Sometimes I wonder if Google, Amazon, Facebook, Apple and Microsoft all have the same innovation guru calling the shots. I’m pretty sure there is a 65y old guy somewhere in the Silicon Valley that organizes secret retreats with Zuckerberg, Bezos, Cook and co. I mean, these companies are converging on so many themes: social, cloud, search, mobile, gaming, advertising, voice, smart assistants, now VR headsets. I guess the good news if you are Microsoft is that you seem to be pushing hard to make GAFA more like GAFAM…
– Box was founded in response of founder’s need to fix file sharing on the internet
– 3 forces contributed to Box emergence: cost of storage dropping dramatically, more powerful browsers and networks, and people wanting to share more and more and from more locations
– after product launched, was in between a consumer product (too many features) and an enterprise product (not enough features)
– consumer looks really fun, enterprise looks really hard. But in consumer space, it’s hard to monetise. Only two ways: people either pay for the app, or you sell advertising.
– to measure the opportunities, let’s look at global market sizes:
$35b = money spent on apps
$135b = global digital advertising
$3.7 trillion spent on enterprise IT per year…
Should you fight with millions of people for a bit of money, or with few people you charge lots of money?
– Enterprise software: building is slow, expensive, complex, and sales process is also very slow (and usually involves an intermediary, which internet people hate)
WHAT HAS CHANGED IN THE ENTERPRISE?
Everything has changed in the past 5 years, most magical time to build an enterprise software company
– on-premise computing -> cloud
– expensive computing -> cheap, low cost computing. Barrier for client introducing a product to their enterprise is lower.
– customised software -> standardized platforms, that the client customises themselves
– large enterprises -> every business can be sold an enterprise software. Makes the market much larger for enterprise software
– regional -> global, people will buy enterprise software from anywhere
– IT-led -> user-led, bring your own devices etc
LOTS OF INDUSTRIES NEEDING NEW TOOLS
– every company needs better, faster, more secure technologies
– retail: will need technologies to reach customers across all channels. No current solution addressing this [totally true, huge but complicated opportunity]
– every single healthcare company needs to personalize its services to the patients, electronic health records, assistance for doctors, etc
– media: from linear to on demand experiences, new forms of distribution and production need to appear. Need for big data analytics for marketing, etc
HOW TO GET STARTED?
– spot technology disruptions: look for new enabling technologies that create a wide gap between how things have been done and how they can be done. Ex: iPad disrupting blueprints management and collaboration, www.plangrid.com
– intentionally start small: start simple and expand over time. What are the gaps in the incumbents solution that customers will want to use? Expand to the larger solution at a later time. Incumbents will overlook you [or buy you if they notice you get traction?]
– find asymmetries: do things incumbents can’t or won’t do because the economics don’t make sense to them, or because technically they can’t.
Ex: software suites have a hard time being on multiple platforms, so go multi platforms [lesser service across more platforms]
– Find the fringe/extreme customers: go after those who are working in the future without totally losing their minds
– Listen to customers, but don’t always build exactly what they want, build what they need
– Modularize (openness, APIs), don’t customize
– Your product should sell itself, but you will still need sales people to help clients navigate the competitive environment and your product
Bilan just published an article on Robinhood, the startup that promises to unlock free stock trading for a new generation of clients.
Pour Laurent Haug, spécialiste du digital banking qui a conseillé et oeuvré pour des institutions financières suisses et genevoises de premier ordre, «ce qu’on voit c’est deux types d’acteur s’affronter: les entreprises traditionnelles et la nouvelle génération de mastodontes du web. On peut poser la question ainsi: quelles sont les skills qu’il faut pour réussir au 21ème siècle? Quelle genre de compétences une société doit-elle posséder pour offrir des services à des clients toujours plus mobiles, qui interagissent par un nombre grandissant de canaux? Il faut des data analysts, des spécialistes UX, des programmeurs iOS, android, windows phone, des information architects, des sysadmin, des spécialistes du cloud, des designers, etc. Qui a ces gens sur son payroll? Apple/Google/Amazon ou les grandes banques?»
Part 11 of Stanford’s How to start a startup class. Presentation by Ben Silbermann (Pinterest), John Collison (Stripe) and Patrick Collison (Stripe) on how to hire and create a strong corporate culture. All notes are consolidated on a single page here.
