Startups Are Winning the Remote Work Game. Here’s the Data That Proves It.

By Dharmesh Shah on October 4, 2017

Today the State of Remote Work 2017 report revealed that 63% of people in product and engineering roles work remotely at least once per week, which is 21% more than the average.

Along with key findings on how remote work is changing the workplace, the report also revealed that startup environments may be a particularly strong match for remote work. Why might that be? 


State_Of_Remote_Work_3.png

When breaking down remote work by company size, the report found that smaller companies are 2X more likely to hire remote workers than larger companies

Considering stage, sense of innovation, hiring needs and nimble state, startups have the upperhand when adapting to this cultural shift toward flexible work. In fact, I believe that startups are uniquely positioned to transition to remote work much more fluidly than other companies, and thus are likely to get far more benefit.

Here's why. 

1. Remote work expands the startup talent pool. As a leader of a startup, recruiting the best possible team is arguably one of the most important parts of the job and could make or break your long-term success. Finding the right person also can be incredibly difficult, especially if you are limited by your own network and local community. 

One of the most effective ways to maximize your talent pool is to remove all geographic limitations. Think about it ... perhaps your perfect VP of Engineering isn’t a reasonable commute away.

Companies who are open to growing their team by hiring remotely are much more likely to find the unique skillsets needed for the job. In fact, the State of Remote Work found that fully-distributed (or fully remote) companies hire 33% faster than other organizations. Use it to your advantage.

State_Of_Remote_Work_1.png

2. Expands diversity of thought. Here's another key benefit when hiring outside your bubble. When you remove geographic barriers, you will most likely find people from different parts of the country (or world) with varied perspectives -- and these individuals can bring strong diversity of thought.

Harvard Business Review examined the impact of diversity on business. The article cited a study by the London Annual Business Survey, which found a strong correlation between diversity and effective innovation. The report discovered that, "businesses with culturally diverse leadership teams were more likely to develop new products than those with homogeneous leadership."

Lean into this opportunity. Hiring a remote team can be an effective forcing function to find candidates and employees who bring experience much different than yours.

3. Remote work builds trust. When leaders work with remote employees for the first time, it’s common to be concerned about productivity. Will the remote person use her time effectively? How will you know if you can’t see her working at her desk?

Pause right there. What’s the real issue here? Is the problem that the person’s desk is 1,000 miles away? No. The issue is an absence of trust. In this case, the manager needs to back away from the compulsion to “monitor work.” That’s a cultural poison, and it also doesn’t scale.

Dr. Peter Hirst of MIT Sloan’s Executive Education Department spoke to the growth in trust after piloting a remote work program for his team: “We went from a culture of assuming people were working because you could see them working to having a clearer understanding of what outcomes we’re trying to achieve and trusting everyone to be a professional. …The [employee] engagement that we got from that change of management relationship was really tremendous.”

Building a culture of trust early will be especially impactful as the company scales. Startups don’t have time to babysit. Let your teammates results speak for themselves.

4. Drives flexibility. Employees at an early stage startup most likely have the propensity to work long and odd hours -- and most likely from anywhere. The State of Remote Work report found that 51% of remote workers choose to work remotely to support their work-life balance. Work-life balance is a challenge in any startup. (Let’s be real, our startup is our life.) However, supporting remote work to add flexibility to one’s life does make it easier to balance personal goals with professional. And happier employees will work even harder.

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5. Develops culture. The larger an organization gets, the more difficult it becomes to make substantial cultural changes. If a later stage company wants to transition to a remote or flexible work environment for the first time, while possible, it will take significant planning and communication across the full employee base to make it work.

Remote work is also a forcing function that makes startups scale communication early. Think about it. When you have a small startup collocated in the same space, you can rely on your close proximity to communicate well.

If your organization is distributed, you need to learn how to communicate effectively across multiple locations, time zones, and technologies. These skills will prepare you to communicate effectively when your company is 10X its current size.

6. Lowers office costs. As a startup, every penny counts. Leaders need to make smart investments and keep a close look on the impact of their investments. While saving money shouldn’t be the primary advantage of supporting a remote work culture, it certainly can be a perk.

For example, in Boston (where I’m located), the average yearly cost to rent office space per employee is $6,080. In San Francisco it’s $13,032. While of course you should financially support your remote employees' work-from-home office setups, the costs will be substantially lower.

7. Retains employees. The most striking data point in the State of Remote Work was that companies that support remote work see 25% lower employee turnover than companies that don’t.

State_Of_Remote_Work_5.png

Considering the points earlier, perhaps you aren’t so surprised. As we discussed, companies that support remote work are more diverse, flexible, and practice trust. If you build your startup with those building blocks in your DNA, you’re off to a great start.

This was a guest post by Rebecca Corliss of Owl Labs. She and I had the pleasure of working together for eight years at HubSpot, and she’s since rejoined the startup ecosystem.

If you're as passionate about remote work as she is and want to learn more about the data cited in this post, check out Owl Labs' State or Remote Work 2017 report

Topics: culture team
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Secret To SaaS Success: Recognize That You're Not Selling Software

By Dharmesh Shah on March 7, 2017

I've been working in the software industry for over 25 years. Pretty much my entire professional career (if you don't count that stint as a night clerk at Red Roof Inn).

Back in the late 1900s, when you sold software, you sold software. What your company produced was a large set of properly aligned bits (software). You then got those bits to your customers somehow (floppy disk, DVD, FTP, whatever). And, then those customers installed those bits on a computer of their choosing and if all went well, they'd get some value out of it. But, that wouldn't always happen. Often, they'd fail to ever install it and get it working. Or fail to learn it. Or fail to use it properly. Basically fail to get the value expected -- or the value promised, or sometimes any value. Ironically, the higher the purchase price was, the lower the chances of seeing success. History is replete with multi-million dollar software purchases that never saw the light of day. As an entrepreneur, this pains me. Most start software companies to make money, they start companies to solve problems.

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Now, fast-forward to today. It's 2017. Many software companies are now Software as a Service (SaaS) companies. What they produce is the same as before: A large set of properly aligned bits (software). Only now, instead of shipping those bits off to the customer somehow, they "host" those bits on the customers behalf and off the benefit of that software as a service.

Makes sense, right?

Now, naive folks that are new to SaaS often make the mistake of thinking they're still selling software. They're not. Because...

SaaS = Success as a Service

If you're in the SaaS business, the only way to survive in the long-term is not to just deliver software. It's to deliver success. You have to actually deliver the benefit that the software is promised to provide. And, if the customer fails to get that benefit then you have failed. Do not pass GO, do not collect $200.

The reason for this new bar is relatively straight-forward. Back in the old days, you got paid for your software upfront and though you wanted your customer to succeed, and maybe even labored to help them succeed, if they didn't succeed, well, such was life and you moved on. Today, if the customer doesn't succeed, they cancel. In a month, in a quarter, in a year -- but eventually, they cancel. And, more likely than not, if they cancel, you've lost money. The math won't work.

So, to survive and thrive in the long-term, you can't sell software, or even access to software, you have to sell -- and deliver -- success.

Let me give you a concrete example and some lessons learned from my company, HubSpot, which provides marketing/sales software. HubSpot is a textbook SaaS company. We're about 10 years old, and we're now public [NYSE:HUBS].

Here's what we invest in (because it works):

1. Onboarding. If you help customers get started with your product, they are more likely to do so. Ideally, your software is so simple and intuitive and easy that customers just get up and running and succeed on their own. But, if you have a relatively broad or sophisticated product, customers will often need help. In those cases, onboarding works.

2. Education. HubSpot has HubSpot Academy, which is a team that helps educate people on inbound marketing. Interestingly, they don't just invest in HubSpot customers, they educate the broader marketing industry.

3. Community. HubSpot hosts inbound.org, an online community built for marketers. It allows them to find the best content (curated by the community itself), discuss topics of interest, post jobs and find jobs. It acts as the premier professional network for marketers. The community has over 200,000 members now.

So, why does HubSpot spend millions of dollars educating and supporting marketers? It's simple. because we've realized that our success depends on the success of our customers.

We've learned and accepted that we're building a "Success as a Service" company.

Topics: saas
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Why This New Chatbot Is More Likely To Get You Promoted Than Fired

By Dharmesh Shah on July 14, 2016

Confession: For the past several months I've been furiously coding away on a new project as part of HubSpot Labs. It's called GrowthBot. It's a chatbot for marketing and sales people -- and anyone looking to grow a company (like startup folks).

The launch has gone well, and my bot is currently happily handling thousands of messages. Things like "show me companies in california that use HubSpot" and "who are the top influencers about landing pages". GrowthBot can answer most of these, and thousands of others. So, overall, it's been a good day.

But, anytime bots come up in conversation (no pun intended), especially with media folks, people seem to frequently wander into the "are bots going to replace humans?" arena. Some wonder "will this bot cause people to lose their jobs?" I can't speak for all bots, but for GrowthBot, the short answer is no.

I'll explain with a visual:

HumanBot-8.jpg

 

The way I like to think about it is not, Human vs. Bot, but Human + Bot. The bot amplifies what you can do. The bot is an exponent.

It's not smart enough to write a blog post -- but it can tell you what posts about a particular topic people are sharing. You just ask: "what are the top posts this week on product marketing?"

It's not smart enough to automatically run a campaign to drive traffic to your website -- but it can answer questions about how your website traffic is doing. "How was organic traffic to the site last month?" And the bot also tells you how that compares to the prior month. You can compare results year-over-year (Yes, June is a slow month, but is this June slower than usual?)

It's not savvy enough to close a deal for you, but it can help you find potential customers by asking: "show me law firms in Boston that use Google Apps". (Assuming you're trying to sell SaaS software to law firms and are looking to find firms that are modern enough to use Google Apps).

So, you're still doing the creative, meaningful work.   GrowthBot is just making you better, stronger, faster. It gives you access to information you may not have had access to before. It can surface insights that you may not have come up with on your own.

By the way, it's completely free and easy-peasy to try out. Nothing to download. Nothing to install. No forms to fill out. No credit card required.

Just head over to http://growthbot.org and say hello. I'm not saying it is guaranteed to get you a promotion, but you never know. It may just put that small spring in your step and data in your head. 

 

 

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Insightful Study of 386 SaaS Startup Pricing Pages

By Dharmesh Shah on March 21, 2016

Late last year, I combed through the Montclare SaaS 250 — a directory of the biggest SaaS companies in the world — to find common trends in what I thought would be a significant dataset. As it turned out, 80% of the 250 biggest SaaS companies didn’t have a pricing page at all.

Expecting to find a set of data more representative of what I’m used to seeing around (essentially startups), I turned to a bigger sample, scraping information from the first 400 startups in AngelList’s ‘Trending’ category. Of the remaining 386 which hadn’t shut down, I found that startups are around twice as likely to show their pricing than their enterprise SaaS big brothers. In fact, 39% of the 389 startups I analysed had pricing clearly available.

As I looked at in that previous article, there’s often good reason behind hidden pricing, and, for the top 250 SaaS firms, that reasoning was mostly that they are selling to enterprise customers who thinking pricing is just a formality.

And, besides, enterprise SaaS is a more complex beast than self-service, or SaaS aimed at SMBs.

So, equipped with wider range of data to analyse, I set about to answer the question: How do the top 386 trending AngelList SaaS startups compare to the Montclare SaaS 250?

The study’s highlights

Here’s a quick overview of the main findings for my set of data from 386 AngelList trending startups:

  • 39% have pricing publicly available
  • The average number of packages is 3.5
  • 44% sell the benefits on-page
  • 84% organize prices low to high
  • 9% organize prices high to low
  • 59% list their enterprise package’s price as ‘Contact us’
  • 49% highlight a package with a contrasting CTA color
  • The most common CTA is ‘Start free trial’
  • 63% offer a free trial
  • 11% offer pricing on a sliding scale
  • 85% of packages are named (‘Growth’, ‘Pro’, etc.)
  • 6% offer a money-back guarantee
  • 30% operate on a freemium model

The average number of packages is 3.5

In both the Montclare 250 and AngelList Trending data sets, the results are exactly the same: most SaaS companies offer between 3 and 4 packages.

In a recent article from Price Intelligently’s Patrick Campbell, he says that over-complicating and over-simplifying pricing is an equally terrible mistake. This is because complicated pricing can give buyers analysis paralysis, yet simple sliding scale structure built on a single value metric can stunt the company’s growth and kill any opportunities for upsells.

3packages

Additionally, research shows that 7 ± 2 is the maximum amount of objects an average human can hold in working memory. Because of this, it makes sense to limit your price points to just 3 or 4 significant choices -- unless the buyer makes a choice right then and there, they could easily forget some key details later on down the line.

twitmusic

This said, package count on the extreme end of the scale (Twitmusic’s 9 packages, for example), is often linked to a single value metric like number of Twitter followers, not a complex array of features.

53% Highlighted a package

Highlighting a package as popular or best value or simply putting it in a different color to the others is a technique SaaS companies can use to make the buyer’s decision easier, promote their most profitable package, or even to draw attention first to a higher priced package to make the others look cheap (more on that later).

However, just over half of the 386 analyzed startups chose to use this tactic. Why is that?

On Episode 271 of Startups For The Rest Of Us, where the hosts talk through my original 250 pricing pages analysis, Mike Taber has an answer for that. He says it could be because by listing 3 packages (the mode of packages offered), the price is naturally anchored in a low/medium/high setting, and there’s no need to highlight anything and sway the potential buyer away from a potentially more profitable plan.

Here’s an example of a pricing page where a package is highlighted:

highlighted

44% Sell the benefits

One of the most striking things about looking at pricing pages in a vacuum (as in, without sometimes even knowing what the company does), is how disconnected from the rest of the site the page tends to be. While the landing page is often very benefit and social proof driven, it’s rare that the pricing page will list anything other than the features.

Surely it wouldn’t hurt to reiterate the reason the potential buyer is here in the first place. And, not to mention the fact that a common search query for SaaS companies is [company name] + [pricing]. Reiterating the benefits or employing any kind of copywriting tactics at all on the pricing page seems like an obvious, often-overlooked choice.

Here’s a great example from Rainforest, re-selling the benefits to reassure buyers once they find out the price is $10,000/month:

rainforest

84% Organised packages low to high

Heatmaps show that visitors spend twice as much time looking at the left side of the page as they do the right.

lowtohigh

With this in mind, 84% of SaaS pricing pages could be using one of these tactics:

  • The principle of least surprise: a UX axiom which says that the last thing a user wants to happen is for them to be confused. Since we’re used to reading left to right, and seeing a low-to-high structure, sticking to it can ease user discomfort.
  • Price anchoring: A deliberately feature-light package on the left side could make package 2 or 3 look like an amazing deal compared to the price difference. For a non-SaaS reference, this is like when The Economist offered its print subscription as a decoy package:

economistpricing-1

However…

9% Organised packages high to low

In Robert Cialdini’s book Influence, he recounts an eternally relevant A/B test from the retail world staged in 1975.

