Jason Fried from 37signals recently spoke in Chicago about Scaling Startups. Insightful and well worth watching.
The people who successfully start independent businesses do it because we have no real choice in the matter. The voice in our heads won’t shut up until we discover if we’re right, if we can do it, if we can make something happen. This is an art, our art, and to leave it bottled up is a crime.
This has turned out to be the most important quality in startup
founders. We thought when we started Y Combinator that the most
important quality would be intelligence. That’s the myth in the
Valley. And certainly you don’t want founders to be stupid. But
as long as you’re over a certain threshold of intelligence, what
matters most is determination. You’re going to hit a lot of
obstacles. You can’t be the sort of person who gets demoralized
Bill Clerico and Rich Aberman of WePay
are a good example. They’re
doing a finance startup, which means endless negotiations with big,
bureaucratic companies. When you’re starting a startup that depends
on deals with big companies to exist, it often feels like they’re
trying to ignore you out of existence. But when Bill Clerico starts
calling you, you may as well do what he asks, because he is not
You do not however want the sort of determination implied by phrases
like “don’t give up on your dreams.” The world of startups is so
unpredictable that you need to be able to modify your dreams on the
fly. The best metaphor I’ve found for the combination of determination
and flexibility you need is a running back.
He’s determined to get
downfield, but at any given moment he may need to go sideways or
even backwards to get there.
The current record holder for flexibility may be Daniel Gross of
Greplin. He applied to YC with
some bad ecommerce idea. We told
him we’d fund him if he did something else. He thought for a second,
and said ok. He then went through two more ideas before settling
on Greplin. He’d only been working on it for a couple days when
he presented to investors at Demo Day, but he got a lot of interest.
He always seems to land on his feet.
Intelligence does matter a lot of course. It seems like the type
that matters most is imagination. It’s not so important to be able
to solve predefined problems quickly as to be able to come up with
surprising new ideas. In the startup world, most good ideas
bad initially. If they were obviously good, someone would already
be doing them. So you need the kind of intelligence that produces
ideas with just the right level of craziness.
Airbnb is that kind of idea.
In fact, when we funded Airbnb, we
thought it was too crazy. We couldn’t believe large numbers of
people would want to stay in other people’s places. We funded them
because we liked the founders so much. As soon as we heard they’d
been supporting themselves by selling Obama and McCain branded
breakfast cereal, they were in. And it turned out the idea was on
the right side of crazy after all.
Though the most successful founders are usually good people, they
tend to have a piratical gleam in their eye. They’re not Goody
Two-Shoes type good. Morally, they care about getting the big
questions right, but not about observing proprieties. That’s why
I’d use the word naughty rather than evil. They delight in
rules, but not rules that matter. This quality may be redundant
though; it may be implied by imagination.
Sam Altman of Loopt
is one of the most successful alumni, so we
asked him what question we could put on the Y Combinator application
that would help us discover more people like him. He said to ask
about a time when they’d hacked something to their advantage—hacked in the sense of beating the system, not breaking into
computers. It has become one of the questions we pay most attention
to when judging applications.
Empirically it seems to be hard to start a startup with just
founder. Most of the big successes have two or three. And the
relationship between the founders has to be strong. They must
genuinely like one another, and work well together. Startups do
to the relationship between the founders what a dog does to a sock:
if it can be pulled apart, it will be.
Emmett Shear and Justin Kan of Justin.tv
are a good example of close
friends who work well together. They’ve known each other since
second grade. They can practically read one another’s minds. I’m
sure they argue, like all founders, but I have never once sensed
any unresolved tension between them.
Topics include big vs. small, fear of success, turning points, solving universal problems, if investment and success has affected the company and how it’s evolved over 10 years, the “37 Signals culture” and mindset (like spending only one day a week in the office), and finding design inspiration in nature.
Other topics include: financial modeling, how to keep costs low, and Mint’s revenue model. He also gives suggested goals and milestones for each successive funding round. One interesting fact – today Mint, which is free, generates $30/year/user from various offers and value added services.
If you are a startup founder, you’ll want to bookmark this and refer back to it. Seriously.
Jason Fried, co-founder of 37 Signals, talks about his take on doing business. He shares his belief in the value of simplicity and how it can impact the optimal workplace. Fried works to identify the hidden inefficiencies of the typical workplace and develops common sense ways to fix them. Absolutely worth watching!
In this speech Morten Lund – Danish entrepreneur and seed investor – speaks about his life as an entrepreneur. It has been a rocky ride with the very successful exit with Skype in 2003 and his bankruptcy in 2009.
Driven by the will to create new ventures, Morten Lund has co-founded more than 50 high-tech start-ups in the most varied industries, ranging from Internet, health and travel to alternative energy.
In 2003, he invested in his so far most successful project: the online communication software Skype which has over 500 million users today.
Not averse of taking risks, Morten Lund bought the heavily indebted Danish free daily newspaper Nyhedsavisen in 2006, with the ambitious goal of making it profitable again. Despite of the newspaper becoming the most read in Denmark, the project failed and he had to declare bankruptcy in early 2009.
Lean management for the “enterprise” is taught in many MBA programs. What is not very common is teaching entrepreneurship – especially the parts that really matter – to startups. With Startup Lessons Learned Eric Ries has started a nice initiative to change just that.
Robert Scoble has visited him in his office and they have an intensive talk about “real” progress in a startup, the minimum viable product, the five “whys”, startup metrics, scaling of the lean startup ideas, continous deployment and a lot more. I really recommend you watch both videos. It’s an hour well spent.
Todd Sattersten has published an eBook called Fixed to Flexible and it is about cost, price, margin, and the options we have for how to sell. It is a quick and good read. I especially recommend it for entreprepreneurs, product/marketing guys and sales people. It might change the way you look at pricing.
- The story of cost is that it always trends down. You can count on it.
- The story of price is that it is more flexible than you think.
- The story of margin is that is is a stark choice between opposing strategies.
- The story of options is that you have many more than you realize.
The way they are stated here they seem simple and obvious. However, I recommend you read the book. Every topic has a concise an entertaining explanation.