MOST IMPORTANT ASPECTS OF BUILDING A COMPANY CULTURE
– who do you hire
– what do you do everyday, why you do it
– what you choose to communicate
– what you choose to celebrate (and punish)
– have everyone informed (transparency), which becomes a challenge as your company grows
– have everybody aligned on the vision
WHAT DO YOU LOOK FOR IN THE FIRST 10 EMPLOYEES
– hire people that look like you and share your values
– look for multitalented people who have a lot of interests outside of work [ties into what E.Schmid is calling “smart creatives”]
– nobody knows your company, so you will have to fight lack of awareness and relatives telling future employees not to join
– have your early employees refer friends, word of mouth is a very powerful way to recruit
– get people early in their career, most of them will likely be undervalued
– genuine, straight people, trustworthy, who like getting things finished, with no ego getting in the way
– there is no wrong place to find people
HOW TO IDENTIFY RAW TALENT
– you never 100% know if people are going to be good [remember to use that trial period as a real trial period]
– ask yourself what’s really world class. Ask people who are world class at a certain thing what you should be looking at in a new hire, the questions to ask
– good people want to solve tough problems, to come on hard things
– be very transparent why it’s an amazing opportunity, but also explain that it’s gonna be hard.
– tech people: spend a week-end working with the person
WHAT CHANGES DID GROWTH BRING TO YOUR COMPANY?
– either you fail, or growth becomes your number one problem [Better be good at it]
– try to make people feel like they are in startups inside a larger organization. Let people control the ressources and priorities and let them know how success is measured.
– recreate diversity inside teams (designers + writers + programmers together)
– as you grow, your time horizon grows. At the beginning you hire people for a month, then you hire them for years
– at the beginning, you need people who can contribute immediately. After a few years, you can make longer term investments, start working on things that will pay off down the road and not immediately.
– your tools will need to evolve (from email to better communication tools, because it becomes harder to copy the whole company on emails)
– make sure people don’t HAVE to grow into leadership roles. Some early hires have what it takes to become managers, others don’t. Don’t create an organization where the only way to evolve within the company is by taking a management role.
Just saw another presentation by a speaker who claimed to decode millennials for a bunch of baby-boomers. I’m getting so tired of these talks. I understand it’s a good business model to make CEOs panic by telling them “you don’t understand anything, pay me a huge amount of money and I’ll make sense of all this for you”, but my god this is such a slippery slope:
- No, this generation hasn’t invented revolutions. Totalitarian regimes have been overthrown way before social media and mobile phones
- I’m not seeing a generation with “stronger values”, or that is more “environment conscious”. These kids are like all of us, they would kill for having a new phone every 6 months. I’m sure H&M and Zara are still producing with cheap labour in Bangladesh, and make more money than ever.
- Any presentation that offers “facts” when making generalizations about a group of hundreds of million of people is suspicious to me. I’m pretty sure geographical, cultural and socio-economical differences make this population heterogeneous.
- “Millennials are not loyal to brands”. I have no idea how that can be measured, seems to me that running away from bad services or products has nothing to do with age. Have you heard of instagram and snapchat? I feel like millennials are pretty attached to these brands.
- Millennials want instant gratification in their interactions with brands, but isn’t that the case for everyone?
- My analysis is the more it changes, the more it stays the same.
- Still watching hours of entertainment, my time was MTV, now it’s YouTube
- Consumerism as high as ever, just not on same products and brands and maybe shopping differently (still Amazon = 2% of US retail)
- People still struggling with how the world goes, same as any youth any time (hippies, punks, grungies, etc)
- People relying on their friends to make decisions, network just got faster and bigger but that’s about what the novel part is about
- Entrepreneurship making a comeback, not appearing. Making a comeback, just like after any of the numerous economical/innovation crisis in history
- People still animated by those ancestral forces: ego, need for attention, social status, peer recognition, etc
- A generation bringing new tools to the workplace, just like my generation (email, internet) or my dad’s generation (fax, computer) or my grandad’s generation (phone).
Part 10 of Stanford’s How to start a startup class. Presentation by Brian Chesky (CEO, Airbnb) and Alfred Lin (Sequoia, former Zappos) on how to build and sustain a strong corporate culture. All notes are consolidated on a single page here.
– Culture is important to scale the business and the team. How to build a company culture?
– company culture = beliefs and actions leading towards the company goal
– Mahatma Ghandi: “Your beliefs become your thoughts. Your thoughts become your words. Your words become your actions. Your actions become your habits. Your habits become your values. Your values become your destiny.”
– Why does corporate culture matter? Provides alignment, stability, trust, exclusion (what not to do) & retain right employees.
– Why does corporate culture matter? Returns of best companies to work for close to double of others
– Create a “core value worksheet”
1) what are the personal values most important to the founder(s)?
2) what are the most important values for business success?
3) what values will you look for in employees?
4) what could not be tolerated?
