Archive | October 2014
2014-10-28  

Building for the Enterprise

Aaron Levie, Founder of Box, describes how the enterprise market differs from the consumer space for startups and how to best build products for it.

Aaron Levie – @levie

Notes

  • 50s – Introduction
  • Why building for enterprise is better than consumer, history of box, state of enterprise, patterns in enterprise
  • 3m01s – 99% of Fortune 500 using box
  • How did we get here?
  • 2004 really hard to share
  • cost of storage dropped, more powerful browsers, faster Internet; look for changing technology factors
  • 2005 box.net, funding from Mark Cuban; 100,000 users; 1 gb free storage; over-serving consumers; under-serving business
  • 10m30s – 2006: need to choose consumer or business focus; consumer hard to monetize (pay or advertise)
  • consumer: mobile $35 billion, advertising $135 billion; enterprise: $3.7 Trillion on IT yearly
  • enterprise very competitive and unappealing because slow to build, to sell, software generally complex, no love and care, sales process intermediary
  • 16m40s – 2007: investers, “you’ll never make it in the enterprise”;
  • strategy: do it differently; how do we move to customer directly; build for user beyond RFP; look for technology change
  • 240,000 business customers
  • architected solution to enterprise
  • 19m51s – what has changed about enterprise and made it easier to enter in past 5 years
  • now is magical time to enter enterprise: cloud; cheaper low cost computing, open platforms (customize above software), larger market (2 person business to 300,000 business), international, because of mobile IT more user focused, user led (finance, marketing, …)
  • IT now has to manage smart phones
  • 3 billion people online changes how business gets product to people
  • every industry is changing, need help dealing with distruption; they will need helpl from startups
  • 27m00s – changes in retail, healthcare, media creation & distribution, and every other
  • 30m56s – every company in the world needs better technology to work smarter, faster, more securely
  • 31m55s – How to get started
  • spot disruptions – look for new enabling technologies that create a wide gap between how things have been done and how they can be done
  • 34m27s – PlanGrid example in construction industry
  • 36m11s – Intetionally Start Small – and expand over time, if people call it a “toy” you’re on to something
  • zenpayroll example
  • 38m52s – find asymmetries – do things that incumbents can’t or won’t do because it’s economically or technically infeasible
  • go after suite players by building platform agnostic; benefits
  • 41m25s – Find the Almost-crazy Outliers – go after the customers that are working in the future, but also haven’t totally lost their mind
  • skycatch example – enterprise drones
  • 43m08s – Listen to Customers – but don’t always build what they want, build what they need
  • Palantir example
  • 43m58s – Modularize, Don’t Customize – every customer will want something a little bit different. Don’t make the product suffer for this.
  • Salesforce example
  • 44m15s – Focus on the User – Keep “customer” DNS at the core of your enterprise product. This will always pay dividends
  • box example
  • 44m37s – Your product should sell itself – Sales should be used to navigate customers and close deals, not be a substitute for great product.
  • Mixpanel – analytics for mobile, get foot in door with developers, then inside sales
  • Recommended reading: Crossing the Chasm by Moore; Innovators Dilemma by Christensen; Behind the Cloud by Benioff

Additional Reading

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2014-10-28  

Company Culture and Building a Team, Part 2

Patrick Collison, Co-Founder, Stripe; John Collison, Co-Founder, Stripe; Ben Silbermann, Founder & CEO, Pinterest discuss finding, hiring, and integrating a startup’s first 10 employees.

