C.”
Other fun facts (some of which may actually be factual): Phonetically, Etsy has many homonyms too. It can mean:
"and if" in Latin
"horny" in Japanese
A slur for "loose woman" in Russian-speaking parts of Bay Ridge / Brighton Beach. Oh, and it rhymes with "Betsy."
8. Scribd
Scribd CEO Trip Adler says the company picked Scribd (pronounced "skribbed") beause of its ties to writing and publishing.
More interesting is how the coppany decided on the name of its mobile reader app, Float. “We wanted something to highlight the floating reading experience,” Adler says. “Namely, the idea of reading without boundaries.”
9. Hipmunk
After discarding names like “BouncePounce” (if there were a good travel deal, you’d pounce, right?) and Truvel (travel, but true), Hipmunk co-founder Adam Goldstein was discussing the naming roadblock with his girlfriend.
She suggested they go with a cute animal so that they could have a cool logo. Hipmunk.com was auctioning for about $70 at a time, and so the name -- and admittedly adorable logo -- were born.
Showing posts with label Start Ups. Show all posts
Showing posts with label Start Ups. Show all posts
Tuesday, November 22, 2011
Friday, November 11, 2011
Notes From the MIT Startup Bootcamp 2011
By Jason Morrison
September 24 2011, I had the pleasure of attending MIT’s 2011 Startup Bootcamp. In its third year, Startup Bootcamp brought an inspiring and thoughful collection of speakers who have had a variety of startup successes.
The event hashtag #sb2011 is a stream of reactions and pull-quotes from the event - mixed here and there with excited anticipation for a dance festival in Goa.
Ten speakers presented a variety of viewpoints, insight, and food for thought.
It was a mixed bag - yes, there was unnecessary focus on vanity metrics and the rah-rah of startup theater. Breathless celebration of hockeysticking uniques and of flying around to court VCs makes for good TechCrunch articles. Like it or not, that’s an inculcated part of startup culture.
But if you get past the Hollywooding and the Silicon Valley adulation, there were gems of solid advice, grounded in experience, on hiring (Paul English of Kayak), data-driven product development (Naveen Selvadurai of foursquare), optimizing your life for personal growth (Drew Houston of Dropbox), identifying underlying social and technological shifts that enable new products (Charlie Cheever of Quora, Patrick Collison of Stripe), negotiation (Alex Polvi of Cloudkick), the importance of on-the-ground and unscalable product development tactics early on (Nathan Blecharczyk of Airbnb), earning and answering to the responsibility of finding your own way in the world (Anthony Volodkin of Hype Machine) and how important it is to empower yourself in perhaps the largest disruptive theme of our time by learning to code (Patrick Collison of Stripe).
Paul English, CTO and co-founder of Kayak.
Recruit a diversity of success.
Paul spoke on three kinds of recruiting: companies recruiting new hires, companies recruiting investors, and job-seekers recruiting companies.
When you’re recruiting, look for success, regardless of the kind. In fact, look for a diversity of success. Paul once hired an olympic rower, and a chess grandmaster, and couldn’t be happier with these decisions. Find people who operate at the top levels of excellence.
Some companies have a “no assholes” rule - at Kayak, they have a policy of “no neutrals”. Like Charlie Cheever, who later discussed the importance of hiring people you have high-bandwidth communication with, Paul encouraged building a team of people who are fully engaged: “intense and in-your-face - in a good way.”
Leah Culver, CEO and co-founder of Convore
Show up, say yes.
Leah told an lighthearted and likeable story of her journey from big state school CS major to Silicon Valley startup founder. Full of serendipity and luck, she shared stories of driving a UHaul from her native Minnesota out to the Bay Area (picked not primarily for its burgeoning tech scene, but for how much better the weather is), getting started with Instructables, and bumping into Pownce co-founders Kevin Rose and Daniel Burka at a party.
Have a good story to tell the press - you don’t have to tell people the ugly, dirty truth.
Another of Leah’s pieces of advice was a common thread through the talks - that of consistent applied effort. “Show up,” she said - in places with a critical mass of startup people, such as Silicon Valley - and “say yes” to opporunities that come your way.
Andrew Sutherland, founder of Quizlet
I didn’t just rush it on my parents that I was leaving MIT. It took two whole weeks.
Andrew shared his story of inspiration for an online learning tool. When he hacked together a prototype to help study for a French III class in high school and subsequently aced the test, he knew he was onto something.
Andrew discouraged market research - “If I had googled for online flash cards, I would have found other sites, that were not as good, and I wouldn’t have made Quizlet. Now, we’re 10x the [volume] of our next competitor.”
This phrasing raised some contention. I would reframe his advice as: focus on your own products rather than on the competition, and don’t be discouraged by incumbent players; rather, recognize them as a validation of the market space, and proceed to out-execute them.
Naveen Selvadurai co-founder of foursquare
At first, go with your hunch. Later, with data.
Naveen worked for Lucent and Sun in college. This was important - it was real-world learning. Seeing engineering culture, doing code reviews, shipping real products. Sun had an open culture of learning where you can dive into other products. “How’d they build Solaris? File systems?” Just sign up for the mailing list.
Naveen shared seven pieces of distilled advice:
Keep good company.
Make something that people want.
Build around an atomic action.
Seek mentors early.
At first, go with your hunch. Later, with data.
Balance unknowns with knowns.
Always be recruiting.
On the last point Naveen shared the four stages of foursquare’s hiring strategy:
Hire friends
Hire friends of friends
Use an external agency (but they didn’t find this valuable)
Hire an internal fulltime recruiter.
It needs to be someone’s job to think about recruiting, seven days a week. Additionally, as a founder, you must always be recruiting.
Charlie Cheever, founder of Quora
Work with people you have really high-bandwidth communication with. Understand how the other person is thinking.
Charlie shared great advice on early-stage tactics. Start with few users (Quora started with fewer than fifty) and a low-cost MVP. Foster the community by hand, be high-touch and, if your business builds on user-generated content, be prepared at the beginning to build a lot of it by yourself. See how the experiment goes, and then take the learning from that experience and apply it to your MVP.
He shared the importance of collecting metrics early on. With Quora, they actually stored the entire webpage for every visit for every customer, so that they could go back later, having identified trends or formulated hypotheses, and see the site as their users saw it.
They noticed a set of high-engagement users, looked at these users’ expereinces, and found that they had all used Facebook connect. Running with this, the team spent time focusing on improving their social experience.
Charlie also left the audience with good food for though:
What wave enables your product? Why is now the right time to build it?
For foursquare, it was GPS-enabled mobile phones. For Quora, it was that “normal” people were comfortable sharing things online, and that the web was turning into a mess; with Google turning up more content farm results, people were moving onto safe harbors of organized information like IMDB and Wikipedia. The timing was right.
Drew Houston, co-founder of Dropbox
Get out of your comfort zone. Learn a little about a lot.
“Everything big starts small” - Drew’s original perception of startups was that of Tolkien’s Mount Doom. His original strategy to build a successful startup was to be overwhelmingly prepared - nab an MIT CS degree, get a few years’ exerpience working for small companies and big companies alike, come back for a PhD, maybe an MBA.