In the experiment, salespeople offered potential buyers of billiard tables two choices: a $329 model and a $3,000 model. The usual tactics are to offer the lower priced model in hope that the customer isn’t scared away by hearing big numbers, but one week, instead of starting with the low-priced table and try to sell up, the salespeople changed their tactics to offer the $3,000 model first. What happened? An 81% increase in revenue from billiard tables.

The idea that it’s easier to “sell down” than it is to “sell up” (meaning that it’s a more effective strategy to start high and the reduce), is a strategy employed by only 9% of the analyzed SaaS companies and is a tactic that comes with high recommendations from SaaS pricing expert Lincoln Murphy.

Going back to the previous point about low-high pricing, however, the tactic of offering something first which seems inadequate could be equally as powerful.

Here’s an example of a high-low pricing page layout from Unbounce, a company which knows a thing or two about conversion optimization:

hightolow

59% list one or more package’s price as ‘Contact Us’

By far the most common 4+ package layout is 3 priced packages and an enterprise package with the CTA of ‘Contact Us’.

For the minority of SaaS companies which show their pricing, the complexity of enterprise deals forces more than half of SaaS firms to leave their enterprise package pricing undisclosed.

contactus

As discussed in my previous article, there are plenty of good reasons to keep price hidden for enterprise deals, including:

  • Deals are too complex to price without fully understanding the needs of the customer
  • Rigid pricing could blow the deal for companies used to getting discounts
  • You don’t want to push $700k customers down the same track as $100k customers. By getting them on the phone, a suitably concierge approach can be taken
  • Enterprise customers don’t care about the price anyway, just about the solution.
  • Like how fancy restaurants don’t have pricing, hidden prices are an aesthetic that gives the aura of exclusivity. Enterprises are used to having to call for pricing, so the Principle of Least Surprise returns here again.

49% use a contrasting color for the CTA

You don’t want your CTA to be subtle. After all, it’s the only place you want visitors to click when they’re on your pricing page.

According to Unbounce, a rule of thumb for CTA color is to “look for the dominant hue of your page and pick its contrasting color for your call to action”.

There’s evidence to support this from the famous red/green A/B test carried out by Performable, which showed a 21% higher CTR on the red button which contrasted with the otherwise green page.

Here’s an example of a clear, contrasting CTA button on Nitro’s pricing page:

contrastingcta

As you can see, the orange CTA sticks out because it's the top-of-the-funnel package they expect to get leads from. While the Premium package is highlighted, the efforts in the copy above the buttons are focused on getting visitors to test the free package.

The most common CTA is ‘Start free trial’

Unlike the SaaS 250 where the most common CTA copy was ‘Buy Now’, AngelList trending startups made references to ‘buy’ in their CTA copy less than 2% of the time.

As you’ll see, unlike the enterprise-focused SaaS 250, startups seem to be pushing self-service free trials instead of demos with sales staff.

startfreetrial

Here is a rundown of the top 5 CTAs ordered by frequency:

  • Start free trial (25%)
  • Sign up (14%)
  • Try for free (14%)
  • Get started (13%)
  • Request a demo (6%)

And the top 5 words by frequency throughout the set:

  • Free (69)
  • Trial (47)
  • Start (39)
  • Try (25)
  • Get (23)

Another couple of data points about CTA copy: conforming to the true definition of a CTA, 95% of samples start with an imperative, like ‘try’, ‘start’ or ‘get’.

39% of samples are in title case, with the first letter of each word capitalized, while 38% are written in all caps.

While writing in all caps is frowned on (even amongst conversion-hungry copywriters), pricing pages are essentially a call-to-action in themselves, so drawing attention to where the visitor should go next is essential.

anygoodcta

63% Offer a free trial

63% of both Montclare’s SaaS 250 and the 383 AngelList trending startups offer a free trial on their pricing pages, many as the only option to ease into the product.

When looking at the psychology of free stuff and risk reduction, it’s obvious why SaaS companies use this powerful tool as a way to get customers. And, as I’ll look at later, a probable reason behind why only 6% of the sample companies offer a money back guarantee.

Here’s what Accountable’s free trial offering looks like on their pricing page:

accountable

11% Present pricing on a sliding scale

For SaaS companies with a single value metric, like OnFleet’s tasks (a task being a single delivery or pickup of goods), presenting pricing on a sliding scale can remove the confusion that comes with showing visitors a formula like:

0–100 tasks: $X/task

100–200 tasks: $Y/task

etc.

In fact, to reduce friction, OnFleet’s pricing page shows both the formula and the slider, as well as anchors the price by showing tasks reducing in price tenfold with just a comparatively small increase in monthly task allowance.

For comparison, almost 3 times as many AngelList trending startups offer pricing on a sliding scale than the Montclare 250.

Here’s sliding-scale pricing done masterfully:

onfleet

85% have named packages

While some SaaS companies choose to name their packages in relation to their price (with names like ‘Basic’, ‘Premium’, etc.), some grab the opportunity to target segments of their visitors and name the packages by who they’re for. Free packages are sometimes named ‘Hacker’, like in the case of Algolia. Enterprise packages are almost ALWAYS called Enterprise.

When looking at the brackets in between, however, it’s common to get packages targeted at businesses at specific stages of growth, for example, the pricing for AppView which includes plans for different office sizes:

appview

6% Offer a money back guarantee

Since most SaaS startups offer customers a free trial, there’s not much need for a money-back guarantee which explains why so few companies list it.

According to Kissmetrics:

“[Money back guarantees are] so overused and average that unless your product is extremely valuable (like a car) or easy to return (commodity products, such as retail goods), then you’re going to have an incredibly difficult time overcoming an objection with this guarantee alone.”

Among the rare few which use it is Close.io — a company that’s no stranger to sales techniques. They even use it in conjunction with a 30-day free trial:

close-io

30% have a free package alongside paid packages

That’s right, only 30% of the 386 AngelList trending startups analyzed operate on a freemium model, with the vast majority of the rest relying on free trials. That said, that means that at 93% of the sample pages have some kind of free element, whether it’s a free package or a free trial.

According to Weekly Growth, early stage SaaS startups are best off with a freemium model because it is more likely to attract early adopters. Later on, however, with a larger customer base, the huge amount of free-only users can put a massive strain on your support staff, and may end up negatively impacting your business overall.

Here’s an example of Envoy’s pricing page with a free package on offer:

Envoy

What are the differences, then, between enterprise and startup SaaS pricing pages?

The most striking difference is that a SaaS startup is almost twice as likely to show its pricing than an enterprise SaaS company.

For enterprise SaaS serving a larger amount of influential customers, it's probable that a lot of business comes from referrals and deals are done over the phone without a pricing page being necessary. This would explain why 80% of the SaaS 250 didn't have a pricing page.

As well as this, a comparison between the two data sets shows that enterprise SaaS reiterates the benefits on their pricing page 25% more often. Just like we saw Rainforest's pricing page earlier, it could be that enterprise SaaS's high-ticket products need to be justified to buyers because choosing one provider over another is a huge investment.

And finally, the last major difference is that startups are 19% more likely to have a mixture of priced and 'contact us' packages. Just because a SaaS company is a startup doesn't mean it can't serve enterprises and startups. So, by having both transparent pricing for smaller companies and a 'contact us' package, they appeal to both markets.

Well, it's been an eye-splitting three days spent inside spreadsheets and on pricing pages, so I hope you find this data interesting and it gives you an insight into the typical SaaS startup pricing pages.

This was a guest post from Benjamin Brandall. Ben is a content creator at Process Street. Find him on Twitter here.

Topics: saas pricing
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10 Questions I Hope I Don't Get Asked During My Product Hunt AMA

By Dharmesh Shah on February 22, 2016

I'm doing an "Ask Me Anything' (AMA) session on Product Hunt tomorrow (Tuesday, Feb 23rd, 2016 at 10 am PST, 1pm EST).  

Would love for you to sign-up early, because I'm insecure, egotistical and I want to impress Ryan Hoover.  Would love for a decent number of people to sign-up.  Or an indecent number would be even better.  350 have signed up already (before this blog post was published).  Here's the link again.  

As the name implies, folks are allowed to pretty much ask me anything, and short of something that will land me in jail (do not pass GO, do not collect $200) or harm someone else, I'm going to do my best to answer everything.

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Here are the questions I'm hoping I won't get asked...

1. How does it feel, personally, to have the HubSpot stock price drop so much in the past several weeks?

2. How much weight have you gained in the past 2 years?  Does it have anything to do with HubSpot being public?

3. What do you think about competitor [X] -- aren't they just awful?

4. Is there a diabolical, grand master plan behind inbound.org?  Why is HubSpot investing millions of dollars in this?

5. What do you and your wife talk about at the dinner table?

6. Should I buy HubSpot stock right now?  Would you buy stock if you were me?

7. Do you secretly covet Rand Fishkin's lovely beard/fashion-sense/wife?

8. How many actual computers are in your house right now?

9. What did you think of the latest Star Wars movie?

10. What's the super-secret thing you're working on at HubSpot right now that most people at HubSpot don't even know about?

11. Are you and Ryan Hoover (founder/CEO of Product Hunt) actually twins? If not, why does it seem that way?

On the other hand, there are a few questions that I think would be fun/relevant/legal:

1. I hear you really like the Amazon Echo.  What's the strangest thing you use it for on a regular basis?

2. Are you going to write another book -- if so, what's it going to be about?

3. How many domain names do you personally own?  What do you do with them?  What are your favorites?

4. Is it true that you had lunch with Seth Godin and asked him what he thought about the term "inbound marketing"?

5.  Were you and Scott Brinker (of Marketing Tech Landscape fame) classmates at MIT?  What's he like?

6. How many marketing strategists does it take to change a light bulb?

Remember, you can not ask questions by leaving a comment below.  You have to ask them at the Product Hunt LIVE AMA with Dharmesh Shah

Hope to see you there.  It should be fun!

 

Topics: fun
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Zero to IPO: Lessons From The Unlikely Story of HubSpot

By Dharmesh Shah on February 19, 2016

HubSpot has had a pretty good run.  Went from zero to IPO.  What's not known is how unlikely the story of our success is.

II gave a talk at the 2016 SaaStr Conference hosted by Jason Lemkin.  The slides and full video from the talk are included below, with some quick notes on a few of the topics covered. 

Here's me presenting what turned out to be the most popular slide (more on this idea at the end of the article).

saastr-2016-dharmesh-shah.jpg

 Here is the full deck from Slideshare.

And, here's the full video of the talk.
Note: There are some pre-roll videos, and my segment starts at about the 3 minute mark.
 
If you have trouble vieweing the embedded video, try this:  Dharmesh Shah at 2016 SaaStr Conference
A quick note on the "Tools are bought, transformations are sold."  This is one of the more important lessons I've learned through my professional career.  When you are improving things by offering a tool (which may or not be something that exists -- perhaps yours is just better), it is possible to put up a website, have people try out the tool, and start paying you if they like it or want to upgrade. 
But, if you're doing something radically new and trying to transform how people do things, it's unlikely that this approach will work.  Even some brilliantly written blog posts or videos are probably not going to get people to think:  "You know, she's right, I'm just going to start doing things the right way, and here's a platform to do it -- where do I sign up?".  It will likely require some "selling".  You'll need people to explain what's wrong with the world, how your company solves it, address objections, answer questions, and generally help people get over the hump.  Even then it is hard.  But if you try to transform the world with nothing but a website and a credit card form, chances are low that you'll succeed. It happens -- just not that often.
 
Would love to hear any comments or feedback you have.
 
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The First Rule Of Disruption

By Dharmesh Shah on December 22, 2015

Working on a startup?  Have a 800 pound gorilla you're trying to disrupt?  That's awesome.  But here's a tip:  Don't talk about disrupting them.  

The first rule of disruption is: You do not talk about disruption. 

 Why is this so important?  Why shouldn't you declare to the world (and the tech press) that you're going after the big kahuna?  Doesn't the media love a great David and Goliath story?

There are my reasons.  I'm going to keep this simple:first-rule-of-disruption.jpg

1. In just about all cases, to successfully disrupt a large incumbent, your best case scenario is that they completely ignore you and what you're doing.  This allows you to (quietly) build the thing you need to build without too much intervention.  

Here's the script:  "Don't mind us, we're just over here working on something tiny.  We're not worth your time. You're much better off focusing on your best customers and driving your profit margins up."  (This is pretty much the story that plays out in Clayton Christensen's "Innovator's Dilemma", which if you haven't read, stop what you're doing and do that right now).

2. You want the incumbent to act "rationally", because an emotionally fired-up incumbent will come try to crush you simply out of spite and ego.  They may not succeed  in crushing you -- but in the process, they can certainly cause a lot of pain.  And, responding to their actions will distract you from that whole disrupting thing you're trying to do.

3. One of the keys to disruption -- which usually happens from below is that your product/offering has to be inferior in some critical way.  The fact that what you have doesn't meet the needs of the existing customer-base is what makes it easier for the incumbent to ignore you.  If you start talking about how you're going to disrupt -- you're probably going to wind up trying to convince the world why your product is not really inferior but even better for customers than the existing, leading alternative.  That sounds like a good thing -- but it's not, because you shouldn't, in the beginning, be trying to create something that's "better" than what exists.  Chances are, if you do that, you'll do something incremental and you take the incumbent on, on their home turf.  Turns out, they're really good at playing that game (there's a good chance they invented the game).  You should be working on something dramatically simpler, cheaper or lighter.  

Don't start out trying to build something better for the entrenched company's existing customers.  That's not your goal -- your goal is to create something "good enough" for customers the incumbent doesn't care that much about.  If their best customers wouldn't laugh at the ludicrous lack of capability in what you're building -- you're probably doing disruption wrong.  Go back and read Innovator's Dilemma (again).  

OK, so when should you talk about this awesome disrupting you're doing?  

Ideally, in the past tense:  Think:  "We've disrupted...", not "we are disrupting".  Next best choice?  When the path is clear and the outcome is more or less inevitable.

Until then, be heads-down and quietly just do the work.

 

Topics: strategy
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Do Fewer Things, Better

By Dharmesh Shah on November 24, 2015

I'm going to tell you a secret.  I have a very simple, 4-word strategic plan (devised it a few years ago).

Here it is...

fewer-things-better-3.jpg

Do fewer things, better.

This has made my life -- and my work, dramatically better.

Here's how I execute on my strategic plan:

1. Decide on what matters the most.

2. Say no to everything else.

3. When something falls in the gray area, re-read #2.

Of course, that's easier to say than do. I fail at it all the time -- but I'm getting better.  Here are some tips learned from years of practice:

1. When making your list, start with a low-level of abstraction.  Resist the temptation to make your list really "high-level".  As an extreme example, one of the things on your priority list shouldn't be "Be successful".  That's so broad, that you'd be able to rationalize almost every activity under the sun.  Try to be specific enough that the number of things that "fit" is a manageable number.  If you find yourself taking on too much (which you probably do), refine your filters and move to a lower-level of abstraction.  I've written an article on this that you might find useful:  "The Power of Focus and The Peril of Myopia".   

2. Forgive yourself for having to say "no" to things not on your "fewer things" list.  Years ago, I wrote a blog post asking public forgiveness , you can see it here at http://MustSayNo.com.  Of all the articles I've ever written, that one has had the most positive impact on my life. 

