Category Archives: Entrepreneurship

Developer, Designer, Driver

The ideal founding team for a technology startup in 2014 is one designer, one developer, and one driver (product manager).

Most people in Silicon Valley put a marketer in that third role, but I would argue that marketing should not be a key focus prior to product/market fit. A much more valuable role is a customer-centric product manager who sets the vision and product roadmap, and then drives the team towards the finish line.

The secondary role of this product manager is to serve as a barrier between the product development team and all unproductive distractions. Is the team worried about bouncing rent checks? Then the job of the product manager is to find initial funding. If the biggest problem is finding talented employees, the product manager becomes the HR director. And when customer feedback is needed, it’s the product manager’s job to recruit your early adopters.

If you have identified a real problem and have the right product builders, then finding the first 10,000 people to try your product should be the least of your concerns. Add this early “growth hacking” onto the product manager’s job description.

I often advocate hiring and partnering with people who fit the “jack of all trades, master of one” mold. The perfect product manager is obsessed with the customer experience and does whatever it takes to drive the product towards a solution that solves a key problem for your users.

Inbox zero is a vanity metric

My email inbox is currently at zero, so I have approximately 45 seconds to get my point across until that is no longer the case:

Answering emails feels productive, but it can be one of the biggest wastes of time in your day.

Have you ever had a huge project deadline looming over you, and all of a sudden found yourself performing every little chore to procrastinate? Four hours later, your apartment has never been cleaner, but you’re even further behind in reaching your big goal.

Email is supposed to be the most efficient way to communicate over the internet. Don’t let it be your #1 daily distraction.

I usually triage emails with Mailbox each morning on my way to work. I’ll answer the most important ones immediately, then snooze the rest until my afternoon email break. That way, I get to work and immediately spend my first 4-6 hours deeply focused on my most important tasks of the day. During this time, my phone actually comes out of my pocket and under the desk to avoid distractions.

Once a week, usually on Sunday afternoons, I’ll sit down for a concentrated email session. This is when I draft key emails for the week, answer my email backlog, and unsubscribe from any spam that made its way into my inbox. Each Sunday night, I take a moment to savor the pretty picture that Mailbox provides me when I hit inbox zero. And then I get another email.

 

Should you learn to code?

Professional athletes and pop singers make millions. All-star technology entrepreneurs make billions. Kids now grow up on Facebook and Snapchat, not with baseball cards and CD players. And while traditional manufacturing jobs face constant downsizing, Silicon Valley is a boom town once again. Is it time to embrace your inner nerd and join the nearest coding class?

I love the new generation of startups and organizations, from Codecademy to Girls Who Code, who democratize access to educational opportunities (and career flexibility). But if you see coding skills as a winning ticket to immense wealth, you’re better off trying your luck at the next Mega Millions lottery instead. Here are six more pros and cons to consider before signing up for that new coding class:

  • CON: Following trends doesn’t lead to success. I’m only four years out of college, but have witnessed a huge shift of coding skills into the mainstream since my adolescence. In high school, kids still associated with coders with Steve Wozniak-like nerds. Our school didn’t offer a single computer programming class. The smartest kids already had their eyes on law school, medical school, or Wall Street. Now, teens can’t wait to put “Harvard dropout, startup CEO” on their résumé. Simply mimicking the path of the latest billionaire is a terrible way to chase success.
  • PRO: You can build early prototypes. The best technology-driven startups have a “Show Me” mentality at all levels of the company. If you have the talent to turn your great idea into a working prototype, this significantly increases the likelihood that it will become a reality.
  • CON: It’s not actually your job. Many startup founders believe that the best way to run a technology startup is from the coding front line. While ‘Sprint and Follow’ Leadership is an excellent short-term way to inspire your tech team, your job as a startup CEO is to manage the toughest parts of the business. Mark Zuckerberg and Larry Page haven’t touched a line of company code for years. If you are truly on your way to building a huge, disruptive business, there will be little room on your long-term job description for coding.
  • PRO: You’ll better understand product development. When we plan a new feature launch, I can accurately estimate how long it will take to build. If something breaks on our site, I can dig into the code and search for an answer. I’m miles away from building any independent part of our product, but if you strand me in Techlandia for a couple days, I know enough of the language to navigate around town and keep out of danger.
  • CON: You’re just checking off requirements. Like with Spanish and Mandarin, we are approaching an era where coding languages will be considered a required subject in schools and a valuable addition to résumés. But these skills will never be the only prerequisite for success in Silicon Valley, let alone in other industries. ‘Experts’ will always tell you to learn new talents, from networking to blogging to coding. But being great at any of these skills takes years of commitment. Never start a project because it’s what you are “supposed to do.”
  • PRO: You’ll develop new synapses. Your brain loves a challenge. Instead of picking up a Sudoku book or a Rubik’s cube, try your hand at a new website. Start in beginner mode by editing existing code templates before moving on to novel development.