He then related a story from Dropbox’s origins: Drew had just settled into his seat on a Chinatown bus from Boston, in which he could usually get in several hours of undisturbed work. He popped open his laptop, and searched his pockets for his ever-present USB thumb drive. “Shit.” Realization set in just as he visualized, in his mind’s eye, the thumb drive sitting on his desk at home. “Like any good engineer with a problem to solve, I opened my editor.” Drew then wrote the first lines of what would eventually become Dropbox. Today, his company has a multi-billion dollar valuation and “stores more files than Twitter stores tweets.”
Drew exhorted the audience to learn about a broad variety of topics: sales, marketing, finance, accounting, product design, psychology, influence, negotiation, organizational design, management and leadership, business strategy. Buy books (“today we have this amazing thing, Amazon”), dip in, find mentors, and surround yourself with smart people.
Wrapping up, Drew shared his advice for success:
Take on more than you’re “ready for.”
Maximize how much you learn per unit time.
Stack the odds in your favor. Surround yourself with great people; you are the average of your five closest friends.
The fastest way to learn about startups is to join one.
Starting a company is one of the best ways for engingeers to change the world.
Alex Polvi, founder of Cloudkick
No matter what number they offer, pause, count to 10 in your head, and then act as disappointed as possible.
Alex spoke on negotiation, specifically about his experience of his company Cloudkick being acquired by Rackspace.
If a VP of Corp Dev says “strategic” to you, they are talking about acquisition.
Acquisitions are a bit like romantic relationships: you often get the most attention when you’re looking for it the least. Once you are involved with one party, others can sense it. You somehow become more desirable.
Once you have a term sheet from one prospective buyer, you have great leverage. When others call you up, you can very quickly get to hard numbers.
The best negotiation position is one of truth. Build something of value that people want, and your position is irrefutable.
Alex also discussed the importance of taking care of your team, and the people around you. Upon acquisition, he fully accelerated all employees’ options - whether they had been with Cloudkick for four years or four weeks, they were all fully vested and could share in the company’s success. It was important that the acquiring party, Rackspace was on board with this - and they were. Rackspace wanted the new team members to stick around not because they were waiting to vest, but because they wanted to be there.
Anthony Volodkin, founder of Hype Machine
Venture Capital? You do not need anyone’s permission to make stuff.
Anthony shared the perspective that VC or angel investment can be very important, but it’s not for everyone. “I don’t want to shut something off because the math doesn’t work. For people to not remember it. That would make me sad.”
Anthony’s vision was a question: while people with cool friends can get interesting music recommendations from that network, what about people without cool friends? He knew that there was great taste and insight being shared by music bloggers online, and sought to aggregate and distill it. “I didn’t want to miss anything.”
(If music startups are your thing, Anthony couldn’t recommend highly enough Dalton Caldwell’s talk from Startup School 3 on music startups.)
Find your own way.
He started Hype Machine from his dorm room. He didn’t take investor money. This gave Anthony and his team the freedom to run the company as they pleased.
“We wanted to travel,” he said - so they packed their bags and hung out in Berlin for a month. It was cheaper than they would have thought, “about six thousand dollars,” and incredibly fun. But if they’d had VC money? “No way,” Anthony imagined an advisor’s response, “we thought you were, you know, going to be working sixteen hour days. Now you want to go to Berlin and maybe work?”
YCombinator? TechStars? Just fucking make something.
Anthony exhorted: it’s okay to have a different process. Don’t discount investment and the accompanying advisors, but don’t go blindly down that most celebrated path. With a different process, it’s easier to stand out, to be differentiated. You can always get money if you are making something great.
Nathan Blecharczyk of Airbnb
You have to have a vision, you have to be able to execute that vision.
Nathan shared a 2008 pitch deck for Airbnb (then AirBed&Breakfast) - the first time this deck had ever seen the light of day. Tiffany Kosolcharoen posted photos of the slides on her blog.
He highlighted its strengths - it had a problem statement, and had a bottom-up business projection by analogy to CouchSurfing and Craigslist. He was also quick to point out its weaknesses - it involved hand-wavy notions of unlikely major player partnerships, and touted top down projections (“If we can capture 2% of the $1.9B travel booking market… imagine!”) that are quick to raise doubt from savvy adviors or investors.
The company was accepted into Y Combinator’s Winter 2009 class. YC companies are supposed to be heads-down; but at Paul Graham’s behest, the cofounders zeroed in their market focus to just New York and hopped redeyes back and forth every few weeks. They met with their initial supply-side renteres in bars, and chatted about how things were going. As the team refined the product and identified sticking points, they could be on the ground to help optimize listings. They’d go with people into their homes and take high-quality photos. They found that the initial asking rates were a little too high, so they asked their listers (after a few drinks) to lower their prices. Things clicked, and soon they had handled $250,000 in bookings of which they collected 10%.
Fast-forward to the YC W09 Demo Day, and although at that point Airbnb has already accepted Sequoia investment, they had prepared a Demo Day deck. Gone was the hand-wavy top-down projection and partnership hopefulness, replaced with a quarter million dollars of demonstrable traction, a tight initial market focus, and a tight, clear problem statement.
Like many of the speakers, Nathan stressed the importance of finding quality mentors.
Patrick Collison co-founder of Stripe
It is impossible to motivate great people by something that is merely going to be profitable.
Ptrick’s talk was an excellent finish to the day. He delivered an essay full of engaging stories - I sincerely hope it will be posted online in full.
Patrick’s story was of his trip from hardcore Lisp academic to startup founder. Along the way, he developed one of the first iPhone apps, an offline Wikipedia, before the SDK and App Store, by debugging ARM assmebly. He shared the touching experience of getting emails form users whose lives he had changed; from bringing the world’s knowledge to villages in rural Peru and Ghana to delivering the freedom to browse Wikipedia without overisght to people behind the Great Firewall of China. At nineteen, he co-founded and sold an online action tool, and is currently working on a new payment startup, Stripe.
The anthropological story of the last twenty years is that software is taking over the world. Even if you’re a traveling violinist, you should learn how to program. Do all you can to ensure code is not a foreign language.
Posted by Jason Morrison Sep 25th, 2011
September 24 2011, I had the pleasure of attending MIT’s 2011 Startup Bootcamp. In its third year, Startup Bootcamp brought an inspiring and thoughful collection of speakers who have had a variety of startup successes.
The event hashtag #sb2011 is a stream of reactions and pull-quotes from the event - mixed here and there with excited anticipation for a dance festival in Goa.
Ten speakers presented a variety of viewpoints, insight, and food for thought.
It was a mixed bag - yes, there was unnecessary focus on vanity metrics and the rah-rah of startup theater. Breathless celebration of hockeysticking uniques and of flying around to court VCs makes for good TechCrunch articles. Like it or not, that’s an inculcated part of startup culture.
But if you get past the Hollywooding and the Silicon Valley adulation, there were gems of solid advice, grounded in experience, on hiring (Paul English of Kayak), data-driven product development (Naveen Selvadurai of foursquare), optimizing your life for personal growth (Drew Houston of Dropbox), identifying underlying social and technological shifts that enable new products (Charlie Cheever of Quora, Patrick Collison of Stripe), negotiation (Alex Polvi of Cloudkick), the importance of on-the-ground and unscalable product development tactics early on (Nathan Blecharczyk of Airbnb), earning and answering to the responsibility of finding your own way in the world (Anthony Volodkin of Hype Machine) and how important it is to empower yourself in perhaps the largest disruptive theme of our time by learning to code (Patrick Collison of Stripe).