3. Remember that every time you say "no" to something you might have said "yes" to, it frees up time to focus on the things that matter.  And the more time you spend on the things that matter, the better you get at them.  Let me give you an example:  Let's say you say "no" to some project/request/idea that would have "only" taken a few hours a month, because it didn't make the "few things that matter" list.  And, let's say that one of the things that matter to you is being able to better communicate your message to the world -- via public speaking.  Those few hours you "saved" can be spent on getting your message out. More speaking gigs, more people influenced.  But wait!  That's not all!  Not only are you able to do some more public speaking, because you're going to spend more time on it, you're going to get better at it.  And, because you get better at it, you're going to get more frequent speaking invites.  With larger audiences.  And have more influence once you're on stage.  You're building leverage by getting better and better at the thing that matters.  And, it's amazing how much better you will get, once you decide on only a few things to get better at.

By the way, the reverse of this is true to:  Everytime you say "yes" to something, you're saying "no" to something else.  Often, you're saying "no" to something more important.

4. Fight the FOMO (Fear Of Missing Out) emotion.  It's a killer. We all have it to varying degrees.  This fear that if we don't say "yes" to something, we're going to miss out on some big opportunity, small joy or new connection.  Yes, sometimes you will miss out, but that's OK.  Life goes on.  On average, you will be better off skipping some things, instead of trying to do too much.  

More people fail from a gluttony of good activities than from being starved of them. 

5. Be super-careful with recurring commitments.   If you are going to occasionally say "yes" to things that are not on your "things that matter most" list, be super-careful that they're not a recurring commitment.  A one-time commitment of 4 hours is much less dangerous than a monthly hourly committment.  The way I think about this:  When I say "yes" to a recurring committment, I'm effectively saying "yes' multiple times (for as long as I think I'm going to be in that committment).  Which brings me to the next point...

6. As painful as it is, prune your prior committments. If you are like me (and apologies if you are), you've said yes to a few things that you now sort of regret.  Get yourself out of those.  Be respectful, be, understanding and be fair -- but be disciplined and true to yourself.  And just because you committed to something last year with no real "expiration date" doesn't mean you have to keep doing it forever.  Things change.  On a related note:  For things that don't have an expiration date, remember that it's going to be just as painful to prune later as it is now -- why not give yourself the gift of some time back sooner?

7. Try to solve for outcome, not activity.  Figure out what you want to happen (whether it be a commercial interest or a philanthropic one), and figure out how to best create impact.  Usually, optimal outcomes are not achieved by saying "yes" to a bunch of "good" activities (however well-intentioned).

On the point of philanthropy, you might be wondering: "What about doing good, and giving back?"  

Warning: My opinion here may be controversial for some and feel beknighted and self-serving to others. Sorry.  

First off, if you have the ability to give back, you should do so.  No doubt.  But the question is, how do you optimimize for outcome?  

Let me explain with a personal example.  I'm an entrepreneur.  Have been for most of my professional career.  I LOVE STARTUPS. THEY BRING ME GREAT JOY. I'm one of the co-founders of HubSpot (NYSE:HUBS).  I'm also a big fan of Boston and want to see the Boston startup ecosystem grow and thrive.

But a few years ago, I decided to dramatically limit the time I spend directly helping entrepreneurs and the Boston ecosystem.

Why would I do this?  Isn't that selfish?  Yes, I guess it is.

I'm a big, big believer in leverage and scale.  I like to spend my calories in ways that deliver the greatest impact and the best outcomes.  I'm actually quite geeked out on that idea. 

The reason I made this decision was that I felt the best way for me to help the startup ecosystem -- was to use my time to help make HubSpot a super-successful company.  The by-product of that success will be much greater than what I'd get if I were just directly trying to help a handful of startups.  

 So far, HubSpot has had some modest success.  We are a publicly traded now and have 1,000+ people working at the company.  We have many that have "graduated" HubSpot and gone off to start their own companies or join other teams.  We've also made a bunch of people money (several of whom are channeling some of that back into to the ecosystem by way of angel investing). We've improved Boston's "brand" as being a place where big tech companies can still be built (which helps pull in more capital, talent and interest).  All in, I'd say we're a net positive.

But, fact remains that instead of being a mentor/advisor/mensch -- I've sort of been a schmuck when it comes to where I spend my time.  My money is a different matter -- I've made 60+ angel investments.  But, I've been fiercely protecting of my time and I've said "no" to just about everything. And remember, I LOVE STARTUPS.  I love helping them.  I love the thrill, joy and fulfillment.  But, I said "no" anyways.  And, I may be rationalizing here -- but I think I've likely done more for the ecosystem than if I had simply gone to more events, tried to pick a handful of startups to be an advisor/mentor for, etc.  

This section got much longer than I planned for it to be.  I have a whole other article in draft-mode titled "The Surgeon In The Soup Kitchen".  I'll give you the abridged message of that post:

Don't favor what feels the most good.  Favor what does the most good.  

Thankfully, blogging is a high-leverage activity.  And, since I'm using HubSpot to write/promote/track this article, it helps HubSpot too.  So, I can rationalize this into my "fewer things" list.

Cheers, and best wishes with your "fewer things". 

 

 

Topics: strategy
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An Early-Stage Founder’s Quick & Dirty Guide To Growth

By Dharmesh Shah on August 5, 2015

The following is a guest post by William Griggs.  William is the Founder of Startup Slingshot, the resource for battle-tested startup strategies. Access the audio interviews of today’s featured growth practitioners, the full 43 page guide, and tons of resources here (free for now).

 

A startup is a company designed to grow fast.” 

 

Growth is what founders and investors alike are constantly searching for. Growth enables startups to quickly create tremendous value in the market. Without growth you’re dead in the water. But accordingly to Paul Graham, there’s a silver lining: “...if you get growth, everything else tends to fall into place.”

For a company to grow really big, it must
(a) make something lots of people want, and
(b) reach and serve all those people.”

Unfortunately for most founders, viewing their startup from this altitude isn’t extremely actionable. In this post, we’ll uncover the methodologies and tactics you will need in order to validate your business and systematically reach and serve your target market.

 

How do you ensure you are making something lots of people want?

Making stuff is the easy part. The key, however, is making something a lot of people want. Market selection and product/market fit are critical here.

This is where a lot of startups end up spinning their wheels. As you build product early on, how do you determine if you’re on the right track or heading towards a dead end? While every business is unique in terms of exactly what it needs to do to achieve product/market fit, the process for quantifying it is consistent.

Assuming you can’t use sales as an indicator of product/market fit, below you will find several ways Brian Balfour, VP Growth at Hubspot suggests quantifying product/market fit for your startup. The further down you go on the list, the more customers are required to receive meaningful insight.

  1. Indicator Surveys -- What do people say about your product?
    1. Created by Sean Ellis, Survey.io is the perfect tool for indicator surveys. To learn how to use Survey.io, read this.
  2. Leading Indicator Data On Engagement -- How are people using your product?
    1. What are you seeing inside the product? How active are your customers?’
  3. Retention Cohort Curve -- Does your retention curve flatten off?
    1. If people consistently use your product over a certain period of time, you’ve reached product/market fit for at least a subset of the market.
    2. Unsure how to get started with cohort analysis? Read this.


Don’t have enough data to do any of these steps? Focus on executing “trickle marketing campaigns.” Sean Ellis, CEO at Qualaroo was right to say that in order to understand what your target market thinks of your solution you have to expose it to them. The trick here is to not spend money and time on a big launch, instead focus on highly targeted marketing campaign that puts your product in the hands of the target market.

Before moving on to the second piece of Paul Graham’s growth equation, it’s important to emphasize that you have to get this right.Without product/market fit you’re wasting time even thinking about growth. As a founder, your startup is like a ticking time bomb says Andy Johns, Director of Growth at Wealthfront. You have a certain amount of time before everything will explode. To extend the time allotted, you need to show growth and the first step is establishing product/market fit.

 

How do you ensure you reach and serve all those people?

You’ve built something that solves a problem, for at least a part of the market, and now it’s time to get it into their hands.

Three Principles For Driving Quantifiable Growth

Learning how to reach and serve your target marketing isn’t rocket science but it isn’t obvious either. Those that drive quantifiable results do so by following these three principles:

  • Triage: They work on the highest return on investment activities, suggests Ivan Kirigin, CEO of YesGraph.
  • Test: They don’t assume they know what’s going to work. Instead, they focus on generating and testing hypotheses, Ivan adds. If you don’t take the time to get your analytics straight, so you can validate assumptions you’re flying blind.
  • Set Goals: They have a target metric they focus on. Doing so will help you focus your efforts.

Now let’s dig into the specifics.

 

How To Ensure You Reach Your Target Market

When starting to think about how you are going to really invest in reaching your target market, it’s important to revisit your business model. To start, you will need to formulate your target customer acquisition cost (CAC). Doing so will help guide you in determining which channels to test. To calculate your target CAC, you must estimate the average lifetime value (LTV) of your customer (learn how to calculate LTV) and subtract your profit margin. Hitting this CAC will allow you to profitably acquire customers. While most bootstrapped companies target a CAC that is 30% of their LTV, many VC backed companies that are trying to own their market typically spend to 100% of their LTV.

With this in mind, the next step is selecting what customer acquisition channels to test first. Below, I’ve briefly summarized Brian Balfour’s blog post titled, “5 Steps To Choose Your Customer Acquisition Channel.”

 

channel matrix 3.jpg

Source: 5 Steps To Choose Your Customer Acquisition Channel by Brian Balfour

 

In this matrix, you will have a list of potential marketing channels on the left and a set of channel attributes at the top. Keep your business model, competition, and target market in mind, and begin to fill out the matrix by rating each channel using the words “low,” “medium,” and “high.”

Review your current constraints (time, money, target audience, legal, etc.) and select the top one or two channels to test for viability. The viability of a channel is determined by its ability to drive predictable returns on the time/money invested. Once you find a channel or two that works, it’s time to double down and to continue to invest in optimizing the channel.

Not sure where to start with each of these channels? Check out these videos from 500 Startups’ WMD conference.

 

How To Ensure You Serve Your Target Market

In addition to reaching your target market, you must also focus on optimizing the process with which you use to serve them. In this case, serving them means getting them to your product’s “wow moment.” To get more of your target market to your product’s “wow moment,” Sean Ellis suggests that you focus on increasing desire and decreasing demand.

  • Increasing Desire: To increase desire you are continually working to test and optimize your messaging and positioning. The thought is, “with enough desire, people will overcome a lot of friction” says Sean Ellis. To execute on this and track your progress, you will need a combination of qualitative and quantitative data. Sean emphasizes that it’s paramount to keep the ultimate product experience in mind, so that you don’t increase desire for a product promise that your product is not designed to deliver on.
  • Decrease Friction: This step in the process is all about conversion rate optimization. It’s about seeking out and fixing all that’s preventing people from converting, whether that’s a macroconversion, like signing up for your product, or any of the microconversions that lead up to it. To dig in further on this topic, I suggest you read Qualaroo’s, “The Beginner’s Guide to Conversion Rate Optimization.”

 

Conclusion

In this post, we’ve covered the essential elements to designing a startup for fast growth. If you’re farther along or you just want to dive deeper into growth for early-stage startups, you can access the audio interviews of today’s featured growth practitioners, the full 43 page guide, and tons of resources here (free for now).




Topics: marketing
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Happy Birthday HubSpot! 9 Lessons From Our First 9 Years

By Dharmesh Shah on June 9, 2015

9 years ago today, on June 9th 2006, HubSpot was officially started. I remember the day, because it was also the day I graduated.  (I had promised myself I'd enjoy my 2 years in grad school without too much distraction, so deliberately picked graduation day as the official start-date for HubSpot.)

So far, we've had a pretty good run.  HubSpot is now public [NYSE:HUBS] and still growing fast.  More importantly (at least to me), I'm still having a great time.

Rather than bring out the party hats and cake, I thought I'd reflect a bit on some of the hard-won lessons we've learned across our 9 hear history in the hopes that it will be helpful to some of you.  (Note: The below picture of a cake is from our 2nd birthday party.  Now, we'd need a bigger cake)

Warning: Some parts of this article are a bit immodest.  I usually try to avoid that, but sometimes I fail.  Also, some parts of this article are a bit touchy-feely.  The reason for that is that despite popular perception, I'm kind of touchy-feely sometimes.  

On with the lessons and stories...

1. Don't defer the hard co-founder questions for later. They only get harder.

Have the important conversation(s) with your co-founder early.  Topics might include long-term goals, fund-raising, equity allocation, vesting, etc. I've written an entire article with some of the questions co-founders should ask each other. In our case, one of the reasons my relationship with Brian Halligan (co-founder/CEO of HubSpot) has worked out so well is that we talked through these things early and made sure we had agreement and alignment.  One of the top reasons for startup failure is co-founder conflict.  You can't mitigate that risk completely, but you can reduce it significantly simply by some candid and direct conversations just as things are getting started.

Oh, and no, the best way to avoid co-founder conflict is not to not have any co-founders.  I think that's sub-optimal.  Your odds of success go up if you have a co-founder.  

2. An imperfect decision today is better than a perfect decision some day.

Some decisions will be impossiblly hard to make and you'll debate them for months (and in our case years).  Most decisions you'll need to make in a startup are based on imprecise and incomplete data. Get used to it.  Make the decision and move on.  Sometimes, you'll need to cycle back and "course-correct" decisions that are wrong and significant (the wrong, insignificant ones you should learn to ignore).

Let me give you an example of how not to do it.  In the early years of HubSpot we were trying to make the (very hard) decision about whether to focus on the very small business market or the mid-market (larger businesses with 10-2,000 employees).  We debated this one for years.  There were good, strong arguments on both sides.  We spent many days locked up in a conference room, promising ourselves we wouldn't leave the room until we had made a decision.  But, the decision still didn't get made.  We should have made the decision sooner, because regardless of which path we picked, we likely would have made it work.  

3. Don't be distracted by the "Press Release Hire".

When building the early team, don't get hung-up on how people look on "paper" (i.e. how experienced someone is).  Brian (my co-founder) calls these kind of hires the "Press Release Hire".  Litmus test:  Imagine you hired this person.  Would you issue a press release to let the world know that you brought this awesome person on board?  If so, you're probably more focused on what they've done instead of what they will do for you.  Don't get me wrong, if you can get someone that's a great fit and they've accomplished something in the past, and you think that'll translate to doing great things at your company, go for it -- and may the force be with you. But remember, that past successes at really big companies doesn't guarantee future success at your company.  The context is very different.  Also don't ignore talented future stars because they lack experience and nobody has heard of them.  At HubSpot, in those early years, we were all relatively unqualified for the roles we were in.  Some might argue I'm still unqualiifed for the role I'm in.  But, we were hungry, willing to learn and most importantly -- we cared

4. If you don't love your customers, you're more likely to lose.

You better really love your customers.  If not, pick a different idea or industry.  Life is short.  Startup success is both about solving a problem you care about and solving them for people you care about (or at least don't hate).  If you find yourself making fun of or disparaging your customers when they're not around, something's wrong.  It's not impossible to build a business this way (there are entire industries where it seems that every company hates their customers).  It's not impossible, but it's harder -- and less fun.  On the flip side, there's something immensely gratifying about genuinely helping people and caring.  If you love your customers, several good things happen.  One, they'll know it, and will stay longer (yay,lifetime value!).  They'll refer other customers.  You'll be able to recruit and retain better people onto the team.  So, overall, your odds of success go up.