Patrick Collison (@patrickc)
John Collison (@collision)
Ben Silbermann (@8en)

Notes

  • 52s – Ben Silbermann; what are most important parts of building out culture and hiring
  • 1) who do we hire and what do they value 2) what do we do and what do we value 3) what do we choose to communicate 4) what we choose to celebrate
  • 1m32s – John Collison; transparency of plans with employees; use slack
  • 2m50s – Patrick Collison; need to delegate via culture
  • 5m10s – how to hire first 10 employees
  • Ben: very inductive; look for people you want to work with; hiring like gardening; look for creativity and quirkiness
  • John: first 10 hires hard, friends of friends, hires early in careers
  • Patrick: people who like getting things finished, github resume not as good as deep projects; genuine, caring, completing things
  • Ben: craigslist, tech talks, weekly bar-b-q; you have to go seek them out
  • get them excited early; anticipate recruiting need down the road
  • hard to hire people for niche things
  • 15m40s – as an inexperienced founder how do you identify raw talent?
  • Ben: you’ll never 100% know; if a bad hire, try to fix, then end quickly; find mentors who are experts; build list of questions and evaluate metrics
  • John: interview in way you feel comfortable
  • Patrick: work with them before you commit to hiring for first 10
  • Ben: reference people, what are they like to work with, reference good source of new recruits
  • 24m20s – what have you done to get new hires up to speed?
  • Ben: at first onboarding happen naturally and fast; need more formality as company grows
  • John: 1) get them up and running doing real work quickly so you can measure them, 2) give feedback quickly (e.g. how to adapt to culture)
  • 28m20s: what are biggest changes to hiring process and management as company has grown?
  • Ben: goal is to make teams feel as autonomous as possible; startup of startups; abstracted units; remove barriers; referrals become more important
  • Patrick: time horizons change quickly; thinking farther ahead long term; plays into hiring; group meals
  • transparency easier in startup because everything is new, rowing in same direction; weekly catchup meeting
  • hackpad (google docs with newsfeed) to see everyone’s work
  • Q&A
  • 39m14s – are early hires able to grow into leadership roles?
  • yes and no. not everyone born knowing how to manage but can learn, volunteer lead project, group, dept; give people a shot
  • 42m58s – how has pinterest vision change?
  • discovery by viewing other peoples boards not just building your own
  • 43m33s – how do you convince people to join a startup?
  • Patrick: prospect is exciting, guarantee would be boring
  • find out if they are good fit with mission or just looking for startup experience
  • make more of a contribution at startup than big company, attracts the best and most capable
  • 48m26s – how has user base affected hiring strategy?
  • hire people who understand product and use it, ambitious about mission

Additional Reading

Series

2014-10-23  

Company Culture and Building a Team, Part 1

Alfred Lin, Former COO, Zappos and Partner, Sequoia Capital; Brian Chesky, Founder, Airbnb talk about the importance of building company culture and building a team around core values. Lecture starts off academic and then picks up at 11m25s with Brian Chesky interview.

Notes

  • Alfred Lin introduces lecture, covers culture
  • 53s – what is culture, why does it matter, core value worksheet, elements of high performaing teams, best practices for culture
  • 1m11s – what is culture? Everyday core values and actions of each member of the team in pursuit of our company mission.
  • 2m44s – why does it matter? “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.” – Mahatma Ghandi
  • 3m10s – first principles, alignment, stability, trust, exclusion, retention
  • best companies to work for also best performing
  • 4m52 – core value worksheet
  • honesty, integrity, service, teamwork, … go deeper level of description
  • elements of high performing teams (results, accountability, commitment, conflict, trust)
  • mission to values, thnk deeper about values, interview for culture fit, evaluate performance on culture as well, make it daily habit
  • 11m25s – airbnb, Brian Chesky Q&A
  • airbnb background
  • core values: champion the mission, (mission: belong anywhere and bringing people together)
  • london riots story
  • 23m30s – creative and frugal: obama o’s; captain mccain
  • 27m22s – how has strong culture helped make tough decisions
  • 1) culture not talked about, 2) hard to measure, 3) long term results (not short term)
  • 32m40s – culture and brand 2 sides of the same coin
  • no such thing as good culture or bad culture, just strong culture or weak culture
  • if you have strong culture, the brand will come through
  • talk about what we value, without that you become utility and commodity
  • 35m22s – how to communicate what company does
  • “forget hotels, save money with airbnb” – too limiting, “travel like a human”, lots of story telling
  • role of CEO: 1) articulate the vision, 2) develop strategy, 3) hire people to fit the culture = company
  • 37m40s – how do hosts reinforce culture? super host level, host convention, apply to list, getting more rigorous
  • 38m28s – open source contributions: a result of culture and hiring, bottom up
  • 41m41s – how did they get users to site in early days? “better to have 100 users love you than 1,000,000 who kind of like you” -PG
  • visited and lived with users, make perfect for one person, then scale
  • on demand photography network
  • 46m10s – is airbnb a tech company or marketing? payments company, trust and safety, regulatory problems (34,000 cities), search and discovery
  • in 190 countries (all but north korea, syria, iran, cuba), 40,000 homes in Paris, offline product, design