5) incorporate your mission into your core values
– Elements of high performing teams:
2) trust leads to the ability to have debates and constructive conflicts
3) if you don’t have debate, there can be no commitment. You need to come to the right answer before people commit
4) If people don’t commit, you can’t hold them accountable
4) if people can’t be held accountable, there will be no results
– Some best practices for culture:
1) incorporate your mission with your values
2) think harder, deeper, longer about values
3) interview for cultural fit
4) evaluate on culture as well
5) make it a daily habit
Brian Chesky, Airbnb
– First you build a product, then you build a company. To build a company you need a culture
– Our product changed, but our values didn’t. There have to be things that don’t change, that are unique to you
– Wrote core values before hiring anyone
– First hire took time, because this person would bring some of their DNA to be added to the company’s DNA
– You want diversity of culture, age, background, education, but you don’t want diversity on values
– We want people who join the company for the one thing that will never change: the mission of the company. Not because they like the valuation, or the money.
– Constraints bring creativity. The less money ou have, the more creative and frugal you will be
– Three things you never hear about culture:
1) nobody talks about culture, it’s mystical and fuzzy
2) culture is hard to measure, and what’s hard to measure has a tendency to be discarded
3) culture doesn’t pay off in the short term. If you want to make money quickly, don’t pay attention to culture. Culture makes you hire slowly, which in the short term can slow your progress down.
– hire only people who are world class and adhere to the culture
– have people interview on technical aspects (employees with similar jobs) but also on culture (with employees doing other jobs, that can meet with the potential hire only in the culture)
– Airbnb was ripped off by Rocket Internet who cloned the site, and at a time Airbnb was 90 people they put together a team of 400 with 90M raised. Airbnb shied away from buying them because they wouldn’t fit culturally. Mercenaries vs missionaries.
– Your brand evangelists are you employees. The stronger the culture, the stronger the brand because it will be relayed by all employees.
– Don’t communicate on the details of your products, communicate on your mission (cf Apple’s think different campaign)
– In the early days, airbnb communicated as a utility: save money, find many rooms. Then changed tagline to “travel like a human”, meant to say the company thinks in a certain way, that the world should be a village. Did a lot of story telling.
– Role of the CEO: vision, strategy, people.
– Automate services after they took off. Example: photographers making photos of hosts’ rooms. First was the founders doing it themselves. Then named an intern to manage the process. Then interned was upgraded and hired other interns to manage the photographers. Then it became impossible to manage by hand and then airbnb built a system for it.
- iOS not supporting Flash
- Amazon patenting one-click orders
- Robots reading emails for advertising purpose
- Whatsapp bought by Facebook
- Facebook splitting Messenger from its main app
- Apple upgrading charging cables for idevices
- Google stopping Google Reader
- Browsers embedded into operating systems
- Twitter cutting down on API Access
Part 9 of Stanford’s How to start a startup class. Presentation by Marc Andreessen (Venture capitalist, Andreessen Horowitz), Ron Conway (Founder, SV Angel) and Parker Conrad (Founder, Zenefits) on how to raise money. All notes are consolidated on a single page here.
HOW DOES AN INVESTOR CHOOSE A STARTUP?
– Think about a startup as having all conceivable risks on day one (right founders? can you build the product? right technology? launch risks? market acceptance risks? revenue risks?). Raising money helps you peel away risks from the project. Each round has to help you remove some risks from the equation.
– To pitch: show for each round what risks you’ve eliminated. Show what risks the money you’ll raise will help you get rid of.
– questions asked about founder: is this person a leader? is the person focused and obsessed by the product?
– look for communication skills, because to be successful you will need to communicate a lot, especially with your team
– better founders are solving a personal problem, something they really struggle with
– Venture capital is about outliers, you’re looking for people that are different. There are only a few winners every year
– Invest in extreme strength rather than lack of weakness. Look at extreme strength that makes a project an outlier, but projects with extreme strengths also have weaknesses
– Make sure the startup does not conflict with an existing investment
– Think in terms of opportunity cost: is this really the best way to use that money/time/bandwidth? Every investment reduces the capacity of the investor to make other deals.
– Ron Conway: “we invest in people first”.
– Don’t ask people to sign a NDA, it tells the investor you don’t trust them. Relationship has to involve a lot of trust
– Send a really great, short executive summary. Investors are busy. If you make the cut you’ll get a phone call. If phone call goes well, you’ll get a meeting, and then there is a good chance the investor will invest.
– You want the investors to understand in your first sentence what you do. Get that first sentence perfect.
– Pitch to a lot of people so that your pitch gets better
– Raising capital is the easiest thing an entrepreneur will have to do, much easier than hiring, or promoting your product. If you get in a situation where raising money is hard, keep in mind the hardest is yet to come
– Biggest mistake from founders is to not get things in writing. When somebody makes a commitment, email to them and confirm what they just said to you. Investors have very short memory, forget the valuation, etc. Get rid of all controversy by putting everything in writing. Take notes in meetings, and follow up on what’s important.