Paul English, CTO and co-founder of Kayak.
Recruit a diversity of success.
Paul spoke on three kinds of recruiting: companies recruiting new hires, companies recruiting investors, and job-seekers recruiting companies.
When you’re recruiting, look for success, regardless of the kind. In fact, look for a diversity of success. Paul once hired an olympic rower, and a chess grandmaster, and couldn’t be happier with these decisions. Find people who operate at the top levels of excellence.
Some companies have a “no assholes” rule - at Kayak, they have a policy of “no neutrals”. Like Charlie Cheever, who later discussed the importance of hiring people you have high-bandwidth communication with, Paul encouraged building a team of people who are fully engaged: “intense and in-your-face - in a good way.”
Leah Culver, CEO and co-founder of Convore
Show up, say yes.
Leah told an lighthearted and likeable story of her journey from big state school CS major to Silicon Valley startup founder. Full of serendipity and luck, she shared stories of driving a UHaul from her native Minnesota out to the Bay Area (picked not primarily for its burgeoning tech scene, but for how much better the weather is), getting started with Instructables, and bumping into Pownce co-founders Kevin Rose and Daniel Burka at a party.
Have a good story to tell the press - you don’t have to tell people the ugly, dirty truth.
Another of Leah’s pieces of advice was a common thread through the talks - that of consistent applied effort. “Show up,” she said - in places with a critical mass of startup people, such as Silicon Valley - and “say yes” to opporunities that come your way.
Andrew Sutherland, founder of Quizlet
I didn’t just rush it on my parents that I was leaving MIT. It took two whole weeks.
Andrew shared his story of inspiration for an online learning tool. When he hacked together a prototype to help study for a French III class in high school and subsequently aced the test, he knew he was onto something.
Andrew discouraged market research - “If I had googled for online flash cards, I would have found other sites, that were not as good, and I wouldn’t have made Quizlet. Now, we’re 10x the [volume] of our next competitor.”
This phrasing raised some contention. I would reframe his advice as: focus on your own products rather than on the competition, and don’t be discouraged by incumbent players; rather, recognize them as a validation of the market space, and proceed to out-execute them.
Naveen Selvadurai co-founder of foursquare
At first, go with your hunch. Later, with data.
Naveen worked for Lucent and Sun in college. This was important - it was real-world learning. Seeing engineering culture, doing code reviews, shipping real products. Sun had an open culture of learning where you can dive into other products. “How’d they build Solaris? File systems?” Just sign up for the mailing list.
Naveen shared seven pieces of distilled advice:
Keep good company.
Make something that people want.
Build around an atomic action.
Seek mentors early.
At first, go with your hunch. Later, with data.
Balance unknowns with knowns.
Always be recruiting.
On the last point Naveen shared the four stages of foursquare’s hiring strategy:
Hire friends
Hire friends of friends
Use an external agency (but they didn’t find this valuable)
Hire an internal fulltime recruiter.
It needs to be someone’s job to think about recruiting, seven days a week. Additionally, as a founder, you must always be recruiting.
Charlie Cheever, founder of Quora
Work with people you have really high-bandwidth communication with. Understand how the other person is thinking.
Charlie shared great advice on early-stage tactics. Start with few users (Quora started with fewer than fifty) and a low-cost MVP. Foster the community by hand, be high-touch and, if your business builds on user-generated content, be prepared at the beginning to build a lot of it by yourself. See how the experiment goes, and then take the learning from that experience and apply it to your MVP.
He shared the importance of collecting metrics early on. With Quora, they actually stored the entire webpage for every visit for every customer, so that they could go back later, having identified trends or formulated hypotheses, and see the site as their users saw it.
They noticed a set of high-engagement users, looked at these users’ expereinces, and found that they had all used Facebook connect. Running with this, the team spent time focusing on improving their social experience.
Charlie also left the audience with good food for though:
What wave enables your product? Why is now the right time to build it?
For foursquare, it was GPS-enabled mobile phones. For Quora, it was that “normal” people were comfortable sharing things online, and that the web was turning into a mess; with Google turning up more content farm results, people were moving onto safe harbors of organized information like IMDB and Wikipedia. The timing was right.
Drew Houston, co-founder of Dropbox
Get out of your comfort zone. Learn a little about a lot.
“Everything big starts small” - Drew’s original perception of startups was that of Tolkien’s Mount Doom. His original strategy to build a successful startup was to be overwhelmingly prepared - nab an MIT CS degree, get a few years’ exerpience working for small companies and big companies alike, come back for a PhD, maybe an MBA.
He then related a story from Dropbox’s origins: Drew had just settled into his seat on a Chinatown bus from Boston, in which he could usually get in several hours of undisturbed work. He popped open his laptop, and searched his pockets for his ever-present USB thumb drive. “Shit.” Realization set in just as he visualized, in his mind’s eye, the thumb drive sitting on his desk at home. “Like any good engineer with a problem to solve, I opened my editor.” Drew then wrote the first lines of what would eventually become Dropbox. Today, his company has a multi-billion dollar valuation and “stores more files than Twitter stores tweets.”
Drew exhorted the audience to learn about a broad variety of topics: sales, marketing, finance, accounting, product design, psychology, influence, negotiation, organizational design, management and leadership, business strategy. Buy books (“today we have this amazing thing, Amazon”), dip in, find mentors, and surround yourself with smart people.
Wrapping up, Drew shared his advice for success:
Take on more than you’re “ready for.”
Maximize how much you learn per unit time.
Stack the odds in your favor. Surround yourself with great people; you are the average of your five closest friends.
The fastest way to learn about startups is to join one.
Starting a company is one of the best ways for engingeers to change the world.
Alex Polvi, founder of Cloudkick
No matter what number they offer, pause, count to 10 in your head, and then act as disappointed as possible.
Alex spoke on negotiation, specifically about his experience of his company Cloudkick being acquired by Rackspace.
If a VP of Corp Dev says “strategic” to you, they are talking about acquisition.
Acquisitions are a bit like romantic relationships: you often get the most attention when you’re looking for it the least. Once you are involved with one party, others can sense it. You somehow become more desirable.
Once you have a term sheet from one prospective buyer, you have great leverage. When others call you up, you can very quickly get to hard numbers.
The best negotiation position is one of truth. Build something of value that people want, and your position is irrefutable.
Alex also discussed the importance of taking care of your team, and the people around you. Upon acquisition, he fully accelerated all employees’ options - whether they had been with Cloudkick for four years or four weeks, they were all fully vested and could share in the company’s success. It was important that the acquiring party, Rackspace was on board with this - and they were. Rackspace wanted the new team members to stick around not because they were waiting to vest, but because they wanted to be there.
Anthony Volodkin, founder of Hype Machine
Venture Capital? You do not need anyone’s permission to make stuff.
Anthony shared the perspective that VC or angel investment can be very important, but it’s not for everyone. “I don’t want to shut something off because the math doesn’t work. For people to not remember it. That would make me sad.”
Anthony’s vision was a question: while people with cool friends can get interesting music recommendations from that network, what about people without cool friends? He knew that there was great taste and insight being shared by music bloggers online, and sought to aggregate and distill it. “I didn’t want to miss anything.”