Jack of all trades. Master of one.

In my hiring process, I love candidates that are great at one thing and willing to learn everything else. If you are preparing to enter the startup world, find your special sauce. Five years ago, Silicon Valley was begging for more developers. Now, skilled designers are in the shortest supply. And, if you are a master salesperson, you’ll be a coveted asset for any team.

If brilliant, efficient code is your thing, own it. But technical novices like Steve Jobs and Jeff Bezos earned their stripes (and market caps) alongside masterful technologists like Bill Gates and Mark Zuckerberg. Identify and cultivate your A+ talent, and you will maximize your chances for success.

Note: This blog post first appeared on Forbes.com.

Is it ever okay to take a break from your startup?

As a startup entrepreneur, is it ever okay to take a day, or (avert your eyes) even a week off?

At any sign of fatigue, my first instinct is always to hit the accelerator. Another few hours of work are just a pump-up speech (and energy drink) away. But after years of leading scientific and technology teams, I’ve long since learned the limitations of constantly returning to this strategy.

Like many tough guy rules, like “don’t show emotion” and “don’t ask for help”, “don’t take breaks” is a simplistic platitude.

Make no mistake about it – I am obsessed with LabDoor. My work keeps me up late into each night. I come home and reflect on our daily successes and failures. Many nights are spent working through major work challenges in my dreams. Then, I wake up, strategize in the shower, and get back to work.

‘Sprint and Follow’ Leadership is great for a short-term boost in work output. But every time you force your team (and yourself) beyond its limits, know that you are borrowing against future productivity.

Remember when you used to pull ‘all-nighters’ in college? It may have seemed like a good idea at the time, and may have even saved you from a few failed exams. But when you understand these three factors, maybe you’ll reconsider:

  1. Why were you in the library at 3AM Wednesday morning? Could it have anything to do with that Sunday morning hangover that kept you unproductive until 3PM that day? A big Sunday study session would have saved you a full night of sleep.
  2. Was your mind at 100% for your big test? Scientifically, that’s nearly impossible. Studies show that 17 hours of sleep deprivation has cognitive effects equivalent to a BAC of 0.05%. At 24+ hours without sleep, your equivalent BAC level would leave you illegal to drive a car.
  3. What did you do immediately after that exam? Odds are that you didn’t immediately start studying for your next big test. Be honest – you skipped your next class, went straight to bed, and paid back your sleep debt.

We’re not building LabDoor for a quick exit. We have hundreds of big tests in front of us. In our early months, we were proud of our frequent all-nighters. Now, we’re planning ahead. Consistently shipping new code every day and novel science every week. And now we’re not embarrassed to take a couple weekends and holidays completely off the grid.

This blog post was written weeks ago, and automatically published today. Our office is closed, and everyone is home with their families. LabDoor is poised for a huge 2014, and our team is going to be running at 100% all year.

CEOs vs. Journalists

I’m not the only person who has noticed a jocks v. geeks dynamic in sports journalism.

Sure, writers love to tell that story of the national hero that once bagged groceries. But even the biggest fan boys and girls can’t help but snicker when they find the star quarterback going through rehab.

If journalists can’t be cool, at least they can be honest and unmerciful.

But in the tech world, journalism turns into geek on geek warfare. The school newspaper vs. the computer club. This dynamic tends to be even more hostile.

We can both be better.

CEOs: Learn from the mistakes of professional athletes in this space. Don’t be Barry Bonds. No one ever wins a fight with a reporter, even everyone’s hero Elon Musk.

But don’t be Derek Jeter either. Ditch the clichés. Every entrepreneur ‘hustles’. We all ‘play to win the game’. Every startup wants to ‘change the world’. But very few entrepreneurs truly break down the reasons why their startup failed. It’s all about honesty and transparency. Nothing beats learning the inside story behind a team or product that you love.

Writers: Aspire to live up to the title ‘journalist’. Whether you write for the Wall Street Journal or a personal blog, find the story behind the headline. Startups launch products, raise money, and go out of business every day. What lessons can we learn? What trends are you seeing in the market? Who are the unsung stars of these companies?

There’s a big difference between analysis and antagonism. There’s a word for members of the media who constantly seek to ridicule the missteps of famous people – paparazzi.