CHOOSE THE RIGHT INVESTOR
– investors with a good rolodex and domain expertise will add more value than their money. Dumb money vs smart money debate…
– Seed stage: find someone who can introduce you to VCs for your A-round
– You’re going to live, deal with and go to war with your investors. It’s like a marriage, make sure you like these people because you will spend a lot of time with them. Shared values and ethics are a must. Second time founders take that point very seriously. It really matters who you partners are.
– Your 2 hours meeting with an investor is a microcosm of years to come, so make sure you learn from them and enjoy their presence
RAISING THE RIGHT AMOUNT
– Bootstrap as long as you possibly can, if you can don’t raise money [point coming from a VC…]
– don’t forget there are ways to borrow money instead of selling capital.
– raise as close to your needs as possible, don’t raise too much money because you will dilute yourself too much and complicate your life further down the road (C+ rounds)
– Identify investors mental thresholds. Example: just go below 10M and suddenly the investors turning you down might fight for bits of your project
– How much should a founder sell?
Seed stage: sell between 10 and 15%
Series A: sell between 20 and 30%
Real question: at what point of dilution does the founder get demotivated? If you give away 40% on the seed round, not much remains for the founders who could lose interest.
RAISING MONEY ≠ SUCCESS
– Raising money is not a success, it’s not a milestone. Don’t let your ego get involved. Raising money just puts you in a position to do other things.
Part 8 of Stanford’s How to start a startup class. Presentation by Stanley Tang (Founder of Doordash), Walker Williams (Founder of Teespring) and Justin Kan (Founder of TwitchTV) on their respective experiences, and how to deal with the press. All notes are consolidated on a single page here.
Stanley Tang (Doordash, food delivery startup)
– wanted to start a delivery business, but felt like something was wrong. How could customers be so unhappy about this, yet nobody had figured it out?
– built a prototype in an hour: simple homepage with PDF menus from restaurants and phone number. People called on founder’s mobile number who was handling delivery. [ties back to previous lecture on how you first do manually what you’ll automate/simplify later]
– used square to charge people, apple’s find my friends to keep track of drivers, google doc for orders tracking
– people started to call, and they knew they had a market
– learning experience through contacts with clients, restaurants, drivers
– 3 things: test your hypothesis, launch fast, it’s ok to do things that don’t scale (figure out how to scale once you have the demand)
Walker Williams (Teespring, ecommerce platform)
– advantage of a startup: you can do things that don’t scale.
– finding first users: there is no silver bullet. First users as impossibly hard to get. Do whatever it takes to bring them in.
– don’t focus on ROI at the beginning, focus on growth
– don’t give away your product for free. Value your product, free could give you a false sense of security
– delight users with experiences they will remember, talk to them (constantly, for as long as possible)
– you’ll never get a better sense for your product than listening to users
– reach out to churned customers. Painful but will really help you make your product better.
– listen to social media and communities
– the feature set you start with is not the feature set you’re going to scale with
– if you turn them around, frustrated and unhappy users can become the best champions
– only worry about the next order of magnitude. When you have 10 users, worry about 100. When 100 worry about 1000. You’ll find a way to make it work.
Justin Kan (Twitch.tv) How do you get press?
– before you reach out to the press, ask yourself who do you want to reach (investors, customers, industry)
– getting in the news is useless unless is fulfils one of your business goals
– target your message geographically (sometimes national is less good than local coverage)
– what’s a story? Product launches, fundraising, milestone/metrics, business story (happens once you’re succesful), stunts, hiring announcements, contributed articles
– think about your story objectively… Most of the things you do people won’t care about
– be original: be the first one in your field, this will make things much easier. First game console to raise money on kickstarter got good press, second one much less.
– Keep your contacts fresh [also: give before you receive]
– help your fellow entrepreneurs get coverage, they will help you back
MECHANICS OF A STORY
– think of it as a sales funnel (talk to lot of people, won’t all convert)
1) think of a story
2) get introduced to reporter(s). Ask people who got recent coverage, and ask them to introduce you
3) set a date (4-7 days in advance) for news to go out
4) reach out (get a commitment to invest time). More time reporter spends with you more likely they will cover you.
5) pitch. Write out all the key points you’d like to see published
6) follow up a couple days before the story goes out. thanks for meeting, collateral (photos, videos), how to spell important peoples’ names
7) launch your news
– make sure getting press is worth it, it doesn’t mean you’re successful
– press is not a scalable user acquisition strategy
– can only help with contacts (maybe) and follow-up
– can’t generate stories
– are expensive (generally not a good use of money in the early days)
– can help know what’s interesting about your company
Video of the presentations here.