(If music startups are your thing, Anthony couldn’t recommend highly enough Dalton Caldwell’s talk from Startup School 3 on music startups.)
Find your own way.
He started Hype Machine from his dorm room. He didn’t take investor money. This gave Anthony and his team the freedom to run the company as they pleased.
“We wanted to travel,” he said - so they packed their bags and hung out in Berlin for a month. It was cheaper than they would have thought, “about six thousand dollars,” and incredibly fun. But if they’d had VC money? “No way,” Anthony imagined an advisor’s response, “we thought you were, you know, going to be working sixteen hour days. Now you want to go to Berlin and maybe work?”
YCombinator? TechStars? Just fucking make something.
Anthony exhorted: it’s okay to have a different process. Don’t discount investment and the accompanying advisors, but don’t go blindly down that most celebrated path. With a different process, it’s easier to stand out, to be differentiated. You can always get money if you are making something great.
Nathan Blecharczyk of Airbnb
You have to have a vision, you have to be able to execute that vision.
Nathan shared a 2008 pitch deck for Airbnb (then AirBed&Breakfast) - the first time this deck had ever seen the light of day. Tiffany Kosolcharoen posted photos of the slides on her blog.
He highlighted its strengths - it had a problem statement, and had a bottom-up business projection by analogy to CouchSurfing and Craigslist. He was also quick to point out its weaknesses - it involved hand-wavy notions of unlikely major player partnerships, and touted top down projections (“If we can capture 2% of the $1.9B travel booking market… imagine!”) that are quick to raise doubt from savvy adviors or investors.
The company was accepted into Y Combinator’s Winter 2009 class. YC companies are supposed to be heads-down; but at Paul Graham’s behest, the cofounders zeroed in their market focus to just New York and hopped redeyes back and forth every few weeks. They met with their initial supply-side renteres in bars, and chatted about how things were going. As the team refined the product and identified sticking points, they could be on the ground to help optimize listings. They’d go with people into their homes and take high-quality photos. They found that the initial asking rates were a little too high, so they asked their listers (after a few drinks) to lower their prices. Things clicked, and soon they had handled $250,000 in bookings of which they collected 10%.
Fast-forward to the YC W09 Demo Day, and although at that point Airbnb has already accepted Sequoia investment, they had prepared a Demo Day deck. Gone was the hand-wavy top-down projection and partnership hopefulness, replaced with a quarter million dollars of demonstrable traction, a tight initial market focus, and a tight, clear problem statement.
Like many of the speakers, Nathan stressed the importance of finding quality mentors.
Patrick Collison co-founder of Stripe
It is impossible to motivate great people by something that is merely going to be profitable.
Ptrick’s talk was an excellent finish to the day. He delivered an essay full of engaging stories - I sincerely hope it will be posted online in full.
Patrick’s story was of his trip from hardcore Lisp academic to startup founder. Along the way, he developed one of the first iPhone apps, an offline Wikipedia, before the SDK and App Store, by debugging ARM assmebly. He shared the touching experience of getting emails form users whose lives he had changed; from bringing the world’s knowledge to villages in rural Peru and Ghana to delivering the freedom to browse Wikipedia without overisght to people behind the Great Firewall of China. At nineteen, he co-founded and sold an online action tool, and is currently working on a new payment startup, Stripe.
The anthropological story of the last twenty years is that software is taking over the world. Even if you’re a traveling violinist, you should learn how to program. Do all you can to ensure code is not a foreign language.
Posted by Jason Morrison Sep 25th, 2011
Friday, October 28, 2011
Entrepreneurship is a World of Noes
They say life imitates art – and in Radfar’s case, art imitates entrepreneurship. When Radfar was young he loved to build, draw, write, play music, and any other type of art. He loved to create, and as he got older he transferred that skill and energy into programming applications. Now that he’s an entrepreneur, his childhood hobbies are helping him out in business. “As an entrepreneur you have the ultimate creative task – building something that can, in turn, output new creative works independently of you,” he says. “That has been fascinating.”
It was in 2004 that Radfar realized that the web was shifting from a publishing platform into a platform for services. ”These services would be tied together by a social layer,” Radfar says. “Our vision was to help facilitate that world and we started with the simple premise which lies at the heart of the social web – content sharing.” Along with his co-founder Austin Fath he started Clearspring, a leader in connecting publishers, services and advertisers to audiences on the social web. Radfar says the original idea has changed over the years based on online trends. “The idea and business have evolved as social networking has unlocked the next big wave – big data,” he says. “Using big data, entrepreneurs can now create more intelligent services that are truly personalized to you. It’s a very powerful idea and we are in the first inning.”
When asked about his challenges in the early days of the business, Radfar says ‘everything.’ “We didn’t have enough experience, we didn’t have enough money and we didn’t have enough time. So I guess it all boiled down to having the discipline to focus on something small enough that we could move forward, but was valuable enough to get us a ‘pass’ to the next level.” He says whether it was a prototype to show to investors, or a beta test for customers, being able to identify the most important and hitting it out of the park is consistently one of the greatest challenges for an entrepreneur.
Most startups dream of being acquired, but Radfar instead turned his attention to acquiring sharing platform AddThis. He wanted to create a lighter weight platform that enabled publishers to share anything – widgets, links, etc. – to any site. “We were the leaders in the widget sharing and tracking space in the early days of the social web. We recognized that, for our customers, it wasn’t about the noun – the widget – as much as the verb – sharing,” he says. “AddThis had a great early brand, great lightweight approach, and a great founder in Dom Vonarburg who believed in the future of sharing and social data.” Clearspring acquired AddThis in 2008, and Radfar says it was one of the best decisions the team made, and he’s proud of the team for following through with it.
Radfar is on the board of Pittsburgh startup accelerator AlphaLab, and says he thinks it is absolutely critical for entrepreneurs to reinvest their experience back into early stage companies. He works with a number of young companies as an advisor or investor, including Always Prepped, which provides online math practice. The advice that he gives to early startups is simple. “Surround yourself with the best people possible at every stage. At the earliest stage, that means getting good advisors and co-founders. At the later stages, that means getting the best board, investors and executive team possible,” he says. “People are the beating heart of it all and having the best people on the bus is paramount.”
Clearspring has no shortage of impressive numbers to flaunt – the company has raised $60 million to date from investors including Ted Leonsis and Steve Case, and their AddThis platform is used by nine million sites reaching over one billion unique users monthly. But Radfar says one of his proudest moments was when his brother Cyrus, who was a founding engineer, left the company to start his own company called Kapuno. “The fact that he felt confident and armed enough to build something from scratch because of his experience at Clearspring was really inspiring to me. At the end of the day, it shows that the impact Clearspring is already having echoes far beyond our walls.”
Recently Clearspring hired a new CEO, Ramsey McGrory, who joins from Yahoo! where he led their $1 billion Right Media business. Radfar has taken a new role as Executive Chairman, and in that role he will lead the board and partner with Ramsey to focus on product and marketing. “Clearspring has built an amazing platform and team,” Radfar says. “As our President and COO Gar Richlin says, we need to ‘run through the tape’ and finish the job.”
Monday, August 15, 2011
Start Up Sales Strategy
Nat Turner writes about creating a selling strategy for start ups with his experience with Invite Media which he sold to Google in 2005. Enjoy!