Dealing with rejection

It happened again. You walked into a VC partner meeting with a ton of confidence. Your first meeting went great, with the associate gushing over the potential of your startup. Then, you got an introduction to the partner specializing in your industry. Another slam-dunk. But today at the partner meeting, you took some hard shots. There were a couple questions you didn’t handle cleanly. The partner at the far end of the table had her arms crossed defiantly the whole pitch. And by the time you made the drive from Sand Hill Road back to your office, you already had that dreaded email in your inbox:

“Thanks for taking the time to present your company to XX Capital. While we were very impressed with your passion and knowledge of the industry…”

All of a sudden, you’re getting flashbacks to being 17, opening the mailbox, and pulling out that little, standard envelope with your favorite college’s emblem on the top left corner. You know that they can’t fit an entire enrollment packet into that one-page letter.

Even the very best entrepreneurs in the world get rejected over 50% of the time that they pitch an investor. When Mark Suster tells his fundraising story, he makes it very clear that 75% of investors turned him down. And this was when he was pitching two startups that ended up with very successful exits.

So how do you handle the constant pressure of rejection?

The first lesson is to never shy away from it. The only way to successfully run an investment round is to run startup funding as a sales funnel, identifying as many qualified leads as possible, then running through them with passion and intensity. If you get so afraid of rejection that you slow down your process at all, you’re finished. There’s no way to half-ass the funding process.

The second lesson is to just get used to it. Over the course of two startups, I’ve already run through close to 100 pitches. My rejections are definitely over 50%, and likely even higher than Suster’s 75% number. Prepare yourself at the beginning of the process for short-term failure, and know that they’re practically a requirement on the path of startup success.

The third lesson is to celebrate the wins. All those rejections become worth it when you finally get an investor to say yes. Really savor those wins. Drink a six-pack with your team. Accept the pats on the back from your friends. Don’t let anyone tell you that it’s not a big deal to raise money for a startup. Fundraising is hard work, and is often a vital part of growing a rapidly growing, scalable startup.

The fourth, and most important, lesson is to learn the ‘why’ of the rejection. Sometimes the investor doesn’t feel comfortable with the industry. Other times, they’ve been burned in this space before, and are hesitant to jump back in. There are times where investors are simply distracted by external causes, from an upcoming trip to a pending divorce. These are all things that you are not expected to control.

However, if the investor was confused by your pitch, missed the key value of your startup, or disliked the delivery of your presentation, there are lessons to be learned. I wince when I think back at some of my very first pitches. The slides were poorly organized, I stumbled through my words, and the business model was practically incomprehensible. It is no wonder so many investors turned me down in the early days. But after nearly every meeting, I opened up this laptop, and performed a brain dump of all the lessons I learned in that pitch. Where had I connected with the investor? Which parts piqued her interest? Why did I get the ‘confused puppy’ look during the monetization slide?

After every few pitches, I would tweak slides to make them clearer. Then, we would bring the team together and form a fake VC meeting, where everyone was allowed to interrupt me, grill me on specific details of my pitch, and generally force me to hit as many curveballs as possible. Afterwards, I still continued to face rejections, but now they were a little less common.

At the end of the day, that’s the lesson. Fundraising is hard. You’re asking someone to give you thousands or millions of dollars to spend on an extremely high-risk venture in an industry where most investors lose money. Treat fundraising season like you do the rest of your business, with extreme energy and passion, and you’ll survive the rash of rejections just long enough to put money in the bank.

On being ‘first’

As entrepreneurs, we’ve all experienced the rush of excitement that accompanies the arrival of a bright new startup idea. There’s something magical about the belief that you are the very first person in history to figure out this secret. It’s hard not to start counting the billions of dollars in your future bank account.

The next time this happens to you, remember this: You are definitely not the first person to conceive of this idea. You are likely not the first startup to enter this market. In fact, the space is likely littered with companies that have already seen real successes and/or dramatic failures.

Too often, a naïve entrepreneur will carefully approach an investor with their unique, precious idea. They’ll pitch it as the next billion-dollar concept. Worst-case scenario, they may even demand an NDA. And then they’ll be crushed when the investor asks them how they compare to an existing, similar product on the market.

I almost experienced this exact fate. Before starting work on LabDoor in early 2012, I had never considered launching a technology startup. As an analytical chemist running a small laboratory in Michigan, I was far away from the hype and excitement of Silicon Valley. Coding tutorials were a fun diversion, but didn’t seem like a business opportunity.

A chance encounter with a business mentor sparked my obsession with product safety ratings. Consumers needed an easy way to understand the safety, efficacy, and price of products like pharmaceuticals, supplements, and cosmetics. Equipped with this vision, along with my knowledge of regulatory chemistry, I spent my nights and weekends for months testing products, building wireframes, and dreaming up strategies to bring my solution to market. Eventually, I exited from my laboratory business, and began full-time work on LabDoor.

Then, I stumbled upon the website for GoodGuide, another application that rated the quality of consumer products. This discovery crushed me. Not only had GoodGuide launched years before me, but they were also backed by huge venture capitalists, and had recently been named one of the most innovative companies in the world. It felt like all of my work on this new startup was a total waste, and I sat and drank a few drams of whiskey while contemplating my failure.