Additional Reading

Series

2014-10-21  

How to Raise Money

Marc Andreessen, Founder, Andreessen Horowitz and Founder, Netscape; Ron Conway, Founder, SV Angel; and Parker Conrad, Founder, Zenefits discuss funding for startups. The additional readings for this lecture go into more thourough detail than the talk. However, the discussion does more vividly present the motivations of investors and their thought process when deciding to invest or not. Trust and personal relationships is a strong topic.

Notes

  • 0m36s – What makes you decide to invest in a company?
  • Ron Conway, is this person a leader, is this person rifle obsessed with product, what inspired you, communication skills
  • 2m20s – Marc Andreesen – venture capital is a game of outliers, extreme exceptions
  • 3m30s – invest in strength v. lack of weakness
  • 4m40s – What Ron and SV Angel look for in a company
  • 5m55s – Parker Conrad, experience doing seed round funding
  • 8m42s – Ron, bootstrap as long as you can
  • 9m15s – Marc, key to success: be so good they can’t ignore you
  • cautionary lesson, raising vc capital is easest to do compared to other aspects of business
  • raising money not a milestone, not a success,
  • 11m20s – what do you wish founders did differently when raising funds
  • Marc: relationship between raising cash and risk spending cash
  • risks: founder risk, technical, launch, market, cost of sale, viral growth; like an onion
  • for each round of finding present which risks have been answered
  • 14m00s – Ron: don’t ask people to sign NDA; get things in writing; get things as done as quickly as possible, take notes and follow up.
  • 15m40s – what are specific steps?
  • Ron: SV Angel, seed investor $1 million, 1/30 invested, send short executive summary, team votes on phone call, if goes well invite to meeting, meeting a good sign
  • 18m40s – Marc: series A, after seed round; rarely direct to A series
  • 20m12s – What terms should founders negotiate and care about?
  • Parker: pick right seed investors to get good future
  • 12m03s – How does a founder know who the right investors are?
  • YC does a good job telling you who good investors are
  • 21m50s – How do you think about valuation?
  • Parker: if too high, people will let you know; certain thresholds exist; raise only as much as you need
  • 23m43s – is there a maximum that founders should sell in seed round, A round?
  • Parker: A round typically 20-30%; at seed stage 10-15%
  • Ron: guidelines important to avoid giving away too much
  • Marc: sometimes won’t invest because cap table already distroyed (outside investors own too much)
  • 26m28s – What was most successful investment you made?
  • Ron: Google in 1999; met through Stanford professor and angel investor
  • 29m12s – Marc: AirBNB 2011, $1B growth round; Ron: all 3 founders good, same with google
  • 33m07s – Look for investors that will add value beyond just the money,
  • 34m22s – Capital intensive businesses need more precise when and how much to raise each round, plan should be very precise
  • 37m00s – Investors to avoid and partners: not domain expert, doesn’t have contacts to help business development and intros for following rounds, partner really matters, marriage analogy
  • 40m50s – what is constraint to how many VC invest in: SV Angel invests 1 per week
  • 41m35s – conflict policy, opportunity cost being locked out of a category, of partners bandwidth
  • 45m45s – what convinces you to invest pre-launch, pre-traction: founder and team themselves, product ideas tend to merge, valuation pre-users tend to be lower; founder we’ve worked with or well known; enterprise software cold start, typically founder with experience
  • 47m15s – ideal board structure: doesn’t matter too much, if business in trouble terms will get renegotiated, most conflicts solved without vote