5. Even micro-investments in culture can yield mega returns.

If you know me or know HubSpot, you probably know that we are obsessed  with culture.  As many people likely know HubSpot for it's culture as it's product (I could argue that the culture you create is part of the product).  But, it wasn't always that way.  In our early years, we didn't talk about culture much.  We hadn't documented it all.  We just built a business that we wanted to work in.  And, that was great.  But the real return on culture happened when we started getting more deliberate about it.  By writing it down.  By debating it.  By taking it apart, polishing the pieces and putting it back together. Iterating. Again. And again. And again. If you're interested in learning more about how we think about people and culture at HubSpot, you should check out our Culture Code deck -- embedded below for your convenience.

 

Now, I'm not suggesting you drop everything and go create a 128-slide treatise on culture for your company.  But make some small investments.  For starters, have some conversations about the who.  What kind of people do you want on the team? Try to avoid platitudes.  Make a list of attributes and traits that other companies avoid, but tend to work for you.  And vice versa.  Write this list down, even if it's just a simple email to the team.  Once you start writing your culture down, a couple of surprising things will happen:  1) You'll realize you got parts of it wrong (because people will tell you).  2) You'll increase the chances of hiring for "culture fit" without falling into the trap of toxic homogeneity where you just hire people like yourself under the guise of "culture fit".  Short rant on that topic:  No company should be able to skip over candidates for lack of "culture fit" unless it has at least a minimal clue of what that culture is.  

One of my regrets about culture at HubSpot is that we didn't wake up to the value of diversity until much later in our evolution.  And, though I'm in good company, that doesn't make me feel that much better.  If you're just getting started, take my advice:  Be mindful of diversity super-early and beware the homogenity traps.

6. Don't just think bigger -- think better.

Since time t=0, one of the decisions Brian and I made early on was that we were going to take our best shot at building a big, successful company. We specifically talked about not building a company that was "built to sell".  In fact, many of our early decisions and actions reduced our chances of being acquired.  That was OK, because it's not what we were after.  Instead, we made sure that we pushed each other to think about scale.  To keep thinking bigger. 

Here's my theory:  Most big, spectacularly successful companies (which I hope HubSpot will become some day) did not get that way by accident.  Rarely does an entrepreneur, wake up one morning, drink her morning coffee and exclaim: "Hey look!  I accidentally built this super-successful company!  Yay me!"  Yes, that happens every now and then, but it's super-rare.  99.9999% of the time, success is built through deliberately deciding to build something big -- and then working super-hard, taking risks and persevering through the hard times.  

But, what worked for us wasn't just making the numbers go up and to the right.  It was about thinking about every part of the business and trying to figure out what would make it better.  Yes, we're a software company, and I'm proud of our product team.  But, it's not just about the product.  We try to be equally maniacal about making every part of the business better.  Every. Single. Part. 

Fun, inside story:  We do NPS (Net Promoter Style) surveys on a crazy number of things.  You might know NPS as a way to measure customer happiness.  The standard two questions are:  1) On a scale of 0-10, how likely are you to recommend this product/service? 2) Why that score? Like many other companies, we've been sending NPS surveys to our customers regularly for years.  But, unlike many other companies, we also send out NPS-style surveys to all of our employees every quarter.  The question is slightly tweaked to: "On a scale of 0-10, how likely are you to recommend HubSpot as a place to work?".  We also do NPS for our alumni.  We're working on doing it for job candidates that interview with us ("How likely are you to recommend HubSpot as a place to interview?").  We've done it for our company meeting.  After the meeting, we ask: "How likely are you to recommend this meeting?" (Learned lots of interesting things on that one).  OK, so that might be a bit OCD.  But in our experience, once you can start measuring something and getting qualitative feedback it's much easier to make that thing better. No big revelation there, I think the business world has known that for years.

What was a revelation (at least to me) was how all the parts of a company are so inter-connected.  It's impossible to build something really great by just focusing on one part of the system.  You need to simultaneously work on every part of the system -- and make it better.  

7. Don't obsess over competitors.  Obsess over customers. 

I'll confess.  I'm likely more guilty of watching our competitors too closely than anyone at HubSpot.  But, the good news is that though I watch them closely, I try not to follow them.  Knowing what your competitors are up to is good.  Doing what your competitors are up to is bad.

Take the calories you would have spent worrying about your competitors, and spend them on your customers.  You'll be better off (and will sleep better too).  

8. Don't minimize dilution, maximize impact.

This one might come off as controversial.

If you go out and raise outside funding, resist the temptation to worry too much about valuation (and minimizing dilution).  In the grand scheme of things, as long as you're getting a fair deal, marginal differences in dilution won't matter.  What will matter more is the degree to which you can have an impact (however you measure that).  You're probably going to be happier owning 5% of something great than 25% of something not-so-great.  

Now, don't get me wrong, I'm not suggesting that every company should go out and raise funding.  I advise entrepreneurs (especially first-time founders) to defer fund-raising. The reason is that once you start raising funding, you're often shifting your focus from solving customer problems to solving investor problems.  You're better off working on the former -- because that makes the latter much easier.

In any case, if you're going to raise funding, raise funding.  Pick a great partner, get fair terms and don't sweat the dilution too much.

One more thing:  The other way you dilute is by sharing equity with your team.  Here too, don't worry too much about minimizing dilution, get the best people and try to maximize impact.

9. Don't be satisfied with sales, seek LOVE.

This one might come off as a bit weird.

If you're reading this, there's a decent chance that you're human.  (If you're a robot, and you actually understood this article so far, I submit to your kind's superior intellect and ask that you forgive us humans our foibles).  Anyways...let's just assume you're human.  And, because you're human, you probably seek love. It's natural.  We spend a fair amount of time and energy looking for love (hopefully in some of the right places).  I'm going to posit to you that you need to carry that sentiment to your startup. I'm not talking about the crazy, desperate call at 3am kind of "love", but the hope to find someone that "gets you" and "likes you for who you are and what you believe".

Yes, I know that  sounds a bit strange.  But it's not that strange.  Chances are, there are some companies or brands that you love. All I'm saying is that as a startup, you need to seek that love.  

Let me explain by telling you how we do this at HubSpot.  Like most growing companies, we want to get people to buy from us and become customers.  But, unlike most companies, for us, deep-down inside, that's not enough.  We don't just want people to buy from us.  We want people to love us.  We want them to love what we love and respect what we do, even if they don't buy from us.  Even if they are unlikely to ever buy from us. Because what we believe is that the more people that love us, and want us to succeed, the more likely we are to do so.

Thanks for all the love and support over the years.  

-Dharmesh

p.s. It usually feels weird to "sign" a blog article like a letter, but in this case, it felt right.

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How Emotion Helped Grow Our Startup to 2.8M Users in 20 Months

By Dharmesh Shah on June 1, 2015

This is a guest post by Melanie Perkins, co-founder and CEO of Canva. We are launching Canva For Work that will help you and your team create original stunning visuals faster than ever. Register your interest to win free accounts.

I want to start with a question. A question which I think plagues a lot of startups. Should you listen to your users or not?

Most people would answer with a simple yes or no. On one side of the argument are people who believe you should test everything. They say you should trial Google AdWords and see if people click on your ad. If they don’t, you might not have a viable business. On the other side of the argument people point to Henry Ford’s great quote - "If I had asked people what they wanted, they would have said faster horses."

To grow Canva to 2.8 million users in 20 months, we did both. I’m going to share my experience about whether or not you should listen to your users. Above all, the timing for each is incredibly important.

#1 We didn’t ask our users what to build

When I was studying at university I was also teaching design programs. Students from many different faculties came to learn to design as part of their Professional Communications units. However, it took a very long time for them to the learn  the basics of the programs and by the end of the semester they could hardly operate the tools let alone actually ‘communicate’ through their design.

I don’t believe you can ask your users what you should build. If I had asked these students (or professional designers) what they wanted, they would have asked for incremental improvements to the design software they were using and people who had no design experience certainly wouldn’t have even known that they would have the ability to design.

However, it was the particular insight I gained from watching people who knew nothing about design, trying to use the design tools that became the foundation for Canva. It became apparent that they were complex and tedious and beyond the scope of most people’s expertise. But being able to use the tools myself I knew the capabilities of using design tools to communicate and it became apparent that in the future that everyone would have these same capabilities and they would be a lot easier to use.

So, when finding the initial problem we wanted to solve - it was important to have a deep understanding of the problem, even though user surveys would have given little support to our mission. Paul Graham wrote an excellent article on a similar subject, explaining “The very best startup ideas tend to have three things in common: they're something the founders themselves want, that they themselves can build, and that few others realize are worth doing.”

#2:  We delayed our product launch by more than a year

After about a year of development we had the basic building blocks of our design platform built. So we decided it was time to do some usertesting and see how people actually used it.

It was extremely insightful. Users were scared to click much and when they did they wandered around aimlessly, struggled with a few things, created something that looked pretty average and then left feeling dejected. Not quite the fun journey we were hoping for users to experience.

It became quickly apparent that it was not just the tools themselves that were preventing people from creating great designs, but also people’s own belief that they can’t design.

We didn’t just need to create an easy-to-use graphic design program, we needed to empower people who weren't graphic designers to believe they could design. During our initial user tests, the feedback was synonymous. “I’m not creative enough, it’s too hard.”

Furthermore, people using Canva for the first time inevitably didn’t have a ‘design need’, meaning that they had no reason to actually use Canva, so clicking around aimlessly was going to be a pretty uninspiring experience.

In order for Canva to take off - we had to get every person who came into our product to have a great experience in a couple of minutes. We needed to change their own self belief about their design abilities, we needed to give them design needs and we needed to make them feel happy and confident clicking around. We needed to get them to explore and play in Canva. No short order! So we spent months perfecting the onboarding experience paying particular attention to users’ emotional journey.

#3: We Optimised Our Onboarding Experience For Our User’s Emotional Journey

The goal behind our onboarding process was to debunk two key thoughts.

1. People thought it took too long to learn a new skill

Regardless of how simple and intuitive we made our design program, people had preconceived ideas (not wrongly so) that design programs were difficult to learn and use. Again, not a great time to listen to your users.

To address this concern, we created a short introductory animation – 23 seconds – to visualize the simple functionality of Canva. The animation actually uses Canva itself to point out where the tools are and how to use them in three simple steps.

image05

2. People didn’t believe they had the talent or skills to design

Most people think they’re either “creative” or “non-creative”. I disagree. I believe there’s creativity in all of us, and with the right tools it can be unleashed.

In an ambitious bid to prove this belief wrong, we created a series of interactive challenge tasks. Our objective was to give people very simple challenges that would get increasingly complex, and for them to build their confidence with each step of the process. It was imperative users could experience small wins.

Our first challenge seemed simple enough – to change the color of a circle to your favorite color. We watched a user tester struggle for almost a full minute, he said “Can someone tell me how, cos I really don’t know, ummm… How am I going to change that? Am I missing something?” Eventually he figured out how to change the color of the circle and gave us a really interesting insight in the process.

It was difficult to spot the color picker when it was the color grey, when we changed it to red it was very obvious. This tiny tweak has saved hundreds of thousands of people from struggling with this step and boosted our user’s self-confidence in the process. Watch the two videos below and see the huge difference in the emotional reaction.

Video 1:

Caption: The first user test

Video 2:

Caption: The simple change that moulded our onboarding process

image04

To give you another example, we added another ‘challenge’ which prompted users to place a hat on a monkey. Does this make for great design? Not necessarily. But it did convince people that Canva was easy to learn and that Canva was easy enough to explore.

image00

We spent a considerable period of time trialling different variations of ‘challenges’ - three challenges, ten challenges, double barrelled challenges, simpler challenges, more difficult challenges. Each of the variations gave our users a different emotional experience.

The ending result was great, within a few minutes of using Canva people feel confident with their abilities, understand how Canva works and then spread the word.

#3: Established World Class Customer Service To Empower Our Users

Understanding your users’ emotional needs when you’re getting your startup off the ground is only the first step. If you abandon them after you launch, your efforts will have been wasted.

Canva’s customer support is an integral part of our platform. Our amazing team don’t just answer technical queries, they pick up where we left off: they empower our users to believe they can design.

What does this process look like? Our customer service team operates on the following pillars:

  1. A 24-hour roster. Our users’ questions are a huge priority for Canva. A 24 hour roster ensures we can speak to our global community of users anywhere, at any time. By being online when our users are, we’re able to help during their working day. Obviously, when we were starting out 24-hour support would have been a stretch, however, responding in a timely manner when our users are most active has always been essential.

  1. An average response rate of less than two hours. That brings us to speed. Getting back to people quickly is one of the best ways to provide great support. Our users know that they can contact us when they’re having an issue and we’ll do our best to help them out. This also means we can keep on top of the impact of any new features and keep a finger on the pulse of our community.

image06

  1. A daily customer happiness report. To ensure full transparency, each day a report is sent to our entire team with a summary of the day’s tickets. This ensures that our users are always front of mind at Canva, and the relevant team knows when there are particular issues that they should be aware of.

image02

  1. Regular workshops. Recently we flew our team based in Manila to our HQ in Sydney. We conducted intensive workshops with our team where everyone had to opportunity to see what kind of tickets our users were submitting. All new team members also complete the same exercise during their first week at Canva. Why? There’s no better way to inspire your team to build an amazing product than to put yourself in the shoes of the people using it.

image03

After you launch, the conversations you have with your users should be as important as when you build your product.

This is the time to listen. In any case, the conversations your customer happiness team have with your users are critical to your success. Collate their feedback, listen to their suggestions, act quickly on any bugs or challenges they experience - quickly responding to your users and customer support team’s feedback is essential.

#4: Give Goodwill: Word of Mouth Trumps Any Marketing Tactic

I often get asked which tactics we used to propel Canva’s early stages of growth. My answer is always the same. We didn’t focus on engineering virality, SEO, SEM, content marketing or any other marketing.

We relied on the powerful momentum of word of mouth that was spurred by having a product that solved significant pain points for our users. Spending a year in development gave us the luxury of being able to deeply understand our user’s emotional needs, and build a product and solution that would cater for them.

Creating a product people would love wasn’t the only way we exerted our goodwill. When we launched our product, we created a series of free interactive design tutorials people could use to learn basic design skills. Despite strong advice to the contrary, we decided not to watermark user’s designs with our logo, we wanted our users to get so much value from Canva that they spread the word about it. Anything we believed would benefit our users, we did.

And it’s been one of the best decisions we made. Our community of 2.8 million users is proof of that.

image01

I’m not saying go out and make decisions based on your gut – but always be willing to invest in projects or resources that might not immediately return direct revenue. If they create goodwill amongst your users, they’ll yield an incredible amount of value.