If you’re starting a company, you’re going to have to sell your product/service to potential customers (at least if you plan on making any money). This especially applies to enterprise software companies or B2B companies in general, as you’re selling to someone who’s job may ultimately be on the line for the “who we’re going with” decision (related post: The IBM effect). Your company’s strategy and style of how you sell your product is extremely important, and like many other things in your startup’s life cycle, is critical to be aware of and get right. It’s the first impression you make on customers, may be the deciding factor on if you get the business, and depending on the company may end up being a major part of your culture.
First, I’m going to assume you’re building a product to the best of your ability and have built an effective product management process. This post is squarely about how you put that product in customer’s faces and win deals. At Invite Media, the company I co-founded, the core concepts of sales strategy became drilled in our head as we faced the market and encountered competitors. We learned we needed to be conscious of how we sold our product and the first interactions customers had with our company, very specifically, and needed to develop a sales strategy that we could teach others as we scaled the organization. In other words, it wasn’t enough to build the greatest platform we could. We by no means perfected it and more sales-focused organizations probably can do this stuff in their sleep over time, but we definitely came to appreciate it’s importance. Over time, as our sales strategy evolved, it ultimately influenced many other functions at our company, such as how we recruited people and raised money. Overall, the day we figured out how to put ourselves in our customer’s shoes was the day we learned how to effectively sell.
My first piece of advice on sales strategy at startups is to not oversell your product. Aggressive sales tactics piss people off, and set a bad first impression. There’s nothing worse than a salesperson who doesn’t take no for an answer and talks out of his ass about the product and promises the moon, and worse is selling a shitty product to begin with. If your product sucks, fix your product. In other words, fix the root cause, don’t rely on sales to win deals. Companies who rely on aggressive sales tactics in order to win business in general are probably compensating for a weak product, at least in my experience (or are knowingly selling a scam). Even more disappointing is when a company has a great product but uses aggressive sales tactics and steps on their own toes with customers, as that’s something that was entirely avoidable. This unfortunately isn’t uncommon in startups, as many founders decide they can’t or shouldn’t sell and “check the box” by hiring a sales person, which can be extremely hit or miss and hard to do without prior experience (a topic for another day).
The reason this is important is that in ad technology (and in most spaces probably), we learned that the best platform/technology doesn’t necessarily win every deal. Like in sports, that’s why they play the games (i.e., don’t declare a winner based on who has the best team at the start of the season). In startups, sales strategy is an important part of the game. You obviously have to have a great product to ultimately be successful, but you also have to be smart about how you sell it. In other words, the winner of a deal will have a combination of both a great product and a great sales strategy, and rarely does one win being extremely heavy on one side. As an investor or acquirer, if you did have a company on one end of the spectrum and thus wasn’t properly balanced, you’d obviously love to see a company on the “great product, horrible sales strategy” side, as fixing sales strategy is way easier than fixing a shitty product. This even applies to companies with no actual sales people and a purely self-service system, whereby the sales strategy ends up becoming your accessible messaging, how you offer the product online, etc…
At Invite, our sales strategy was very simply “educate the potential customer on the Invite platform, answer any and all questions, and be confident that we have the best platform and that they’ll ultimately chose us.” As a side note, that doesn’t mean we took the initial meeting and then just sat around and hoped they emailed us back; we did our fair share of following up on next steps and checking in if we had mutual expectations to move the process along, but we made sure to never cross the line of being aggressive. Ultimately, if the customer picked someone else because the platform was lacking in an area they required, either we needed to decide to fix that in our product or decide that client wasn’t a fit for us because what they were asked for wasn’t going to be in our roadmap (and both happened a lot). That’s why things like the product feedback cycle (i.e., reducing the number of “layers” between a client’s product feedback and your engineering team) are important, which I’ll mention again later in this post. These are the kind of questions you’ll need to go through, and it took us while to get there (and still wasn’t perfect).
My second piece of advice is think extremely hard about the incentives you give your sales team. The world is run on incentives. You as a startup founder are incentivized
If you do hire sales people, hire sales people who can discern what clients are asking for in your product and can effectively work with your product and engineering teams to improve the product based on that feedback. That doesn’t mean hire a sales person who can code, as that’s a rare thing, but hire a sales person who is comfortable with technology if you’re a technology company, is smart enough to dig into basic tech details, and is a willing and capable listener but also communicator (what good is listening if you do a crappy job of explaining what you heard to the person who needs to build it?). It’s always a scary thing when you see a young company with a product that’s still evolving put a junior or incapable sales person in front of their early clients, and the customer provides all sorts of valuable product feedback that you know won’t ultimately get back to the engineering team in a meaningful way (or worse yet, doesn’t get the feedback in the first place because he didn’t know what questions to ask or didn’t given the customer a chance to speak). Customers really appreciate sales people who understand their needs, understand the product, take the time to listen, and can trust that what they’re telling them is actually being taken back to the engineering team properly. This will build confidence in your product and team that the customer can rely on. It all starts with that initial sales strategy. That’s another reason why it’s great to see founders do a lot of the initial sales, as the product feedback is never more important than then and the founder(s) should know their product better than anyone else at the company.
Another important step is to as the founder, lead and help craft a definition of and a list of characteristics of who your ideal customers are. This is especially important in B2B companies, as every company is different and can be highly complex. If your industry is small enough, this may be an actual list of potential customer names. Making mistakes here are hard to fix if you bring on a customer that isn’t a fit (for both sides). It’s kind of like a golf swing and alignment. You could have the greatest swing in the world, but if you aim at the wrong target and still make the perfect swing (or perfect sales strategy), you’ll still miss. Do you work with agencies or advertisers, or both? Each has it’s own implications for sales strategy and ultimately servicing if you win the deal. Do you only want to work with customers who have a certain number of employees? Or who are or aren’t using a particular piece of software or have previous experience with it? You can always update this definition and/or hit list, and should. The more effort you put into defining who is your ideal customer upfront, the better focused your sales team will be and the less time you’ll waste of your potential customers. Why meet with a company/prospect and confuse them and/or sell them on something you have no intention of delivering or isn’t a fit if you could have known that upfront?
My last piece of advice is to track as much as you can, as you can’t improve something you don’t measure. Figure out close rates on deals for starters. If you have multiple sales people, track performance and patterns across people. Use systems like Salesforce to organize and track stuff like this. If you have a really low deal close rate, you could either have a shitty product, a shitty sales strategy (and/or people), or you could also even be pitching the wrong clients (or all of the above). Figure out what it is. Use data to help you figure out how to adapt and evolve your sales strategy. In this process you may learn that your market is too small, or that you’re building the wrong thing, or that your definition of who an ideal customer is was too broad or too narrow, or that your sales people aren’t effectively able to sell your product. Always be learning.
As a final note, this isn’t re-inventing the wheel and hardly scratches the surface on the topic of sales strategy. There are plenty of better articles on the basics of things like aggressiveness and the concept of sales strategy as a whole that are extremely helpful and way more in-depth than this post. I highly suggest doing your research on the topic of sales strategy as much as anything else.