Additional Reading

Series

2014-10-16  

Doing Things That Don’t Scale; PR; How to get Started

  • Stanley Tang, Founder, DoorDash
  • Walker Williams, Founder, Teespring
  • Justin Kan, Founder, TwitchTV and Partner, Y Combinator

Notes

How to Get Started, Things that don’t scale

  • Stanley Tang, DoorDash
  • DoorDash on demand food delivery service
  • talked to 150-200 business owners regarding delivery service
  • 4m00s test hypothesis with simple site
  • ok to hack things together at the beginning
  • used existing tools instead of building infrastructure/ backend (square, find-my-friends, google docs)
  • 10m20s expanded to more cities and now need to scale
  • 10m45s 1. test your hypothesis, 2. launch fast, 3. do things that don’t scale
  • 11m24s Q&A how did first customer hear about you: word of mouth
  • why wasn’t this done before: mobile and existing tech made infrastructure possible
  • future: expand with restaurant delivery then other verticals

Things that Don’t Scale

08-B

  • Walker Williams, Teespring
  • 16m10s teespring allows launching new apparel brands
  • huge advantage of startup over established business is being able to do things that don’t scale
  • 17m10s Finding your first users, turning those users into champions, finding product/ market fit
  • getting first users: no silver bullet, first ones are the hardest to acquire
  • don’t focus on ROI, focus on growth
  • don’t give product away for free
  • turning users into champions by delighting customers, talk to users, read tweets and user communities
  • talking to customers: 1. run customer service, 2. reach out to current & churned customers, 3. social media/ communities
  • 24m45s problems inevitable, so whatever it takes to make them right
  • 26m00s find product market fit: first product launched probably won’t be the final fit
  • optimize code for speed over scalability
  • only worry about the next order of magnitude (100, 1000, 10000….)
  • do things that don’t scale as long as possible
  • 30m20s Q&A
  • t-shirt print is competitive, why launch: had personal pain point while trying to get shirts printed
  • biggest customer base: entrepreneurs trying to build brands, influencers

PR

  • Justin Kan, TwitchTV, Partner Y Combinator
  • 32m55s how to get press, how does it work
  • who do you want to reach? investors, customers, industry, have targeted audience and goals
  • 36m17s what is a story?: product launches, fundraising, milestones, stunts, hiring, contributed articles
  • 39m40s mechanics of a story: think of a story, get introduced, set a date, reach out, pitch, followup, launch news
  • meet writer face-to-face if possible
  • structure story as bullet points and memorize, then go through during interview
  • send follow-up email
  • 44m50s PR Firms: firms can only help with contacts, can’t generate stories, are expensive. do it yourself first
  • Getting press is work, not a scalable user acquisition strategy, not recommended for startups
  • Further Reading
    • The Burned Out Blogger’s Guide to PR, Jason Kincaid
    • Trust Me, I’m Lying: Confessions of a Media Manipulator, Ryan Holiday

Additional Reading

Series

2014-10-14  

How to Build Products Users Love part 1

Kevin Hale, Founder, Wufoo and Partner, Y Combinator talks about how to build products that users love from the perspective of his startup Wufoo.