At the end of the day, your users are your most valuable asset.

Why Your User’s Emotions Are The Key To Exponential Product Growth

When you’re launching a startup it can often feel like you’re walking in pitch black guided only by flickers of light.

That’s how I felt while receiving advice on whether or not to listen to users that thought they would never be able to design. But what I learned while growing Canva to 2.8 million users is that exercising the discretion to do both is what good business is all about. My advice – do both, but remember timing is everything.

Henry Ford also said: If everyone is moving forward together, then success takes care of itself.” Include your users in your product journey – they’re the only other people who will care about your vision as much as you do.
Topics: marketing growth
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Why Your Startup Should Ignore Your Onboarding Experience (For Now)

By Dharmesh Shah on April 27, 2015

This following article is a guest post by Jackson Noel. Jackson is the Co-Founder of Appcues, a SaaS product that allows you to create in-product experiences without changing any code.  You can follow him on twitter: @jacksonjonson.

Since I joined a startup that focuses on user onboarding, I’ve had half a dozen conversations just like this one:

Startup Friend: “Dude I need to talk to you about our user onboarding.”

Me: “Okay, what’s up?”

Startup Friend: “We’ve changed it 3 times now. Can’t figure out how to get users to engage.”

Me: “Gotcha. Well what are you doing to change it?”

Startup Friend: “I’ve gone through every one of Samuel Hulick’s teardowns like 10 times. We’re just trying to get ours to be more like Slack’s.”

Me: “Have you looked at any of your own data?”

Startup Friend: “Nah, it’s too early to have anything insightful in there. We only had like 250 users sign up last month.”

Friends in early stage startups have come out of the woodwork to talk about their user onboarding experiences. And every time I tell them the same thing: completely ignore your user onboarding experience (for now).

Why your startup shouldn’t focus on user onboarding

To my friends, this advice usually seems *counterintuitive*. After all, it’s coming from someone whose business model hinges on people focusing on onboarding. But bear with me for a moment…

Great user onboarding makes users say, “WOW, this is awesome,” and recognize that your product is a must have experience. But these WOW moments don’t come easy. And the mechanics by which you onboard users is just a small part of whether or not they fall in love with your product.

The more substantial part of the equation is the value your product delivers to your user: something in their life that must get easier, faster, cheaper, more productive, more fun, etc. because of using your product. Otherwise, why would they switch?

And that’s the difficult part to create. That’s the part that requires customer development and experimentation. It requires you to test your assumptions, to pivot, to try new things.

Once you get that part right, building a silky smooth onboarding experience to deliver value to your users quickly will become far easier. But if you focus on onboarding too early, two bad things can happen:

  1. Your team will have less time to build something that truly delivers value (which again, is the much more difficult and important part of scaling user growth)

  2. You’ll create “product baggage” that makes it harder to build and experiment. Now you have to worry about your onboarding flow with each product change you want to make

After I explain this to my startup friends, I usually get a response along the lines of, “but wait, if I don’t have a good onboarding flow how am I ever supposed to know whether my product is delivering enough value?”

Indeed, we have ourselves a classic chicken or the egg conundrum.

Instead, onboard your customers manually

In lieu of investing your development time in user onboarding, you should do whatever it takes to help your new users achieve success. Reach out to them personally via email, install a live chat product, set up demos, etc.

Yes, this approach doesn’t scale. But it will save your startup’s most scarce resource, developer time, and accumulate your startup’s second most scarce resource, information.

Here are 4 things you should do:

  1. Talk to each new user who signs up to learn about their goals and offer to help get their account set up successfully

  2. Reach out to all of your existing customers and find out what they love about your product

  3. Touch base with every single user who signed up but never adopted your product (usually an email after 60 days of zero activity works well)

  4. Track your usage data very closely (Mixpanel/KISSmetrics are great tools for event tracking, Inspectlet is great for recording user sessions). Make sure to cross-reference all your qualitative findings (from customer conversations) with quantitative data.

Bonus: Here are two google docs with email templates, 3rd party tool recommendations and more to help you onboard users manually.

This manual onboarding process is not easy. If your product is still in the early stages, you’ll probably see concerning data and get a lot of negative feedback. It can be demoralizing.

But it will make your team stronger and your product better. You will better understand the motivations and anxieties of your users, identify points of confusion, and figure out why unengaged users didn’t stick around.

This information is a gold mine for an early stage startup. It gives you the information you need to thoughtfully iterate and pivot your product to get more users to say, “this product improves my life”.

When is the right time to prioritize your onboarding experience?

Once you have a high degree of certainty that users are getting great value from your product, you need to fire yourself as onboarding czar and hire your product. Unfortunately, there’s no hard and fast rule about when this time is for every startup.

But there are generally two types of measures you should keep your eyes on:

  • Measures of product value. This could be your NPS score, churn, or Sean Ellis’ 40% rule.

  • Measures of volume. Try to avoid a vanity metric like total number of users. Use something more meaningful like # of highly engaged users or # of paying customers.

At Appcues, we’re waiting until we have over 100 paying customers with greater than a 40% score on the Sean Ellis question to fully optimize our user onboarding experience. But your criteria should be unique to your situation.

When the time is right, you’ll have all the right information to optimize the in-app path that leads to user success based on what you’ve learned by onboarding users manually. Take a look at the user onboarding academy to help you build it the right way, and make sure you’re ready to commit to it for the long term.

As Samuel Hulick points out, user onboarding isn’t a feature. You can’t set it and forget it. Onboarding requires the same thoughtful iteration and pivoting as does the rest of your product.

The bottom line

With more products attempting no- or low-touch sales funnels, user onboarding has become a hot topic over the past year. And for mature products that have validated their value proposition and customer demand, it is a hugely important part of your funnel to optimize.

But for early stage startups that still have much to prove, optimizing your onboarding experience can be a monumental mistake. It will slow you and your team down, distracting you from truly solving your customer problem.

So completely ignore your user onboarding experience (for now). Instead, replace it with yourself. You’ll learn, build and address your customer pain faster.


Topics: support
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We Like Humans, But We LOVE Code (Machine Learning Case Study)

By Dharmesh Shah on April 16, 2015

The following is a guest post by Jonah Lopin (@jonahlopin), founder at Crayon.  Jonah is a HubSpot alumnus, and I'm an angel investor in the company.  

Here at Crayon, we love humans. 

In fact, all our moms and many of our best friends are humans! 

But when it comes to solving problems, we prefer code.

Humans are awesome at certain things, like closing enterprise sales deals, delivering rousing speeches, and comforting small children. For these tasks and lots of others, humans are far superior to code.

But in a business context, humans have some serious drawbacks:

1. They’re hard to recruit (Crayon is hiring, by the way)

2. They’re expensive (compared to servers)

3. They sometimes get sick and can’t come to work (☺)

For a product-driven software company, there’s something else to consider. It’s subtle, but important.

Software is better than humans at providing an elegant solution to complex problems at scale.

Tomasz from Redpoint put together some fascinating data back in 2012 that showed billion dollar public SaaS companies have revenue per employee around 200k/year. Jeremiah Owyang puts revenue per employee at Google & Facebook around $1m per employee, about 5x higher! Clearly, Facebook & Google solve more problems with code than a typical B2B software company.

The fact that Google & Facebook solve their primary problems with code rather than people doesn’t just impact their metrics and margins, it shapes the elegance and efficiency of the solutions they provide. The subtle advantage of solving problems with code rather than humans is that it tends to make your core product better over time.

Crayon is small, but we dream big. We solve problems with code, not humans, because we want to serve millions of users as elegantly as possible. It’s just down-right hard to do that with too many humans in the mix, especially if you want to scale quickly. (And especially if you’re not Uber.)

The rest of this post is about a big problem we had and how we solved it with code.

The Problem: Some Web Pages Don’t Look So Hot

Crayon is a visual inspiration platform. We help marketers get great ideas so they can do better marketing.

We’re programmatically adding about half a million pages to our system every day. As I write this article, we’ve got about 13 million designs in the system, and we’ll have close to 100 million by the end of the year.

We let users vote designs up and down, so most categories on Crayon like Startup Home Pages, B2B Pricing Pages and Landing Pages have always looked pretty good.

But we still had a problem in deeper categories: folks would be happily browsing, only to have the smooth inspirational vibe unceremoniously broken by a crappy looking page. How could we get the “best” designs to the top of the result set and the “least inspiring” designs to the bottom?

We Challenged Ourselves to Solve it With Code

Can code separate “inspiring” marketing designs from “crappy” ones?

Many said it couldn’t be done… but if they were right, would I be writing this article?

Here’s How We Solved It

Step 1: Pick Training Sets

We picked a set of 200 “inspiring” marketing designs and a set of 200 “uninteresting” marketing designs.

Yes, this is a bit of a fuzzy thing to do because it’s based on human judgment. But after running the services team at HubSpot for 5.5 years, and working closely with more than 8,000 professional marketers, I felt qualified to judge which marketing designs were likely to be interesting and instructive to other marketers. So sue me!

Step 2: Make Some Guesses About Why The Good Ones Are Good

This part is like picking a basketball team without being able to watch the candidates play basketball. What characteristics of the players would you look at? For instance, you might pick taller players or players wearing high-tops.

In the style of Jeff Foxworthy’s comedy routine You Might Be a Redneck:

If your Html is all based on tables… you might not have a great marketing design (tweet)

If you’ve got lots of inline styles… you might not have a great marketing design (tweet)

If you don’t use media queries in your CSS… you might not have a great marketing design (tweet)

You get the idea.

Step 3. Test Your Guesses

We wrote some code to test each “guess” from step 2 against each design in the training sets from step 1. We were hoping to find things that were “true” for the “inspiring” pages, and “untrue” for the “uninteresting pages”.

We looked at 45 discrete “guesses”, and found 25 of them were predictive of “inspiring” marketing designs. Success!

Some of the best factors were things like:

  • Setting the viewport meta tag
  • Including Facebook Open Graph tags
  • Using the Bootstrap framework
  • Specifying Apple touch icons

Note that these factors don’t directly predict which pages are “inspiring”. Rather, these factors indicate that someone clueful created the page, which is directly predictive of a page being “inspiring”.

Some of the things we thought might work, but weren’t predictive at all include:

  • Whether a page uses JQuery doesn’t matter… it’s just too ubiquitous
  • The total text on the page doesn't matter.  It turns out there are equally as many crappy short pages as there are long pages (tweet)

The final step was some mathematical mojo based on how strong the signals were in step 2 to come up with an overall “inspiringness score” for each page.

The Results

Pages like the chatterbox.co homepage did very well:

interesting-example

While our friends at biomarkerstrategies.com didn’t fare as well:

uninteresting-example

 

Overall, here’s what we got:

humans-vs-code-chart-chart

How awesome is that?

The top 10% of Crayon search results just went from 50% “inspiring” to a whopping 93%!

We have 13 million designs in the system today, and reviewing those manually would take a 10 person team about 5 years. Ouch! But we’ll have 100 million designs by the end of the year, and that’s just the beginning. If we didn’t solve this problem with code, we’d be in serious trouble. And no humans were involved… except for the one human writing this article.

Your thoughts?

Does your business have a tough problem you plan to solve with code rather than humans?

Have you used machine learning to deliver elegant solutions to customers at scale?

Please continue the converstaion in the comments.

Go solve something with code! (tweet)

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An Insider's Look At HubSpot Sidekick's Growth Approach

By Dan Wolchonok on March 18, 2015

The Sidekick growth team is a small, data driven and aggressive group within HubSpot that works on new, emerging products with massive audiences and a freemium business model (similar to Dropbox and Evernote).  We are constantly pushing ourselves to learn new growth strategies, tactics, and techniques. I have personally become more data driven and model driven after joining the team, and wanted to walk through an example of one decision that became much easier with the use of our generic problem solving framework.

I am a big believer in the idea that complicated problems look simple when you are able to break them down.  Don’t take my word for it - this is what was attributed to Einstein:

If he had one hour to save the world he would spend fifty-five minutes defining the problem and only five minutes finding the solution

The Sidekick growth team follows a very straightforward process that strives to take complicated choices, and analyze them to produce areas of opportunity:

Step 1: Choose a goal

Step 2: Build a model

Step 3: Analyze the inputs

Step 4: Identify opportunities

These steps are generic enough that they can be applied to many kinds of problems.  Whether you’re on a sales, marketing, product, support, services, or any other type of team this framework is incredibly valuable.

Step 1: Choose a goal

Choosing the right metric / goal is very challenging and critical to our success.  If our team optimizes for the wrong metric, it doesn’t matter how well we execute because our efforts won’t translate into success.

Our identified goal:

We ultimately chose to define our goal as increasing the number of people active on a weekly basis.  Rather than pick any metric, a person has to take one of six key actions to demonstrate that they are getting value from our product.  Brian Balfour talks about the cycle of meaningless growth here, but the key takeaways for our product are that more people using Sidekick helps us to grow faster.

Some of the attributes we used when picking our goal:

  • It is a holistic representation of our product. We thought about all of the ways that someone uses Sidekick, and thought about the best way to represent them.

  • It’s authentic (hard to fake).  If you optimize for a hollow metric that is easy to attain, but doesn’t translate into success later on, you might fool yourself into thinking you’re making progress. If we were to pick signups, we might crush that goal and get a lot of users to sign up, but they might not stick around.

  • It represents real value.  If you solve for your own needs instead of the customer’s needs, you may be successful in achieving your goal but it won’t translate into true success down the road.  We tried to pick a goal that represented users getting value out of the product, which results in people upgrading to the paid version of Sidekick.

Step 2: Build a model

With the goal established, we then set out to build a model to understand what will have the biggest impact on weekly active users (WAUs).  If we simply tried to increase our top level goal on its own, we wouldn’t have an understanding of where to start.  In order to understand where to focus our efforts, the model breaks down the goal into manageable pieces.  The whole point of building the model is to understand what the inputs are, and what the biggest contributor to our goal is.

Our Excel model breaks down our goal (WAUs) into the individual components that drive it on a weekly basis.  It’s a simple equation:

WAU = (New people) + (People from previous weeks who continue to use Sidekick)

We broke down each of these two buckets into their individual components.

WAU =

  • New People:
    • Channels:
      • People we acquire through paid acquisition
      • People we acquire through content marketing
      • People we acquire through SEO
      • People we acquire virallly from existing Sidekick users (invites, etc)
      • Activation Rate
        • Not everyone who signs up ends up using the product.  Therefore, we measure the people who install our software and get it up and running correctly through an activation rate. Rather than look at the activation rate across all channels, it’s important to understand how each one is different, and if there are isolated pockets ripe for improvement. For example: users who read our content are more likely to set it up than someone who clicked through on an advertisement before signing up.
  • People from previous weeks who continue to use Sidekick
    • We look at the number of people who sign up each week, and then look to see how many of them are active each week since they signed up.
    • We look at retention, which is critical in freemium businesses.  In order to accomplish our goal of having millions of users, we have to retain the users we acquire.

This is a screenshot of our model:

The numbers in this screenshot have been changed so they are not reflective of our true numbers.