If you’re starting a company, you’re going to have to sell your product/service to potential customers (at least if you plan on making any money). This especially applies to enterprise software companies or B2B companies in general, as you’re selling to someone who’s job may ultimately be on the line for the “who we’re going with” decision (related post: The IBM effect). Your company’s strategy and style of how you sell your product is extremely important, and like many other things in your startup’s life cycle, is critical to be aware of and get right. It’s the first impression you make on customers, may be the deciding factor on if you get the business, and depending on the company may end up being a major part of your culture.First, I’m going to assume you’re building a product to the best of your ability and have built an effective product management process. This post is squarely about how you put that product in customer’s faces and win deals. At Invite Media, the company I co-founded, the core concepts of sales strategy became drilled in our head as we faced the market and encountered competitors. We learned we needed to be conscious of how we sold our product and the first interactions customers had with our company, very specifically, and needed to develop a sales strategy that we could teach others as we scaled the organization. In other words, it wasn’t enough to build the greatest platform we could. We by no means perfected it and more sales-focused organizations probably can do this stuff in their sleep over time, but we definitely came to appreciate it’s importance. Over time, as our sales strategy evolved, it ultimately influenced many other functions at our company, such as how we recruited people and raised money. Overall, the day we figured out how to put ourselves in our customer’s shoes was the day we learned how to effectively sell.
My first piece of advice on sales strategy at startups is to not oversell your product. Aggressive sales tactics piss people off, and set a bad first impression. There’s nothing worse than a salesperson who doesn’t take no for an answer and talks out of his ass about the product and promises the moon, and worse is selling a shitty product to begin with. If your product sucks, fix your product. In other words, fix the root cause, don’t rely on sales to win deals. Companies who rely on aggressive sales tactics in order to win business in general are probably compensating for a weak product, at least in my experience (or are knowingly selling a scam). Even more disappointing is when a company has a great product but uses aggressive sales tactics and steps on their own toes with customers, as that’s something that was entirely avoidable. This unfortunately isn’t uncommon in startups, as many founders decide they can’t or shouldn’t sell and “check the box” by hiring a sales person, which can be extremely hit or miss and hard to do without prior experience (a topic for another day).
The reason this is important is that in ad technology (and in most spaces probably), we learned that the best platform/technology doesn’t necessarily win every deal. Like in sports, that’s why they play the games (i.e., don’t declare a winner based on who has the best team at the start of the season). In startups, sales strategy is an important part of the game. You obviously have to have a great product to ultimately be successful, but you also have to be smart about how you sell it. In other words, the winner of a deal will have a combination of both a great product and a great sales strategy, and rarely does one win being extremely heavy on one side. As an investor or acquirer, if you did have a company on one end of the spectrum and thus wasn’t properly balanced, you’d obviously love to see a company on the “great product, horrible sales strategy” side, as fixing sales strategy is way easier than fixing a shitty product. This even applies to companies with no actual sales people and a purely self-service system, whereby the sales strategy ends up becoming your accessible messaging, how you offer the product online, etc…
At Invite, our sales strategy was very simply “educate the potential customer on the Invite platform, answer any and all questions, and be confident that we have the best platform and that they’ll ultimately chose us.” As a side note, that doesn’t mean we took the initial meeting and then just sat around and hoped they emailed us back; we did our fair share of following up on next steps and checking in if we had mutual expectations to move the process along, but we made sure to never cross the line of being aggressive. Ultimately, if the customer picked someone else because the platform was lacking in an area they required, either we needed to decide to fix that in our product or decide that client wasn’t a fit for us because what they were asked for wasn’t going to be in our roadmap (and both happened a lot). That’s why things like the product feedback cycle (i.e., reducing the number of “layers” between a client’s product feedback and your engineering team) are important, which I’ll mention again later in this post. These are the kind of questions you’ll need to go through, and it took us while to get there (and still wasn’t perfect).
My second piece of advice is think extremely hard about the incentives you give your sales team. The world is run on incentives. You as a startup founder are incentivized
If you do hire sales people, hire sales people who can discern what clients are asking for in your product and can effectively work with your product and engineering teams to improve the product based on that feedback. That doesn’t mean hire a sales person who can code, as that’s a rare thing, but hire a sales person who is comfortable with technology if you’re a technology company, is smart enough to dig into basic tech details, and is a willing and capable listener but also communicator (what good is listening if you do a crappy job of explaining what you heard to the person who needs to build it?). It’s always a scary thing when you see a young company with a product that’s still evolving put a junior or incapable sales person in front of their early clients, and the customer provides all sorts of valuable product feedback that you know won’t ultimately get back to the engineering team in a meaningful way (or worse yet, doesn’t get the feedback in the first place because he didn’t know what questions to ask or didn’t given the customer a chance to speak). Customers really appreciate sales people who understand their needs, understand the product, take the time to listen, and can trust that what they’re telling them is actually being taken back to the engineering team properly. This will build confidence in your product and team that the customer can rely on. It all starts with that initial sales strategy. That’s another reason why it’s great to see founders do a lot of the initial sales, as the product feedback is never more important than then and the founder(s) should know their product better than anyone else at the company.
Another important step is to as the founder, lead and help craft a definition of and a list of characteristics of who your ideal customers are. This is especially important in B2B companies, as every company is different and can be highly complex. If your industry is small enough, this may be an actual list of potential customer names. Making mistakes here are hard to fix if you bring on a customer that isn’t a fit (for both sides). It’s kind of like a golf swing and alignment. You could have the greatest swing in the world, but if you aim at the wrong target and still make the perfect swing (or perfect sales strategy), you’ll still miss. Do you work with agencies or advertisers, or both? Each has it’s own implications for sales strategy and ultimately servicing if you win the deal. Do you only want to work with customers who have a certain number of employees? Or who are or aren’t using a particular piece of software or have previous experience with it? You can always update this definition and/or hit list, and should. The more effort you put into defining who is your ideal customer upfront, the better focused your sales team will be and the less time you’ll waste of your potential customers. Why meet with a company/prospect and confuse them and/or sell them on something you have no intention of delivering or isn’t a fit if you could have known that upfront?
My last piece of advice is to track as much as you can, as you can’t improve something you don’t measure. Figure out close rates on deals for starters. If you have multiple sales people, track performance and patterns across people. Use systems like Salesforce to organize and track stuff like this. If you have a really low deal close rate, you could either have a shitty product, a shitty sales strategy (and/or people), or you could also even be pitching the wrong clients (or all of the above). Figure out what it is. Use data to help you figure out how to adapt and evolve your sales strategy. In this process you may learn that your market is too small, or that you’re building the wrong thing, or that your definition of who an ideal customer is was too broad or too narrow, or that your sales people aren’t effectively able to sell your product. Always be learning.
As a final note, this isn’t re-inventing the wheel and hardly scratches the surface on the topic of sales strategy. There are plenty of better articles on the basics of things like aggressiveness and the concept of sales strategy as a whole that are extremely helpful and way more in-depth than this post. I highly suggest doing your research on the topic of sales strategy as much as anything else.
Thursday, August 11, 2011
Why You Should Eliminate Titles at Start-ups
This is an interesting article by Jeff Bussgang on how titles hamper start up growth. On the flip side, I have seen startups hand out big titles, sometimes in excange foe lesser pay, which also hamper growth. enjoy!