I shouldn’t have reacted this way. To be fair, the idea of product quality certifications has been around for nearly a century, with companies like Underwriters Laboratories, Consumer Reports, and Good Housekeeping originally leading the charge. GoodGuide was just the latest to take a shot at fighting marketing hype with consumer-focused data.

After my literal and figurative hangover wore off, I reevaluated my startup idea in the light of my new discovery. As I dug deeper into the fundamentals behind GoodGuide, I quickly learned about the huge challenges that face applications like ours, from customer acquisition and engagement to business models and monetization. One month later, GoodGuide quietly sold their product and assets to Underwriters Laboratories, having struggled to surmount these obstacles.

With this knowledge, our team regrouped and redoubled our efforts to build LabDoor into a sustainable, profitable company. We interviewed every target user we could find, and became obsessed with providing value to our early customer segments. We purposely took meetings with investors who had previously backed GoodGuide, knowing that they would ask us the toughest questions. We raised a smaller amount of money, and carefully built monetization into our go-to-market strategy. The result is our current product, constantly evolving, rapidly improving.

About a year later, I actually met the original founder and current CEO of GoodGuide. I’m sure they took my meeting with a mix of curiosity and skepticism. While they were very interested to see another company take a shot at their space, I definitely sensed in them a cynicism about the market. After nearly five years from great data scientists and over $10 million from leading VCs, GoodGuide was unable to effectively alter consumer purchasing decisions from bad products to good ones. How would we be any different?

A smart investor once told me: “Identify the biggest risks in your startup, and attack them first.” Instead of being the biggest impediment in our path, GoodGuide actually helped to highlight some of the largest roadblocks to our success.

In the months since, I’ve identified other companies in the space, and even a couple startups that have launched behind us. Now, when I hear about a potential competitor, I take a little time to study their story, and then get back to work at LabDoor. There will be a winner in this space, and I know we won’t be first or last, but I can guarantee we’ll diligently pursue our grand vision with a clear knowledge our market’s ecosystem.

There was commerce before Amazon, search before Google, social media before Twitter and Facebook, and computers before Apple. As cliché as it sounds, startups truly are about execution. When you find a company who got there first, calmly take note, learn from their mistakes, and most importantly, keep building.

Take as many entrepreneur meetings as possible

If there’s one idea from this blog series that I hope sticks with the most startup folks, it’s that entrepreneurs should go out of their way during the fundraising process to meet as many fellow entrepreneurs as possible.

This may seem counter-intuitive. Fundraising is supposed to be a ‘full-time job’. No time for ‘having coffee’ with a ‘random entrepreneur’; just “put money in the bank”. That’s the advice I always got.

However, fundraising is a very exhausting process. We pour endless energy into an investor and hope that something sparks in their minds.

Conversely, in meetings with entrepreneurs, energy flows back and forth, as each party fills with excitement while discussing their vision and goals. Worst-case, a meeting with a fellow entrepreneur turns into an impromptu counseling/commiseration session, with both sides bitching about a disrespectful investor or sharing the constant fear of missing payroll.

I’ve found that these meetings are a great way to recharge along the fundraising path. They are also often great sources for investor introductions and references, which can actually make the journey significantly shorter.

For me, this was one of the most important features of joining a startup accelerator. Having thirteen other CEOs available for support and feedback was incredible.

Remember: Never startup alone!

Playing poker with investors

Poker Short Stack

“This round is closing in two weeks. Are you in or out?” vs. “This term sheet self-destructs in two weeks.”

Take it or leave it. Investors are particularly good at this. Here’s why:

  1. They are way more experienced than you. Let’s say you’re pitching First Round Capital. They have invested in 185 companies and participated in 297 rounds (at time of publication). I consider myself a somewhat experienced entrepreneur, and this is my second company and third round.
  2. They have a way bigger stack of chips.

You’re never going to win a staring contest with a VC. In six months, they’re still going to be collecting their management fees while you start making plans to move back into your parents’ basement.

But entrepreneurs have three great things going for them:

  1. Carried interest. VCs often make 2% management fees on the fund and 20% carried interest on the fund’s profits. Nothing kills an investor more than that fund-maker that slipped through their fingers (See Bessemer’s Anti-Portfolio).
  2. The rest of the table. VCs try to get you to focus on a one-on-one battle. But you can engage with hundreds of investors at once. Don’t let a few rejections get you down.
  3. Your cards. Your startup is your gamble. But you get to pick the team, build the product, and target the market. Do it right, and your odds skyrocket.

I walked into every negotiation with a great hand and a tiny stack of chips. Be supremely confident that you’re holding a future billion-dollar company, and then go all-in.