Step 3: Analyze the inputs

The model above is extremely valuable because it allows us to use our week-over-week growth to forecast the long term impact of any change. It’s incredibly hard to understand how multiple factors could interact over a long period of time. It might be possible for someone to reasonably predict the implications of any change, but without the model it is easy to be short sighted.

With our model built, it was easy for us to test the sensitivity of the inputs.  For example, if we were to increase the number of users we acquire from our paid acquisition budget, how would that impact our WAUs in a year? Instead, if we focused on retention and user acquisition rates stayed the same, would we have more users a year later?  What about if we improved the conversion rate for a different area of the funnel?  

Rather than sporadically tackling new campaigns or projects, the goal is to understand what is the most impactful focus area for the business.

In looking at the Sidekick funnel, we found that two of our biggest drivers were retention and viral growth.  We modeled how changes to each of them would impact our goal, and decided to focus on retention first before looking at increasing the number of new people through viral channels.  At the end of the day, some of the factors that we always consider:

  • What is the current state of the metric?
  • How much do we think we can improve this metric?  What’s the ceiling on any improvement?
  • What are the resources required to have a meaningful impact?  How long would it take?

Factoring in answers to those questions, and including the estimates in our model, we decided to focus on improving our retention in Q4 2014.  There was a lot of analysis that went into picking retention; it was the result of repeating Steps 1 through 3 multiple times.  By going through the process of evaluating different levers in the model, it becomes much easier to weigh different options against one another and impartially judge alternatives.

For the Sidekick team, it wasn’t as simple as saying that we wanted to improve retention.  Just like WAU’s, retention in itself has many inputs that we had to evaluate.

  • Of the people that stop using Sidekick, we lose the majority of them in their first couple of weeks

  • In the hypothetical example below, we have sample numbers of how we retain users over time:

    • 45% of a cohort stops using Sidekick one week after signing up

    • 5% of a cohort stops using Sidekick two weeks after signing up

Cohort Size

Signup Week

Active 1 Week Later

Active 2 Weeks later

Active 3 Weeks Later

100

11/3

55

50

45

110

11/10

61

55

50

120

11/17

66

60

54

The numbers in this table have been changed from their real values for this post

  • Given the size of our user base, we determined that week 1 retention was our biggest issue and opportunity.  If our existing user base was larger, our long term retention might have been a more important issue.  The lesson is that your biggest areas of opportunity depend on your current context.

Once we isolated the fact that people stopped using it after their first week, we set out to understand why someone who installed Sidekick would stop using it after they signed up.

Step 4: Identify Opportunities

At this point of the process, we know what’s most important to our goal and the implications of an improvement.  The next step is to start identifying how we can make an improvement.   Depending on the lever, there’s a mix of elements that are helpful in breaking down the opportunity.  We used quantitative analysis to identify a problem segment, qualitative analysis to flush out its symptoms, and used our understanding of our product to come up with ideas to address the issue.

To identify a problem area, we did a quantitative analysis of the people that only used Sidekick for a single week.  We looked to segment these users to look for patterns, such as:

  • Where were these users coming from?  Was there an issue for a single channel of users?

  • What technology were these users using?  Was it an issue with Gmail, Microsoft Outlook, or Apple Mail?

  • What part of the application were they using the most?

  • How much do they use Sidekick?  How many days did they use it?  How much did they use it their first day?

In asking these questions, we found that Gmail users were more likely to stop using the product when compared with other email clients. This was a complete shock to us.  We had figured that Gmail would retain fairly well, and that an issue would be likely to exist in one of our other email clients.  We found that a large number of these people were only active the day that they signed up.  To understand their usage on their first day, we created a histogram that showed how many tracked emails this population of users sent their first day.  

The numbers in this chart have been changed from their real values for this post

For the Sidekick team, it wasn’t surprising that people who only tracked a single email their first day didn’t come back.  The surprising element was that such a large % of these people were only tracking one email.  We wondered why someone would go through the Sidekick onboarding process only to never use it again.  Wouldn’t you at least test it out with a couple of friends or coworkers?

To understand why these people stopped using Sidekick, we sent out a simple email to a thousand users.  I emailed them individually by BCCing them from my HubSpot account, asking for feedback on a specific question designed to bring insight to the pattern we discovered.   We bucketed the replies to our email, and found that there were big opportunities to improve our week 1 retention.

The numbers in this chart have been modified from their real values for this post.

I was personally ecstatic when I saw these distributions.  It wasn’t that a competitor was better, or that there was a mismatch between the features people were looking for and what our product offered.  The issue was a psychological one:

We weren’t doing a very good job explaining what our product did, and how people could get value from using it.

Rather than having to build a lof of new features, we needed to experiment with explaining the value of the product.  It’s much easier to test out different ways of describing the product than addressing weird edge cases or building entirely new features.

With our quantitative analysis done and having received qualitative feedback from the segment of users we were most interested in, we spent time brainstorming ideas to address the opportunity.  We looked at how competitors accomplish the same task, how companies in other industries educate their new users, and researched why our most passionate users like Sidekick.  I’ve included a list of sample experiments we’ve tested:

  • Only show the Sidekick web application once we have value to demonstrate

  • Show a video of someone using Sidekick and how they get value out of it

  • Ask users whether they intended to use Sidekick for personal or business use cases, understand whether we should try to change their mind or give them examples that align with their mind set

  • Show a narrative of how someone uses Sidekick over a period of time

  • Incorporate our onboarding into the Gmail interface rather than in our web app

Conclusion

Looking at the opportunity we have focused on for Q4 2014, it seems kind of simple and obvious.  By setting an appropriate goal, understanding the inputs to that goal and finding the biggest contributor, it led us down a path to clearly define our next steps.  While finding a solution isn’t guaranteed, the team is confident that if successful it’ll have a big impact on our trajectory for 2015.  

This framework isn’t perfect and isn’t for everyone, for instance, if you are creating a new product or process and have a small sample size.  However, for the Sidekick team, this process has been an enormous help in prioritizing where to focus energy and resources and get the team aligned behind a common goal.

This framework is incredibly valuable to the Sidekick team for multiple reasons:

  • It breaks down large, complicated problems into actionable and manageable tasks.

  • We have confidence that the opportunities we are working on will have a big impact.

  • We understand the relative importance of different initiatives and are able to make conscious decisions about areas to pursue and the resulting trade offs.  It’s also easier to decide what we shouldn’t be working on, even if it may feel important.

  • Our team can see the direct impact on individual metrics, and understand how any improvements translate into the success of our team.  Teams like being able to track their progress and see how their efforts translate into success.

  • It’s a repeatable and scalable process.

  • The insights aren’t isolated to technology solutions - they can be as simple as messaging and the steps instructions are displayed.

Great!  How do I apply this?

Your time is extremely valuable. Whenever you can, make data informed choices.  You don’t have to be a slave to your model, but you should be making conscious decisions about what you’re focusing on and why it’s most important. Hold your colleagues accountable - ask them why an initiative is important, and what the impact will be.

The mantra of our team is that we want to be the best at getting better.  If you’re interested in learning about growth and seeing your contributions all the way to a business’ bottom line, our team is hiring.  You can see a list of the open positions here.

Thanks to these wonderful readers for their feedback: Brian Balfour, Anum Hussain, Maggie Georgieva, Jeremy Crane, and Andy Cook.

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5 Mistakes Founders Make When Hiring Their First Salesperson

By Dharmesh Shah on February 25, 2015

Your MVP is complete. Some seed funding is in the bank, or maybe even a Series A. You’re anxious to see if your product flies off the shelf. It’s time to make that first sales hire.

This is a big step. The right call can establish the rocket-ship revenue chart every founder dreams of. The wrong call can be bring down the company.

At HubSpot, I hired over 200 salespeople. I made a lot of mistakes. I figured a few things out. Over the years, I have leveraged this experience to help dozens of startups with this critical first sales hire decision.

Here are five mistakes I see many founders make when hiring their first salesperson.sales-acceleration-book

Mistake #1: Hiring a senior leader

“Yes! We just recruited the director of sales at the public company we are looking to disrupt.”

No! Trouble awaits.

Often startups get greedy and go after the big name leader in their space. Here is the issue - this leader has not sold on the front-line in years. The first question she will ask when joining the company is “where is my assistant?”. You need someone who is closer to the front line and is willing to roll up their sleeves and get their hands dirty.

 

Mistake #2: Placing too much weight on industry experience

Me: “What is the top criteria you are looking for in your first sales hire?”

Startup Founder: “Experience in our industry”

I receive the above answer 99% of the time. It does not sit well with me. The answer sounds logical. Domain experience is certainly straight forward to assess. However, all too often, startups put too much emphasis on candidates’ industry experience and miss real weaknesses in their abilities.

Don’t get me wrong. We hired plenty of sales people at HubSpot from our industry. However, believe it or not, it was a minority case. Most folks came from outside of the marketing software space and even outside of software and tech altogether. I would rather have the below average performers stay with our competitors. Go find the rock star from a dying industry and bring them into your space.

Mistake #3: Placing too little weight on go-to-market strategy experience

When your first sales hire joins the company, the go-to-market strategy is typically not developed. Who should they call? Big companies? Small companies? Should they focus on closing the C-level decision maker or getting the end user into a free trial? Will they sell direct or through a partner channel? Will deals require an in-person visit or can they be completed over the phone? Will they work with inbound inquiries or outbound cold calls?

Most sales people and sales leaders will simply try to replicate the go-to-market strategy from their previous employer. It worked then. It should work again, right?

Not necessarily.

As a founder, consider your buyer, your product, and your company strategy when determining your company’s ideal go-to-market approach. Be sure your first sales hire has experience with that approach or is at least willing to adapt and learn.

Mistake #4: Overlooking sales process development experience

“Yes! We just hired the top sales person from our Fortune 500 competitor. This salesperson was ranked #1 out of 1800 sales people. She is going to crush it here.”

I agree. This salesperson is talented. However, these will be her first questions when she arrives at your company:

§ “Where is the pitch deck?”

§ “What is the sales process I should follow?”

§ “Where is the list of top 10 objections and how I should handle them?”

You’ll be scratching your head, “I thought that is why we hired you”.

When this top salesperson started at your Fortune 500 competitor, she attended a month of training, walking through the blueprint of success. She is great at following the blueprint. In fact, she is the best.

However, can she build the blueprint? Probably not. You need someone that can work in a far less structured environment and at least lay out the foundations of the company’s first sales process.

Mistake #5: Hiring a “product pitcher” rather than a “consultative seller”

Believe it or not, the most valuable result from your first thousand sales calls will not be the early customers or revenue these calls produce. Instead, it will be the plethora of feedback from the market, allowing your team to continue to understand your buyer persona, iterate on your product, and perfect your market message.

Unfortunately, many salespeople will approach these early calls as an opportunity to dump as much information about the product and its beautiful features on the prospect, an approach we call “show up and throw up” in the industry. Chances are, your features and message are not quite right. The salesperson will fail to engage the prospect and throw up his hands, “it’s not working”.

The key question is “why?”.

Alternatively, a consultative seller will leverage the first sales calls to learn about the prospective buyer. They will learn about their goals, learn about the strategy they have to pursue these goals, and learn about the challenges they are facing in these pursuits. A consultative seller will be able to come back to the team with the same “it’s not working” result but they will understand why. As a result, the organization can continue to refine its approach and tighten the product/market fit even further.

I hope these five mistakes help you hone your skills as you embark on the exciting phase of scaling sales. The next logical question is where can I find candidates that avoid these mistakes. Here are a few ideas.

1. A recently promoted sales manager at a reasonably sized business. They are not too far from the front-line but also have some experience in sales process development.

2. A failed entrepreneur with formal sales training in their past. They usually score high in the consultative selling arena and experience with unstructured environments.

3. A top-performing salesperson that was around in the early days of their previous company’s growth. They may not have built the process. However, they certainly watched someone do it and had a hand in it.

Any other ideas?

This is a guest post by Mark Roberge. If you liked this article, check out Mark Roberge’s new book that launched this week, “The Sales Acceleration Formula”, about his experience in building the HubSpot sales team.

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Overcoming The Odds: 10 Tips For Getting Into A Top Accelerator

By Dharmesh Shah on January 5, 2015

Just as the CEO is the investor’s interface to a business, the application process and form is your interface into top accelerators like Techstars and Y Combinator. The best programs are super-selective--less than 1% of applicants get in, making them pickier than Harvard, Stanford and MIT. So as our New Year’s present to you, here is the scoop on how to improve your odds of getting in.

We can’t speak directly for any programs other than TechStars Boston, which the two of us have known and been involved in for years, but these hints should improve your chances significantly just about anywhere.opportunity-calling-iphone

For now, we’ll focus on advice straight from Techstars management (they’re like the admissions team – it’s their job to pick the best people from the pool of applicants). Oh, and in case you’re too busy working on your startup to read through the rest of this before submitting your TechStars application, you can apply here.

1. Team, team, team.

Above all else, it’s the TEAM that is the variable that determines success for early stage companies, and evaluation of the team is the #1 factor for acceptance into TechStars. Spend time proving how well you work together. It’s not just intelligence and drive, but chemistry as well. Business ideas are a dime a dozen, but great teams are the key to startups. Why should we expect you to be able to woo customers if you can’t attract great teammates?

Some pro tips when it comes to team chemistry: The easiest way demonstrate that you like each other is to actually like each other. It always starts with people you respect and enjoy spending time with. If one of these things is not true, you have a problem and it will show up to the trained eye. For example, if you have a co-founder that is brilliant, but you really don’t like her – that will show up. On the other hand, you might have one of your best friends from high-school as your co-founder, but perhaps he’s not that sharp or capable. What happens in these situations is that you’ll try to talk over him, interject and correct him or flat out ignore him in the meeting. All bad signs.

In short: Team counts. Find people you both like and respect. Don’t compromise on either of these.

2. Amaze us.

In spite of our best efforts, our eyes can start glazing over after a few hundred applications for each TechStars class, so make yourself stand out! Whether you were the captain of your college hockey team, memorized pi to 100 digits, or you’ve garnered a million users during your beta launch, we want to see evidence of how you’re special. Tell us how you’ve creatively overcome problems in real-life for fun, profit, or pure goodness in the past and what things you have loved doing. Show us why we will be idiots if we don’t make you an offer on the spot. Make us remember your application!

3. Apply early.

Applications for the next Techstars class in Boston, Boulder, London and Berlin are accepted here [LINK FORTHCOMING], with the Boston application open from January 5th through March 15th for the session starting in June. Applying early allows us to look at your application with depth and focus, whereas leaving your submission to the last few days makes it harder for us to give it the same attention. Even if you think you’ll have, say, much better numbers or demo videos if you wait 8 weeks, we still encourage you to apply early; you can always share updates and developments with us at any time. Think of your application as the start of a conversation.

4. References and recommendations matter. A lot.

Recommendations spark our interest and instantly catapult you forward. A strong reference from a member of the TechStars network, perhaps a mentor or a founder from a previous TechStars class, will definitely help you get recognized. Hustling to get an awesome recommendation is a great indicator of the drive and resourcefulness we want in our class.