Notes

  • gap between conversion and churn is growth
  • growth in terms of human scale and how we build our product
  • the best way to get to $1 billion is focus on the values to acquire that first $1
  • wufoo database app with “fisher-price” ui, meaning it was easy to use and attracted wide customer base
  • wufoo Y Combinator funded, located in Tampa Bay FL, 10 employees, no office, acquired by SurveyMonkey
  • used dating and marriage as model for dealing with customers
  • 4m26s # First Impressions
  • human beings are relationship manufacturing beings
  • pass/fail threshold for first-time interactions so much lower than after long-term relationship
  • software first impressions: homepage, landing pages, plans/ pricing, login, signup
  • other firsts: first email, account creation, blank/ starting interface, login link, ad link, first support
  • 6m56s taken for granted quality (atarimae hinshitsu); enchanting quality (miryokuteki hinshitsu)
  • samples: fun login screen, beautiful user guides, etc.
  • http://littlebigdetails.com
  • John Gottman: insight into personal relationships related to business
  • 15m50s Software engineers/ designers are often divorced from the consequences of their actions
  • before launch 100% create software
  • after launch crap gets added: customer support, fix crap, business crap, hiring crap, crap
  • 15m50s SDD (support driven development) inject software development with responsibility, accountability, humility
  • 17m10s SDD = make everyone do customer support
  • 17m30s # 1 support responsible developers and designers Give the Best Support
  • the four horsemen (reasons we break up with each other): criticism, contempt, defensiveness, stonewalling
  • Joe Gebbia of airbnb also doing phone support all the time
  • asking user’s emotional state made for nicer customers
  • 23m05s # 2 support responsible developers and designers Create Better Software
  • direct exposure to users to get better software (not reports or graphs), minimum every 6 weeks, at least 2 hours
  • knowledge gap: distance between target amount of knowledge required to use software and user’s current knowledge level
  • 25m48s when everyone responsible for support every week… growth
  • 27m08s Relationship Atrophy
  • blogs and newletters for user benefits but only small portion using them, instead…
  • since you’ve been gone: wufoo alerts to show new features timeline since last time user was logged on
  • wufoo made everyone say thank you with hand-written thank you cards
  • 31m41s Discipline of Market Leaders 1. best price, 2. best product, 3. best overall solution (customer intimate)
  • best overall solution – almost no money, little bit of humility and manners
  • 33m00s Q&A
  • what if you have customers with differing preferences: start 1 at a time with most passionate users
  • balance focus on product and getting customers: make really interesting product
  • how to make product decision and communicate with team: see what users ask for and figure out why then build quickly to test change
  • king for a day: once a year a random engineer would get entire company to work on their wish list for 48 hour “hackathon”
  • remote working: respect people’s time, 1/2 friday for meetings, 1 day customer support, during week max discussion 15 minutes between employees regarding problem (then bring up on Friday, but typically it would get solved on own)
  • remote working takes lots of discipline in a different fashion
  • 42m20s how to set up accountability for employees: profit sharing, to do lists – every updates text file with what they plan to do for week, then what they actually did, discuss at meeting if difference
  • how do you hire people that can work remotely: hire as contractor on month long project, monitor customer support ability, ask people in interview to write by hand a breakup letter
  • something that didn’t work: crunch mode contest

Additional Reading

Series

2014-10-09  

Growth Techniques for Startups

Alex Schultz, VP of Growth at Facebook presents strategies and tactics used to contribute to Facebook’s tremendous growth.

Notes

02m25s – What matters most for growth, retention
06m20s – if retention drops make sure have product/market fit before trying growth hacks
09m21s – different verticals need different retention rates to have successful businesses
09m55s – retention most important for growth, comes from great product
11m00s – startups should not have growth teams (whole company should be growth team)
11m30s – number active users not just registered users, sends number, nights booked, different north star
15m00s – affiliate marketing
17m00s – magic moment (facebook – see your friends, feel love and joy) find what makes people stick to your site
19m30s – marginal users
21m20s – what is that metric to grow your company, what is deepest, have a north star, know magic moment, think about marginal users
22m22s – Tactics, see above, internationalization, vitality, seo, espy, sem, affiliates/referral
28m00s – virality: payload (how many people), frequency (how many times), coversion rate
31m00s – hotmail (low payload, high freq, high cr), paypal (low payload, low freq, high cr)
36m11s – K factor: user-import contacts-send-how many read – how many click-how many sign up – repeat; K factor over 1 leads to growth (after good retention)
38m40s – seo: what do people search for it, how many people, how many sites optimize for it (google keywords); get links from high value, internally linking
41m30s – Q&A
41m31s – email not great for young people, be high class citizen, don’t spam push notifications, don’t do newsletters (everyone getting same message), notifications most effective (filter based on volume), trigger based email

Additional Reading

Series

2014-10-07  

Business Strategy and Monopoly Theory

Peter Thiel, founder of Paypal, Palantir, and Founder Fund describes business strategy and monopoly theory for startups.