There has been a recent dialog around a theme I'll call "hacking the corporation" - creating novel approaches to building young companies, particularly when they are in their formative start-up stage and pre-product market fit. One of them, reinventing board meetings (or, "Why Board Meetings Suck"), has gotten some attention from leading thinkers like Steve Blank and Brad Feld.
I'd like to submit another item to add to the "hacking the corporation" punchlist: elimnating titles.
At business school, I learned all about titles and hierarchies and the importance of organizational structure. When I joined my first start-up after graduation, e-commerce leader Open Market, I found the operating philosophy of the founder jarring - he declared no one would have titles in the first few years. If you needed a title for external reasons, our founder told us, we should feel free to make one up. But we would avoid using labels internally. In other words, there would be no "vice president" or "director" or other such hierarchical denominations.
Why? Because a start-up is so fluid, roles changes, responsibilities evolve, and reporting structures move around fluidly. Titles represent friction, pure and simple, and the one thing you want to reduce in a start-up is friction. By avoiding titles, you avoid early employees getting fixated on their role, who they report to, and what their scope of responsibility is - all things that rapidly change in a company's first year or two.
For example, one of my first bosses in the company later became a peer, and then later still reported to me. Our headcount went from 0 to 200 in two years. Our revenue grew from 0 to $60m in 3 years. We went public only two years after the company was founded. We were moving way too fast to get slowed down by titles and rigid hierarchies. Over the course of my five year tenure, I ran a range of departments - product management, marketing, business development, professional services - all amidst a very fluid environment. Around the time that we went public, we matured in such a way that we began to settle into a more stable organizational structure and, yes, had formal titles. But during those formative first few years, avoiding titles provided a more nimble organization.
So when I co-founded Upromise, I instituted a similar policy: no titles. We had an open office structure and functional teams, but a fluid organizational environment and rapid growth. One of our young team members changed jobs four times in her first year. Only after the first year, as we settled into a more stable organizational structure and I recruited senior executives who were more obviously going to serve as my direct reports on the executive team did I begin to give out titles (CTO, CMO, CFO, etc.). With the title policy, there was some early tension and discomfort (one young MBA kept referring to himself as a VP externally, although he was clearly playing an individual contributor role and was soon layered). Often, when you are running your start-up experiments, you are not even sure of the right profile for employees or organization structure for optimal execution. But you can establish role and process clarity without having to depend on titles.
I haven't been able to institute this systematically in our portfolio, but whenever young start-ups are formed, it's one of the first things I counsel the founder. Don't let your founding team and early hires get too attached to titles and hieararchy. In fact, in that formative first year, see if you can avoid them altogether.
There has been a recent dialog around a theme I'll call "hacking the corporation" - creating novel approaches to building young companies, particularly when they are in their formative start-up stage and pre-product market fit. One of them, reinventing board meetings (or, "Why Board Meetings Suck"), has gotten some attention from leading thinkers like Steve Blank and Brad Feld.
I'd like to submit another item to add to the "hacking the corporation" punchlist: elimnating titles.
At business school, I learned all about titles and hierarchies and the importance of organizational structure. When I joined my first start-up after graduation, e-commerce leader Open Market, I found the operating philosophy of the founder jarring - he declared no one would have titles in the first few years. If you needed a title for external reasons, our founder told us, we should feel free to make one up. But we would avoid using labels internally. In other words, there would be no "vice president" or "director" or other such hierarchical denominations.
Why? Because a start-up is so fluid, roles changes, responsibilities evolve, and reporting structures move around fluidly. Titles represent friction, pure and simple, and the one thing you want to reduce in a start-up is friction. By avoiding titles, you avoid early employees getting fixated on their role, who they report to, and what their scope of responsibility is - all things that rapidly change in a company's first year or two.
For example, one of my first bosses in the company later became a peer, and then later still reported to me. Our headcount went from 0 to 200 in two years. Our revenue grew from 0 to $60m in 3 years. We went public only two years after the company was founded. We were moving way too fast to get slowed down by titles and rigid hierarchies. Over the course of my five year tenure, I ran a range of departments - product management, marketing, business development, professional services - all amidst a very fluid environment. Around the time that we went public, we matured in such a way that we began to settle into a more stable organizational structure and, yes, had formal titles. But during those formative first few years, avoiding titles provided a more nimble organization.
So when I co-founded Upromise, I instituted a similar policy: no titles. We had an open office structure and functional teams, but a fluid organizational environment and rapid growth. One of our young team members changed jobs four times in her first year. Only after the first year, as we settled into a more stable organizational structure and I recruited senior executives who were more obviously going to serve as my direct reports on the executive team did I begin to give out titles (CTO, CMO, CFO, etc.). With the title policy, there was some early tension and discomfort (one young MBA kept referring to himself as a VP externally, although he was clearly playing an individual contributor role and was soon layered). Often, when you are running your start-up experiments, you are not even sure of the right profile for employees or organization structure for optimal execution. But you can establish role and process clarity without having to depend on titles.
I haven't been able to institute this systematically in our portfolio, but whenever young start-ups are formed, it's one of the first things I counsel the founder. Don't let your founding team and early hires get too attached to titles and hieararchy. In fact, in that formative first year, see if you can avoid them altogether.
Thursday, July 28, 2011
10 Ideas For Those Critical Early Startup Sales
Closing your initial sales at a startup is one of the most challenging parts of building a company. Many startups die before they ever close a deal.
Unless you’re entering a well established market there will be uncertainty with your product, approach, and timing until you have enough customers to prove that you have a good business model.
When Brendan and I started Wistia, we had questions about how the sales process should work, what kinds of documents we needed in place, how long things should take, and where we should look for potential customers. Through sheer will, conviction, and lots of failure, we found our way to where we are today. Here are the 10 principles we learned along the way.
1. Don’t wait to sell
You should start selling as early as you possibly can. Do not wait until your product is polished and launched. We changed direction and started heading towards Wistia about a year into startup life. How’d we know to head towards Wistia? Because we had a real potential customer that was interested when we had NO PRODUCT. We talked to them about what we thought Wistia could be. They liked the concept and we built the first version of Wistia in two weeks. A month later and we had our first customer.
We had just spent seven months building a portfolio website and four months trying to get people on board while our bank accounts shrank and our time to live decreased. In the course of a month we sold our first customer, decreased our burn, and realized that selling early was possible.
2. Do things that don’t scale
We learned an enormous amount from our first customer. That first sale gave us a benchmark for what people were willing to pay, how long it would take to close a deal, and how easy it was to use the product.
We made a point of going to our first customer’s office every couple of weeks to talk about the challenges that they were seeing and how we could make the product better suited to their needs. We could never spend as much time with every customer as we spent working with customer numero uno but we magnified all the extra learning upfront across the customer base.
Trying things that seem like they can’t scale is not just okay, it’s imperative as long as you are actively learning from every interaction.
3. Get inside your customer’s head
What books and magazines would your customers read? What conferences would they go to? What search terms would they use? Who would they follow on twitter? Once you have an idea of where your customers hang out, you need to go there. The more time you spend where your customers are, the more you’ll learn about how they think and whether or not you’re focused on the right group.
We thought some of our early customers would want to use Wistia for training, so we went to learning conferences. When that didn’t work we focused on talking to people from big companies that went to tech events. As we got better at figuring out where our customers could be we had more opportunities to learn from the right audience.