5. Don’t be just one more wannabe on the same tired meme.

Trust us, we see more social/local/mobile/group purchasing/photo apps than we thought possible. While we know that it’s execution and not the idea that counts, we want to know that you’ve thought hard about how to get an edge on the competition. What’s your unique superpower or approach that differentiates yourselves from the dozens of other startups trying to fill the same need?

6. Do your homework.

Know what kind of companies we’ve accepted before and what problems we love to help solve. Show us not only why you’re a great fit, but how you approach the problem from a new and innovative standpoint. Letting us know how and where TechStars can help you is a plus as well. Information like telling us which mentors you want to work with, or explaining why the TechStars network can accelerate your company, is extremely valuable to us when choosing a new TechStars class. Want to know who we listen to? Start here. [Link to mentors]

7. Show us traction.

Although we accept applicants at various stages of development, we want to see that you’ve got momentum working for you. Whether you’re a team of three with a product in beta, or a company of 12 with $1 million in annual revenue and seed funding already in place, convince us why your idea is awesome and how it’s capable of scaling. Based on the stage of your company, this may involve including Google Analytics in your application, demo videos, or simply explaining why your four beta users are truly invested in improving your product. The more traction you show, the more we are impressed.

8. The video is important.

We take the video on the application seriously as a way to cut down our pool of applicants down to the 100 or so that make it to the semi-final meetings. Although production quality isn’t a focus (iPhone videos are fine), helping us get to know you and your product in a more personal way is important to get your message across. Your video will shed light on your ability to pitch your company not only to the people reading your application, but also to future mentors, VC’s, and users. Tell us your story; inspire us!

9. A bit of branding effort helps.

Work on creating some brand around you and your startup.  Once the team starts to dig into your application, we will do exactly what you would do if you were in our shoes.  Check out the website, check out your online profiles.  Check to see if anyone is already talking about your startup or product.  You don't need glowing reviews from the New York Times this early in the game, but any signals that you can send that this is going to be a successful company and the train is already leaving the station will help you.  If you're not great at design, find a friend to help you.  Better yet, recruit a design-oriented co-founder.

10. Sweat the details...but turn in the application.

Make sure your application is in tip-top shape. Avoid typos, inconsistencies, and obscurity at all costs. The quality of your application is our first indication of how you work, so make sure to present yourself in the best possible light. But as in sports, you don’t make the shots that you don’t take. Get it done and turn it in!

Here’s the link to the application again: TechStars application

Pro tip: Have someone else proof-read and edit your application. This can do wonders (especially if they’re good). It’s amazing how many things we miss when we’ve read and re-read the same document a dozen times.

Want to know more? (Remember #5 above.) Ty covers applications with HubSpots’s Dave Gerhardt in the latest TechInBoston podcast. Good luck!

After a long career as a serial entrepreneur and angel investor, Ty Danco is now a Director at TechStars Boston. His personal opinions can be found on his blog tydanco.com or @tydanco.

Dharmesh Shah is the co-founder and CTO of HubSpot, an active early stage investor, and blogs at OnStartups. You can follow him @dharmesh.

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8 Unconventional Lessons From Quitting My Job At HubSpot

By Dharmesh Shah on December 29, 2014

The following article is a guest post by Ellie Mirman.  Ellie is the VP Marketing at Toast.  Check out her blog or follow her on twitter: @ellieeille.

Three months ago, I told my manager I was going to look for a new job. My parents thought I was crazy. But I knew I was lucky to be in a unique scenario. I had been at HubSpot for seven years and had built an amazing network -- one that I knew I would lean on, both internally and externally, as part of my search.

There are all sorts of risks in telling your boss you’re ready to go — getting kicked out on the spot, getting cut out of meetings and decisions, losing a valuable potential job reference. But I knew none of those things would happen.

My former employers are more than just that — they are mentors, friends, and colleagues. Aside from being some of the most talented people I know, they are also among the most supportive. But hey, I know they wouldn’t just help me because it’s the nice thing to do, they would do it because it’s the smart thing to do too. 

For every HubSpotter who leaves to do amazing things, the HubSpot brand gets better. For every HubSpotter who leaves on good terms, the HubSpot network gets bigger. For every HubSpotter who takes the time to choose big opportunities over small ones, the internal morale gets stronger.

hubspot-ellie

Side note: this wasn’t the first time I told my boss I was going to leave. And the last time, the support and subsequent chain of events actually got me to stay for two more years.

Through my search that followed - aided by my bosses’ introductions and references - I was constantly reminded by how great it is to have worked at HubSpot. (There’s plenty written about how great it is to work at HubSpot, but it’s equally amazing to have worked there in the past.) Here’s why:

1. Brand - I’ll start with the obvious one. HubSpot’s built a great brand. A brand of great marketing (really helps with getting a marketing job) and a brand of success (woohoo IPO). Think Google’s great to have on your resume? HubSpot’s not too shabby either.

2. Ownership - HubSpot gives employees a ton of ownership, whether it’s over a single project or a whole area. That gives people the opportunity to have something substantial on their resume. Everything on my resume really was my doing - I wasn’t just executing on an order from my boss, and I wasn’t always relying on other people to do the execution. I got to do a lot.

3. Data - The HubSpot culture code has “Analytical” front and center, emphasizing how important data is to the decision making and evaluation processes. While that helps with making better decisions, it also helps with showing how HubSpotters can drive results to future employers.

4. New Opportunities - In my seven years at the company, I had many jobs. This kept me engaged and challenged all the time, and helped me learn a variety of skills that I will absolutely use in my future roles. This variety has proven incredibly valuable to me already - in the job meetings I’ve had so far, I’ve recalled lessons not just from the early marketing days (I’m going to an early stage startup) but also my days on the product team and my recent role building a team. All of it has helped round me out as a candidate.

5. Training - I have learned so much in the last seven years, some from direct experience, some from taking on internal and external training classes sponsored by the company, and a lot from working with amazingly smart people. Because HubSpotters spend so much time with each other, it’s easy to forget how much the average person knows on a topic and how much you’ve learned in a short period of time. The training resources are incredibly valuable, the knowledge built up is massive, and being around such smart, passionate people pushes you every day.

6. Transparency - Transparency is one of the most discussed topics when talking about HubSpot culture. Aside from the trust and ownership it builds in employees across the company, it also was incredibly interesting to get the exposure into how a business is run. Coming in with little experience myself, this exposure was another form of education for me, from seeing how the engineering team works to seeing how marketing fits into the business.

7. Supportive Network - I knew I'd need to tell my managers that I was looking for a job because I'd want their help. I immediately got dozens of introductions - to venture capitalists, to startup founders, to other people to network with for new opportunities. This helped me find tons of amazing companies and people, and the reference they provided by simply introducing me to their network was better than five LinkedIn recommendations.

8. People, People, People - In so many ways, the amazing benefits I experienced were because of the people themselves. The people are incredibly smart and hard working, passionate about their work and improving every day. This drive is energizing. This attitude is humbling. I have friends and colleagues for life out of my time at HubSpot.

Lastly, a few tips for finding an experience like this: Work with the smartest people you can find. They will challenge you and push you to be better every day. And take advantage of opportunities. They may not come at the right time or in the right package, but opportunities give you incredible learning experiences that push you out of your comfort zone and help you find unexplored paths. I learned that at HubSpot.

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A Few Funny Characters You'll Find In Silicon Valley

By Dharmesh Shah on December 15, 2014

The following is a guest post by Nathan Beckord.  Nathan is co-founder and CEO of Foundersuite, a San Francisco-based company developing the ultimate collection of software tools and templates for entrepreneurs.  

I’ve worked in Silicon Valley for quite awhile now, and a lot has changed—SaaS and social have supplanted silicon as the medium of choice for starting new companies; San Francisco has usurped Palo Alto as the center of the startup universe; and the 280, long a delightful drive to Sand Hill Road, is now almost as traffic clogged as the 101.multiple-characters

But one thing that has stayed relatively constant is the people. Here’s a quick review of a few of the entrepreneurial archetypes you’ll meet in Silicon Valley.

1. The Socially Awkward Technical Genius Founder CEO

As recently as a decade ago, the Technical Genius toiled quietly in the background behind a “business guy,” but now they are front and center as CEO. Silicon Valley was literally built by this cohort; without them, it wouldn’t exist. However, if you’re not working in their specific industry or niche, it can be painful to chat with them, and you end up making small talk and asking awkward questions like, “how does it feel to grow so fast,” and getting single-word answers. Younger members of this cohort tend to be accepted into YCombinator at an exceedingly high rate.

2. The Happy Hipster Worker Bee

Supporting every Technical Genius CEO is a small army of Worker Bees. Worker Bees rarely become founders, and they’re okay with that. They are paid well, and if they land at the right startup early enough, they typically gain enough vested stock to be able to swing a SOMA condo or a Sunset flat (but rarely a Mission Victorian or Marina split level). They find great joy in the free lunches and gourmet snack bars offered by their IPO-track or just-IPO’d company; indeed, they’ve never worked at a company that didn’thave these perks. When not at work, they can be found in line for a burrito at Senor Sessig’s, an ice cream at BiRite, or hanging out in Dolores Park with a Coolest Cooler full of Pliny the Elder. They have more (and more interesting) facial hair than any of the other cohorts.

3. The Social Climber

Social Climbers usually work in BD, Corp Dev or “Strategy” at a well-funded company, and have a predilection for button-down shirts, dark blue expensive jeans, and North Face vests. They frequently jump from one hot startup to the next; at present you might find them at Uber, but only a year ago they were at Square or Dropbox. You’ll meet them at high-profile startup events like Disrupt or Launch, but they’re difficult to have a meaningful conversation with, as they’re constantly scanning the room to see whom else they should be talking to. Social Climbers often end up in VC, but they rarely make partner.

4. The Legacy VC

Legacy VCs work at firms that are on their 10th fund—funds that have become rather bloated and risk-averse. As recently as a decade ago, this group was at the top of the food chain—they had power, man! But their funds made too many clean tech bets in 2004 and totally missed the social / local / mobile wave. Now they have to fight hard to even get into second-tier big data, IoT, and wearables deals with their remaining dry powder. Simultaneously, this cohort is being disrupted by the likes of AngelList, syndicates, and crowdfunding, as well as by the Young Turks.

5. The Young Turk VC

The Young Turks are on their first or second fund, which they started shortly after leaving Google in the mid- to late-2000’s. They differentiate by being more “entrepreneur-friendly” which means being reachable and responsive, offering solid feedback, and by actually saying “no” when it’s not a fit (vs. retaining optionality). This attitude is extraordinarily refreshing for entrepreneurs courting them, but it is often short-lived, as it leads to a deluge of needy founders emailing, Twitter-stalking, and following them into restrooms at tech conferences; they simply can’t keep up. Thus, the entrepreneur-friendly attitude tends to last until their second or third fund, at which time the Young Turks start to resemble the Legacy VCs (and the cycle repeats itself).       

6. The New Angel

New Angels are a supercharged variation of the Worker Bee; they are folks who were among the first 50 or so hires at a moonshot company that recently went public—think Twitter, Facebook or LinkedIn—and they are now bravely wading into the world of angel investing. For several brilliant months—typically from the time they start investing until they experience their first total write-off—the New Angel is a founder’s best friend, as she is hungry for deal flow, not yet jaded, and willing to open her check book when others won’t. Catch her while you can.  

7. The Socialite

The Socialite is often a co-founder of a company, but spends a huge amount of his or her time putting on events, happy hours, pub crawls, and meet-ups. They’re always pushing you to attend a new event or to spam your network with their latest shin-dig. In their mind, this work is “marketing” or “community development”; back in college, they threw incredible keggers, calling them “networking opportunities.” They have 3k+ connections on LinkedIn, but few actually know them. Notably, Eventbrite derives approximately 74% of its total revenue from this cohort.

8. The Professional Event-Goer

Symbiotic to the Socialite is the Professional Event-Goer. This person is ubiquitous—you see them at Every. Single. Event. They get in for free by promising to promote it to their “network” which usually means a quick tweet or a plug in their spam-filtered newsletter. They always sit in the front row so they can rush the speakers afterward. They wear a rotating set of startup t-shirts and their laptop is covered in startup stickers (some of which have already gone bust). How they pay their rent in absurdistan San Francisco remains a mystery.

9. The Charity Case

The Charity Case is a startup founder, but they really shouldn’t be. They have no money, little to no technical chops to build a product, and quite frankly, their idea is highly derivative and just not that good. They’re constantly hitting you up for introductions to the mythical “technical co-founder” that would make their dreams a reality, and they start a lot of sentences with, “if only I had…” They go to numerous events but never pay; instead, they earn their place by checking people in at the door. 

10. The Old-Schooler

The Old-Schooler originally came from the East Coast or sometimes Chicago or London, and even though they’ve been here for a decade, they never adopt Silicon Valley ways. They don’t own a hoodie and occasionally they even wear a suit. They use their phone primarily to talk, not text. They write formal business plans, eschew AngelList, and raise money by pitching ex-banker friends from Goldman. They might not be on a Mac Book Pro, but they definitely “think different” and are immune to the Silicon Valley echo chamber. Though seemingly a relic, they’re often extraordinarily successful, precisely because they’re outliers and not chasing the herd.

Each of the above was based on one or more real Silicon Valley heroes that I personally know and love—collectively, these characters make the tech world go ‘round. (PS If I’ve described you to a T, please don’t be offended—the above was written with tongue planted firmly in cheek).  All in good fun.

 

 

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The Day I Had To Wear Pants To Ring The IPO Bell

By Dharmesh Shah on November 20, 2014

It's #TBT. It's been a busy and exciting several months.

Earlier this year, HubSpot decided to publicly file our S1 document as part of the IPO process.  On October 9th 2014, after our IPO roadshow, I had the thrill of joining a few HubSpotters and ringing the bell on the NYSE.  $HUBS (NYSE:HUBS) was off to the races.

hubspot-ipo-small
Note: I'm the guy in the middle.  I'm easy to pick out because I'm the calmest one of the bunch.  That's not because I'm cool and collected, but because I'm a bit overwhelmed by it all.
In the intervening time between the S1 filing and the IPO, I was in what is known as a "quiet period" during which I couldn't really say too much about the company.  I don't know all the details in terms of what one can and can't say during a quiet period.  I'm not a lawyer and have never played one on TV (or whatever the kids are calling these days).  So, I erred on the side of conservatism and didn't say much at all during that period.
 quiet-period-tweet-2

Last week, we had our first earnings call as a public company.  Here's the full article: HubSpot Announces 51% Revenue Growth For Third Quarter 2014.  tl;dr: We beat analyst expectations and raised guidance.

So, now, I'm officially out of the "quiet period".  This means I'll be resuming my normal level of blogging, tweeting and such.  And, I can now retweet and link to articles about HubSpot that include the word IPO (like this one).

A few quick observations from the IPO process itself (a longer article, in collaboration with my co-founder is coming soon).

1. The IPO roadshow is a lot like a series of many (50+) VC presentations compressed into ~2 exciting and grueling weeks across many cities. I ended up having a better time than I thought I was going to. It was fun to tell the HubSpot story and share our ambitions for the business with some super-smart folks.

