Blog Update
I've shifted to writng elsewhere on the internets. See you there?
Serial entrepreneur currently at Game Ventures (we make sports games on social networks and mobile phones, we don't invest in gaming companies. Quit asking).
http://www.linkedin.com/in/zakimahomed
Getting in touch:
alizaki at gmail dot com
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I co-founded TimeSvr while still in school in Singapore. I had a few months before graduation (class of '08, for those interested) and finding a real job seemed quite pedestrian and all to normal. So I got a few friends together and we set out to build a company that fused technology with real people. TimeSvr is a smart app which connects you with a real live human being who will help you "save time, get things done". It’s what you would get if Siri had a real person on the other end.
We didn't really raise any money and wanted to bootstrap the company with less than $10,000. We hired a couple of pretty girls and a college kid to serve as our first assistants, thinking we'd take a days to train them while the app was being developed. Running a 24/7/365 service with 3 people means my co-founders and I had to man the stations most days for a few hours. Our 'few days' of staff training stretched to become a 45 day closed beta, during which we had 200+ actual users using the service 24/7/365. We were delivering real value to real people - helping real estate agents sort out their schedules, booking hotels for sales people on the road and even reminding busy guys that it's their girlfriend’s birthday next week (and would you like us to recommend a present?). To make things better, our app was making it easy for our Assistants to juggle all those requests. We figured that we'd switch to paid plans quickly, let all those wonderful users know and perhaps half would convert to paying users. Worst case, 25% might. We'd still be ramen profitable. Things were good.
I still remember the day we decided to email all our users with a link to upgrade their free accounts to paid ones, with a hard cut off on service. We gave them 2 weeks to upgrade, after which we'd be open to public and all free accounts would be disabled.
Zero.
We thought hoped maybe those emails bounced off, didn't reach the inbox or befell some other delivery calamity. So we tried reaching out to those people directly through their assistants.
One person converted to a paid account.
It's really easy getting people to use (abuse?) your product when you're giving it away for free. It's much harder to convert them into paying users. A user base of free users isn't totally invaluable though. Our users were actually using the service for real things. When that happens, it's just a matter of finding people who'd be willing to pay for it.
Meanwhile, our deadline for public launch approached and we decided to stick to it. We'd been reaching out to bloggers whose audiences would have been interested in a service like TimeSvr. We'd made friends with the smaller startup blogs as well as bloggers focused on self-improvement and productivity. A few weeks before our closed beta ended, we'd included some of those guys into the trial with the promise of a review down the road. I got in touch with them and asked them if a review synced with our public launch was a possibility? We'd of course been giving their readers a discount of some sort.
A couple of them responded with a yes and agreed to write us a launch review (we didn't get to see it in advance, but we took good care of them, so we were hopeful it would be positive). I remember sitting at a hookah bar somewhere in San Francisco when we launched to public and the reviews went live (here's a memorable, fair one by Sid Savara). Since we'd worked a few different angles and ensured the reviewers had enough access (and motivation) to write high quality, detailed pieces, we got picked up by some popular news aggregators as well (including Hacker News) and a much smaller Reddit community. TimeSvr had 15 signups within the hour and everyone was happy. By the end of hour 3, we had 75 very active paying new users and my co-founders were begging to make the influx stop (new users also tended to submit a lot of frivolous tasks to check out the service). We ended up putting a pause on signups and working double shifts to meet demand. TimeSvr does well for itself today and is a pretty profitable little business with 25 employees and a growing customer base.
Someone mentioned how we got "really lucky" TimeSvr was breakeven on the "day it launched". I just smiled and agreed. Sometimes the truth is a lot less appealing than the hope of overnight success.
Every week there's a flurry of articles touting City X as "the next Silicon Valley" or the "Silicon Valley of Europe/South East Asia/China/South Asia". No, it's not.
Great entrepreneurs know how to mitigate risk. Starting your company in Silicon Valley helps derisk your startup (bear with me). Since its less risky to start a company there, more people choose to do so and the virtuous cycle continues.
But wait a minute, you say. What about Spotify? Or Rovio? Or Groupon? Exceptions that prove the rule. See, I subscribe to the 25/74/1 rule of startups.1% of startups are truly exceptional executions which meet the perfect timing, liberally sprinkled with a lot of luck and the right connections. You could start one of those in Kabul and it would do pretty well. Those are the shining stars, but you can never guarantee the company you're starting or investing in will be one of those. Then there are 25% of startups that will fail regardless of where they are because they're, well, crap. Usually these fail before a dollar in funding and everyone goes back to their jobs (or gets an MBA, realizing this startup thing is a lot harder than wearing a suit and showing up at their previous bank job). The middle 74% are the bulk of real startups, which can go either way. These are the companies that benefit the most from being in Silicon Valley, especially if they're in one of the "popular" spaces. The surreptitious connections, access to experienced entrepreneurs, cross pollination of employees can lead to more successful outcomes. And if things go really sour, there's always a Google, Facebook, Yahoo!, Groupon, Zynga to get acq-hired by and vest in peace for a bit.
Silicon Valley mushrooms because it derisks starting a company to a certain extent, in ways other regions don't. This is not to discourage entrepreneurs from starting companies anywhere besides the Valley. Opportunities are everywhere and as the internet truly globalizes, you can make amazing companies anywhere. But you won't have a real eco-system of startups huddled together, with potential acquirers down the door, feeding each other and spreading like a bad rash. You also won't have a severe lack of talent and the echo chamber to deal with, which can be deafening at times. Choose wisely.