Notes

0m52s – competition is for losers
0m57s – outline
0m58s – # Capturing Value – X and Y% are independent variables
3m50s – Perfect Competition
4m37s – Monopoly
5m38s – # Lies that people tell
12m48s – Narrow markets
13m28s – # How to Build a Monopoly – start small and monopolize
18m42s – # Last Mover Advantage – order of magnitude better (massive delta), network effect, economies of scale, branding
27m55s – # History of Innovation
33m00s – Success Cases, vertically integrated complex monopolies (capital intensive)
37m01s – # Psychology of Competition
42m25s – # Q&A
42m45s – find true size of market
43m10s – how does google excel at software effects (network effects ad words, proprietary technology of search algorithm, economies of scale of storing data, and google brand)
44m33s – lean startup and risk
46m46s – google, facebook last in their field (search, social network) but first in 1 key dimension (page rank, real identity)
47m58s – competition recap

Additional Reading

Series

2014-10-02  

Building Product, Talking to Users, and Growing a Startup

Adora Cheung, Founder of Homejoy, describes how to build a startup product and focus on user feedback to get the proper market fit. She stresses the importance of immersing yourself in the industry to the point of working with established companies to learn the ins and outs to become a domain expert while at the same time identifying efficiencies. Adora explains the concept of the honesty curve when getting feedback from users and why charging for a product will get you higher quality feedback. She ends by getting into the numbers of paid growth and the concept of pivoting.

Notes

01:28 – have lots of time on your hand; avoid context switching; immerse yourself
02:30 – * n00b approach
03:30 – * problem (what is it? how does it relate to you? verify others have it)
04:10 – pathjoy
05:20 – * where to start? (learn a lot. become expert; identify customer segments; storyboard ideal UX)
08:40 – get in shoes of customer at all angles; be obsessed collecting data and researching
09:50 – identify customer segments and optimize for them
11:00 – what is ideal customer flow from discovery through closing feedback
11:50 – * what is v1? (MVP; simple product positioning; this is not the hard part…)
14:00 – * first few users (you! your friends, family, co-workers; online communities, HN, reddit; local communities, mailing lists; niche influencers, mommy bloggers; cold calls + emails; press)
17:47 – * customer feedback (support@ very important; surveys ok but interviews better; quantitative: ask why, why, why; beware of honesty curve)
20:38 – NPS net promoter score (how likely to recommend)
21:16 – honesty curve (for free ask friends; for paid ask strangers)
23:53 – * v1 feature creep (build fast, but optimize for now; manual before automation; temporary brokenness > permanent paralysis; beware of frankenstein)
26:40 – perfection not necessary at this stage don’t worry about every edge case
27:10 – listen to feedback but don’t build it right away (ask why rather than pile features on)
28:00 – * s is for stealth, and stupid (someone will steal your idea, there is a first-mover advantage, … just launch it already)
29:27 – * ready for a lot of users? (learn one channel at a time; iterate working channels; revisit failed channels; key=creativity)
32:56 – * three types of growth (sticky; viral; paid; key = sustainability)
33:56 – * sticky growth (good experience wins; clv + retention cohort analysis important; repeat users buy more and more)
34:40 – clv & cohort analysis
38:53 – * viral growth (WOW experience + good referral programs; 1 customer touch points; program mechanics; 3 referral conversion flow)
39:20 – have good referral program
40:50 – $10 for $10
41:39 – * paid growth (simple: clv > cac; advanced: clv(ijk) > cac(ijk); payback time + sustainability
41:43 – * paid growth examples (sem, display ads; facebook ads; group on/daily deals; street marketing; b2b sales; direct mailers)
46:39 – * the art of pivoting (1. bad growth; 2. bad retention; 3. bad economics)
49:55 – * Q&A
50:00 – getting customers to switch

Additional Reading

Series