4. Focus on the buyer
Sometimes, especially with enterprise sales, the buyer of your product will be different from the user. That’s why it’s critical that you focus on the buyer.
CRMs are an excellent example of this phenomenon: a product is sold to the VP of Sales that will be used by the sales team. If you focus only on making an amazing experience for the sales team while ignoring the high level dashboards of how the sales team is doing, the VP of Sales will have trouble buying.
Look at Salesforce.com; their application can be an ardous one to setup. In fact, there are companies like OpFocus, whose main business is working with companies to optimize the Salesforce.com system already purchased. But Salesforce.com does have a great set of dashboards for the executives. The buyer, the VP of Sales, is happy and Salesforce is a $18B company with a product that has a terrible UI. All because they focus on the buyer.
5. Don’t price against cost
Cost matters when markets are mature and products are well defined. All that matters to customers is value. Should we charge our customers based on how many servers they’re using or how much video bandwidth they’re pushing because those are our costs? No.
Our customers don’t care how much we’re paying Slicehost or any of our other providers. They want to know if their videos are effective, they want to close more deals, and they want to provide a better experience for their customers. These needs could not be more divorced from our costs.
6. Position against complementary products
For some reason, competitive startups tend to think that they need to position themselves against each other. But as my good friend David Cancel likes to say:
I believe a startup only has one real competitor, indifference
People not caring enough about your product is your true competition, not some other startup.
When you’re thinking about how to position yourself, look at the complementary products, not the competitive ones. Ask yourself two questions: How much value can I create for my customer? And how much value are they getting from the other products they use?
Say your customers are spending $50 a month on Mailchimp, and they get an email platform they use every week that allows them to design, manage, and market to 5,000 recipients. Don’t try to sell them a video hosting solution for $1,000 a month that they’re going to use once a quarter to train 200 people. We made this mistake, and it’s an important one to learn from. Be honest about how much value you create and how much value your customers are getting from other products.
7. It’s only the beginning
When you first start selling a new product every new customer feels hugely important, and they are. It becomes easy to put a crippling amount of pressure on yourself to close deals and get people interested. While this can be a good motivator, it can also cause you to make mistakes.
When we were first getting going sometimes we’d say things like “Maybe we should wait a bit until feature XYZ is launched. Then they won’t be able to say no.” or “If we can just get company ABC to sign up, then it’ll be way easier to get that other guy too.” Here’s the problem with this: unless you’re dealing with a market in which there are less than 100 customers, the customers you’re trying to sign up should only be floating on the surface of your pool of potential customers.
You should not be afraid of scaring people away with a high price, the wrong messaging, or an initial email that’s too short. You need to try all of these things and more to figure out what’s going to work for your sales process. You need to be able to take risks and push forward quickly. This can be impossible if you structure your plans around closing each and every individual potential customer.
8. Focus on every customer
Even though no one customer should define your business model, you should leave yourself the flexibility to cater to each individual customers in specific ways. The most likely way to get customers to close is to spend a little time on each individual target. You need to personalize the correspondence as much as possible. This is true if you’re sending an email or if you’re meeting with someone in person. Figure out why they’re successful, what their hobbies are, and what conferences they like going to. The more you can understand them the more likely you are to speak in their language.
It takes time to prepare and learn about every target. But as you get more customers you’ll quickly learn what similarities and differences your customers have. It becomes easier to figure out where to focus and how to craft your message.
9. Act your size
When you’re first getting started it’s easy to fall into the trap of trying to act bigger than you are. Common pitfalls include trying to demand exorbitantly high prices, positioning to have more customers than you have, and promising more than your product can deliver. Yes, I’ve made all these mistakes.
When you’re trying to act big, it often highlights just how small you are. Pretend like you have more customers than you do and when someone asks you who your customers are you’ll be left speechless. Position your price too highly like your more entrenched comparables and people will stop responding to you.
The secret is: the right customers will gladly pay startups for services. They’ll think they can get a deal because they’re early to the party, which is likely true. They’ll be excited about using cutting edge technology to get a leg up — again true. And if they pick right and your product rocks they get to tell the world that they were first — how can this benefit even be measured!
10. Just keep going
The hardest part of bootstrapping your sales is sticking with the process. It can take a very long time to get your first deal. But each deal comes faster with practice and more information
Your initial hit rate will probably be terrible. If it isn’t, you’re doing something right. I have some friends who run a company called Usable Health that just closed their second deal in a complex and emerging space: kiosk-style self checkout at mid-sized restaurant franchises. They’ve been selling for one and a half years and pivoted three times in the process. Now they have a pattern, happy customers, a model that looks like it could scale, and real tangible revenue.
Not giving up is the most important part. Give yourself time to build your business model. Once you’ve done that, you’re golden.
Tuesday, July 12, 2011
The Most Underrated Quality of a CEO
You usually hear a lot about the early days of being a founder CEO, but I'm going to try to write more about the days of being a founding CEO as a company grows. The articles will probably be shorter and more frequent. Earlier today, someone asked me on Formspring what the most under-rated quality of a CEO is and I responded very simply with this: The Ability To Let Go. Late last week, I was lucky enough to get advice from a very successful CEO that told me: only focus on tasks that you yourself can specifically do. If it's something someone else can do and it constantly eats into your time, then you should find someone to fill that role if you have the resources. It resonated with me heavily as I find Onswipe growing faster than ever before and thinking about what tasks I should be taking on every day.
You Can't Do It All Yourself
As a growing company, there is absolutely zero chance that you can do it all yourself. Even if you had 24 hours in a day, there's no way to do it all. Eventually deals will start to take time, hiring will take numerous interviews, product will be in different divisions, and more. You need to realize this and find someone who can start taking over the burdens. As entrepreneurial CEOs, it's in our DNA to feel like we can do everything. The great CEOs realize they actually can't do everything all by themselves.
Find People Smarter Than Yourself
The best way to do this is to find people that are way smarter than you in the area of expertise. A CEO has to do a great job at setting the vision for the organization and orchestrating it. When your company starts expanding, you need to find people that are just way better at the specific task than yourself. It might be cutting deals with partners in BD or finding top notch engineers. You have to find those that are smarter than you.
Make Sure You Set The Vision
Make sure you set the vision as CEO before bringing people on board. Everyone needs to have cult like zeal in the mission and exact vision of what you're building. If they are not on the same page, it will ultimately destroy your belief that they carry it out when you defer your trust to them. Take the time to make sure everyone is on the same page with the entity that is your startup.
Trust and Defer
The phrase I use internally a lot is "Trust and Defer". I trust certain people with making decisions on certain areas of the company and defer to them for domain expertise. I do my job well by setting the overall course and vision for the company, so the decisions within their domain expertise fit within those confines. You have to trust the people that join your company with your life because that's literally what your product is.
It Will Hurt
There's no way around this. It's going to be a weird feeling if you're used to bootstrapping and running a company with 1-2 cofounders. When you're all of a sudden 10+ people working across the globe, it hits you in the face. It's okay, this is normal. If you've found people you trust and are smarter than yourself, it will work out better than you ever expected.
We're growing faster than I ever thought. A few weeks ago we got to the point where there are teams handling BD and teams that are handling Engineering. I've learned to make sure that the vision is set and make sure that I'm focusing my time solely on the things that solely I can do.
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