About the time when Facebook started taking off (back when Myspace was still bigger, orkut was growing, no one said "fb me" and that creepy dude still stared at you from next to their logo), a popular joke amongst those in the know made fun of how almost every street in parts of the world had at least one garage where some kids were furiously hacking away trying to make a social network. Same was true for every major tech company (Yahoo! 360? Live? Even Wal*Mart had one, if I recall correctly). There were just that many of them. Everybody thought fast following something that was growing like gangbusters and then throwing some traffic at it would result in something equally successful. Almost everybody was wrong.
Starting stuff up is hard. It's the hardest thing I know of, which is why I keep doing it. Perhaps the most important thing to the long term health of your company (and not the short term stuff like not running out of money, etc.) is keeping the founders (and other key drivers of the team) focused and energized. This sounds trivial/easy ("you have many people working for you, great investors and money in the bank, you also need to be interested in what you do?" - yes, if you someone to come in everyday and deposit a piece of their soul into what they do, then yes). Following someone else's vision is a losing strategy when you want to build something of your own.
When you start a company with the blind ambition of beating an incumbent (i.e. when you start a clone or jump into whatever is hot at the time, like social gaming in 2009 and pinterest clones today), then, well, you're going to die a death by a thousand paper cuts. It will be a slow and painful demise as you wake up every morning, a little less interested in carving out your place in the universe and a little less motivated to go and beat the incumbent. To make things worse, while you can feel yourself slip away, they are getting bigger, stronger and better at what they do (after all, they didn't become the incumbent by being stupid).
Most real entrepreneurs I know started off wanting to do big things. Some get lost along the way for a while chasing easy money. The lure of a booming market is a siren call to flip artists looking to make a quick buck as much as it is one for true 'real' entrepreneurs. I'm not asking startups to disgreard markets or opportunity entirely. In fact, market timing is hugely important to companies (perhaps the most important piece?) and I'd encourage you to startup in an expanding market. Just dont forget the importance of a vision. "Company X is killing it" is almost always a terrible reason to start a company (and one I hear often). You need to know (believe!) why you exist and it needs to be the putty you use to shape your company DNA. If your vision is to create the world's best ecommerce experience, then you'll end up with Zappos. Sometimes you can get lucky and tack on a vision after-the-fact, midway through building your company, especially during boom times (I'm looking at your Zynga, with all your talk about "Play"!).
I think successful entrepreneurs start by focusing on their impact. When people ask you about how big a market your startup is in, they're really asking you you how big a dent you can create under optimal conditions. If you try and copy someone else's vision and try to execute 10% better than them (which is something you're also unlikely to do), you won't end up beating them. Your impact will be limited to the size of crater they leave behind and you won't bring anything new to the table.
As an aside, this isn't just me waxing romantic about startups. Check out what this excellent study has to say about impact driven entrepreneurs.
TL; DR: Don't clone, have a vision that leads to real impact. Use vision to shape company DNA. Profit!
Alternative Summary: Fuck the Samwers!
Hot Startup Looking for iOS Ninjas! Ruby Rockstars! Serverside Gurus!
Stop already. If you're looking to hire only rockstars, you're doing it wrong. Rockstars by definition, are rare. Your hiring needs, especially if you're a small/growing company are immediate. If you're skipping perfectly good candidates waiting for the perfect, fully baked candidate to show up, you're not doing your job as a leader.
You've probably heard how one of the most critical things you must must do in a startup is not run out of cash to remain capitalized. But there is the idea of social capitalization as well, which I think is equally important for new companies. Capitalization here is how much of human potential is actually realized by society. Here's Malcolm Gladwell explaining the cooncept better than I can
When you frame you hiring in a nature vs nurture framework like this (with nature of course being those "special" candidates), you realize a couple of things. Namely, the two strategies don't have to be mutually exclusive. And that it's much easier to control the nuture side of things than try to find rockstars.
So instead of writing out that compelling job copy and sifting through 500 resumes today, why don't you ask yourself how you can create an environment where the full human potential of those who work with you is realized, instead? Or better yet, why don't you go ask them? It's a lot less exciting but I believe it's a lot more effective.
Or more aptly, you are not in the same position Steve Jobs is in. I’m going to rant and vent a little here about how it's become really very fashionable for web folk to casually display their disdain for their users. I've heard founders call their users 'idiots', 'morons', even dumb f*cks. This has to stop. Your users are not stupid. Most likely, many of them use your stupid product much more than you do. Or in different ways than you do, at the very least. Unless being a moron is pre-requisite to choosing your product over the hundred possibly (probably) better options available, they have something interesting to say. And while I'm ranting, you're not Henry Ford either, you fool. Customers can have a car in any color they want today. Truly. You are not Steve Jobs. Listen to your customers/users. Take the good and discard the bad ideas they have. Throw in stuff you think would make them do a dance, even if they didn't realize it at first. How do you know the good and bad is? You don't. There is no recipe. Think, or give yourself a long runway to be able to make mistakes. While you have your Customer Development/Lean Startups gaining steam recently, the above had to be said. (I love lean companies that are constantly evolving, but there is definitely whole other rant in me for folk who desperately cling to a recipe for success in order to tackle their fear of failure - in short: learn to pivot on your beliefs too!)
One of the biggest cash and energy drains for a new company are your business development staff. Every time I meet someone who identifies herself as the "Business Development" person for a startup, I always come away less than impressed by them (by always, I mean 99% of the time, of course!). The bigger/hotter the company, the less I feel the BD team will achieve (a function of having more money and the accompanying itch to hire more people).
Here's something that works for me: I'm famously disorganized, so I tend to rely on tricks to make sure I keep getting things done (hey, I even started a company that helps others do the same!: TimeSvr). Here's are a few things that work for me.
When you're growing, you're always looking to hire great people and identifying the wheat from the chaff is pretty much a subjective guess for most people (except the rockstars who come in by reference, of course). Here's what doesn't really work:
* How many golf balls can you fit into a school bus (who cares?)