2. Ringing the bell on the NYSE was a lot of fun.  We broadcast the event to our offices in Cambridge, Dublin and Sydney so our team could follow-along in all the fun.  Arguably, the team back at the office(s) was even more excited than we were on the floor.  There was rumor of tears of joy and such, but those have not been confirmed.

3. The biggest "holy crap!" moment happened the morning of the bell-ringing ceremony.  My wife Kirsten and I were walking up Wall Street on our way to the exchange building.  Then, we saw the HubSpot logo draped over the entire building.  Was not expecting that. We were floored. It was*awesome*.  (It was particularly fun for my wife, who gets credit for the HubSpot logo almost 10 years ago -- well before there was even a company).

hubspot-logo-nyse

4. A quick/fun story about the day I wore pants: In the middle of the road-show (I was on my way to SF at the time), I got an email from someone on our media team.  The email stated (among other things) that the NYSE actually required that one wear pants in order to participate in the ceremonies.  And by pants, I mean trousers/slacks (not jeans or shorts).  At first, I was a bit offended that someone would feel the need to tell me that I needed to wear pants/trousers/slacks to the NYSE bell-ringing.  But, about 10 seconds later, I realized that I had not, in fact, brought any pants/trousers/slacks on the roadshow -- because I wear jeans every day.  10 seconds after that, I remembered that I had actually not worn pants/trousers/slacks in many years, and was pretty sure I didn't own any.  As it turns out, my co-founder (and CEO of HubSpot) had not brought any pants/trousers/slacks on the trip either.  Though, in his defense, he does actually own some.  So, we went shopping during the roadshow.  Since neither Brian nor I are good at shopping, our COO (JD Sherman) was gracious enough to join us.  (JD has really good fashion sense).  So, we bought pants, I wore them to ring the bell.  Crisis averted.  (By the way, I did wear a sportscoat and nice shirt for our roadshow meetings, no HubSpot hoodie).

Oh, and by the way, as you can tell from the photo at the top of this post, pants were completely unnecessary at the podium.  I could have been wearing pajamas and nobody watching would have known.

5. Here's a photo of me with my co-founder, Brian Halligan: "Dude, here's the HUBS ticker symbol on the iPhone stock app!"
nyse-hubs-price-iphone

6. One cool thing we did was how we handled the "friends and family" allocation from our initial pool of IPO shares (whereby designated folks got to buy at the initial $25/share IPO price).  Instead of giving this to the traditional "friends and family" like many companies do, we instead offered these shares to our partners, long-time supporters and employees.  People that have helped us build the business.  (Of course, my mom was disappointed that she couldn't buy at the IPO price, despite having indirectly helped the business by bringing me into the world.  Sorry, mom!)

7. During the quiet period, there were a couple of articles in the media about HubSpot that were just factually incorrect.  But, we couldn't respond or clarify at all.  I bucket this as "life in the big city" and didn't let it bother me too much.  Overall, there was almost no drama during our IPO (other than my lack of pants)

8. Well before going public, I advised the HubSpot team that they shouldn't obsess over the HubSpot stock price.  Of course, for the first couple of weeks, I was obsessed over the stock price.  I had it beamed over Bluetooth to my smart watch, so I could just casually check it without being obvious about it.  Thankfully, I'm over that obsession now, and have returned to a state of normal (well, normal for me).

9. I reiterated my advice to the team earlier this week at  our "all minds" meeting.  Don't get overly elated when the price is up, or overly deflated when the price is down.  Just take care of our customers, and the stock price will (in the long-term) take care of itself.

10. One of the more common questions I get is:  How has my life changed after the IPO?  To be honest, it hasn't changed that much.  That might have something to do with the fact that I'm neither CEO nor CFO of the company (sorry, Brian and John!), so my life hasn't really gotten any harder.  On the upside, it's kind of cool that a much larger pool of people now recognize me/HubSpot when when I am running around donning the company logo (which for me, is every day).  There's also that whole thing about the $125MM+ raised in the IPO too.  

11. This photo is a last minute addition.  Including it because it was one of my prouder moments from the IPO journey.  The photo shows JD Sherman (COO, HubSpot) and Tom Farley (President, NYSE).  And, if you look closely, you'll see me in the background photo-bombing them.  This is outright impressive, but particularly impressive given a) the context b) the fact that it is the only photo-bomb I've ever done.  By the way, Tom was a super-gracious host.  He's even wearing a tie with the HubSpot logo on it that morning.

jd-farley-photo-bomb

All in all, it's been a great year.  That's all I've got for now.  Oh, and if you're amazing and want to join one of the coolest public companies around, check out the HubSpot Culture Code deck to learn what makes us tick (included below for your convenience).  We are so hiring.  Pro tip:  Emails to the address at the end of the deck get forwarded directly to me, and nothing makes my day more than hearing from folks that enjoyed our culture code deck.

Thanks to all of you for your support.  
Cheers.
Topics: hubspot
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10 Tips For A Successful Startup Job Search

By Dharmesh Shah on October 23, 2014

This following article is a guest post by Rick Burnes.  Rick is the VP of Content Products at BookBub.  You can follow him on twitter: @rickburnes.

Startup job searches are hard. There’s more risk (most startups fail!), there’s less information and the best opportunities are sometimes hidden and hard to find.

So how do you navigate a startup job search successfully?

dream-job

 

I learned about this over the last six months. Earlier this month, after six months speaking with Boston-area startups about new opportunities, I left HubSpot to begin a job at the Cambridge book discovery website, BookBub.

It’s not easy to leave an amazing place like HubSpot, so I wanted to do it right, and got a lot of different advice. Here are some of the best tips I got:

  1. Take Your Time. Job searches are not fun, so everybody’s tempted to jump at the first opportunity that comes up. Resist it! If you’re looking for anything other than an entry-level job, it’s going to take you some time to find the right thing. Six months is normal. You’re much better off waiting and landing in the perfect job than rushing through the search and ending up in a job you want to leave after six months.

  2. Tell Your Manager You’re Looking. If it’s at all possible, you should be upfront with your manager. If you have a strong relationship and your manager is smart, he or she will help you. I told my HubSpot manager, Mike Volpe, shortly after I began my job search. He was very supportive, providing many key introductions and strong references to potential employers.

  3. Look For a Company Where You Can Make a Big Impact. Try to find a startup where you bring new skills to the table. If you can teach the company new skills, you’ll have a bigger impact than if you have the exact same skill set as the other five marketers or engineers at the company. I was attracted to BookBub because they’re planning some exciting new content initiatives that my background in marketing and media can help them with.

  4. Look at the Numbers. Startups are risky, but you should do as much as you can to minimize the risk. One way to avoid ending up at a bad company is to get as much data about the company’s traction as possible. I knew BookBub was the real deal when CEO Josh Schanker walked me through the company’s latest board deck, highlighting their millions of members, amazing member engagement (see the Facebook comments here), and great revenue growth. If a startup isn’t willing to share this kind of information with you, it’s a red flag. I’d start looking at other options.

  5. Look for Companies With Big, Disruptive Opportunities. Is the company you’re interviewing with making a modest incremental change, or a big disruptive change? You’re better off with a disruptive company. If your new company’s opportunity is narrow, your opportunity will be narrow. If your new company is thinking big (if it’s trying to change a whole industry) your opportunity will be big. BookBub excites me because it has a massive opportunity -- an opportunity to completely change the way authors promote books and readers find them.

  6. Make Sure You’ll Be Building the Right Skills. When I started my search I found a lot of companies looking for traditional B2B marketers. I eventually steered away from those companies because I don’t want to develop traditional B2B marketing skills. Instead, I want to build on my inbound B2B marketing experience with B2C marketing skills. This is another reason I was attracted to BookBub, a company that does both B2B and B2C marketing.

  7. Make Sure the Company You Pick Has Realistic Expectations for You. During my search I spoke with a few companies that had done zero inbound marketing (no blog, no social following, no SEO), but were looking for a marketer to come in and generate huge new lead flow with almost no new spending in a matter of months. That’s impossible. Inbound is awesome, but like most things, it takes time and money. I steered away from those companies.

  8. Look for a Company With a Good Network. A company’s network is another good way to judge its prospects. If the startup has awesome investors and advisors, and its team members have strong relationships from previous experiences, its chances of success are higher. BookBub’s network, including NextView Ventures and Founder Collective, as well as many strong startup and publishing-industry relationships, was very attractive to me. An added benefit of a strong network that I saw first-hand at HubSpot: When it comes time to start looking for your next new job, your company will be able to connect you with new opportunities.

  9. Use a Spreadsheet to Evaluate All of the Companies You’re Speaking With. If you’re doing it right, you should be talking to a lot of companies. And if you’re talking to a lot of companies, you should create a systematic way of comparing them. For my search, I created a spreadsheet that listed each company and scored them along criteria such as “role fit”, “business risk”, “business opportunity”, and “team caliber”. The spreadsheet didn’t produce any surprises, but did help me keep track of all the opportunities, think clearly about them and prioritize them.

  10. After You’ve Done Your Research, Pick Something You’re Excited About. Once I collected company performance data, put everything into my spreadsheet and finished my research, I had a handful of great companies left on my list. There were a lot of reasons I ended up deciding on BookBub -- I loved the team, it was a unique opportunity to combine my media and marketing experience, and I love books. But at the end of the day, BookBub was simply the company I was crazy-excited about. That’s more important than anything else because, like most people, I do my best work when I’m excited.

One last thing about a startup job search: The most important factor in your search is something that’s already decided by the time you’re looking -- your current job. HubSpot’s success, and my success at HubSpot, was one of the biggest things I had going for me. You can’t change the experience and the job you have now -- but you can do your diligence, ask the right questions and be patient. If you pick wisely, it will pay off later.

 
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You're Probably Wrong

By Dharmesh Shah on October 22, 2014

Dear Friend

About that thing we were chatting about the other day.  I've been trying to find a good way to say this, but...

You're probably wrong.

You think you're right, but you're probably wrong.  And, it's not that I disagree with you.  In fact, quite the opposite, I agree with you.  I agree with you so strongly that I made exactly the same mistake you're about to make -- years ago.  

Coincidentally, back then, I made the exact same arguments you're making now. I was less eloquent and less brilliant than you but equally stubborn -- and equally wrong.

But, I realize I'm probably not going to be able to talk you out of it.  Just like nobody was able to talk me out of it.  And that's OK. Looking back on things I wish I had let myself get talked out of fewer things.

And, even though the right thing to do is to tell you all this, the righter thing is to not.  Because, who knows, maybe I'm wrong, and you're right. Maybe things have changed.   And even if I am right, the last thing you need is the seed of doubt as you're about to try something new and bold.  

Doubt is only useful if it keeps you from making a mistake, otherwise, it's just a distraction.

And, who knows, you may be looking for something different.  It's as if we came across each other in the woods, and I say to you:  "That path, I've been down it...it doesn't go anywhere."  And you say:  "That's OK, I'm not trying to go anywhere."

So, go forth.  I'm hoping you prove yourself right.  I'm used to being wrong.  I've had lots of practice.

Wish you the best.

Cheers.

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Startup Traction Starts With The Right Goal. How To Get It Right.

By Dharmesh Shah on August 28, 2014

Without traction -- sustainable customer growth -- your startup will languish or die. As such, traction should always be top of mind.

To focus your traction efforts, you need a traction goal to work towards. Example goals are 1,000 new users, 100 new customers or 10% market share.

The right goal for you depends on your business. It should  be chosen carefully and align with your company's next inflection point. When you reach this goal, what will change significantly? Perhaps you’d be profitable, be able to raise money, or become the market leader.

The importance of choosing the right traction goal cannot be overstated. Are you going for growth, profitability, or something in between? If you need to raise money in 12 months, how much traction do you need to do so? These are the types of questions that help you determine the right traction goal.traction-book

DuckDuckGo Example

DuckDuckGo is the search engine that doesn't track you. We saw more than a billion searches in 2013, six years after I founded the company. At DuckDuckGo, our current traction goal is one percent of the general search market. Achieving that goal is meaningful because at that point we will be an entrenched part of the market and receive everything that comes with that (recognition, better deals, PR, etc.).

This traction goal wouldn’t work well for most other companies because usually one percent of a well-defined market is not that significant or valuable. It works in the search engine space because the market is so big and there are so few companies in it. This speaks to the importance of setting a traction goal that is significant for your company.

Before this traction goal, DuckDuckGo had a traction goal of 100 million searches a month, which took us to break-even. Getting to break-even was the significant company milestone that aligned with this traction goal.

Before that, the traction goal was to get the product and messaging to a point where people were switching to DuckDuckGo as their primary search engine and sticking indefinitely. The company significance there was to achieve true product/market fit.

These are big goals, and that's the point. Our traction goals have each taken about two years to achieve. The timescale is not important, however. The significance to your company is important. If the significance you are trying to achieve is profitability and you think you can get there in six months then that’s great!

Focusing on your Goal

Once you establish a traction goal, you can use it to evaluate what you should be working on. If activities are not related to achieving your traction goal, you should not be doing them. If marketing campaigns won't move the needle, you should skip them.

The way I like to think about it is through a framework called Critical Path. The path to reaching your traction goal with the fewest number of steps is your Critical Path. I like to literally draw this path out, sketching the milestones we need to hit to reach our goal.

Some of these milestones will be directly traction related, such as picking and pursuing the right marketing channels as we explain in Traction Book. However, these milestones need not all be traction related, but should be absolutely necessary to reach the traction goal. For example, product features, a redesign or a key hire might all be necessary milestones.

Once you’ve defined your critical path, it’s easy to determine the direction to go in – just follow the path! In particular, work on the first step(s) and nothing else. After these first steps are complete, re-examine your critical path using the knowledge you've gained since the last time you sketched out your critical path.

This method helps you stay focused on your traction goal -- the achievement you determined will be at an inflection point for your company. Everything you do should be measured against your critical path and, in turn, your traction goal. Every activity is either on path or not. If it is not on the path, don’t do it!

Unfortunately, this is easier said than done. Most companies get distracted and stray from their ideal traction critical path. Distractions can be deadly.

Startup traction starts with the right goal, followed by relentless pursuit of achieving it. That's why choosing the right traction goal is so important. What's yours? 

This was a guest post based on an excerpt from Traction book, a startup guide to getting customers by Gabriel Weinberg and Justin Mares.

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The 7 Speakers Even This Introvert Will Go See At INBOUND 14

By Dharmesh Shah on July 31, 2014

I’m an introvert at heart. That means I don't draw energy from being around people and definitely don't crave it.  So I usually spend more time in twitter discussions and inbound.org AMAs than face-to-face conversations. As you can imagine, events tend to inspire some anxiety in me. Whether I’m at a conference as an attendee or as a speaker, thousands of humans in one place usually sends me running in the other direction.

But, some events are worth standing in place for. At the Business of Software conference each year, I camp out at the venue before and after my talk to experience everything from the breakout sessions to the happy hour conversation. I usually do the same thing for the annual INBOUND conference that my company HubSpot hosts. But there was that time last year that I missed Arianna Huffington giving me a hard time on stage during her keynote for not getting enough sleep, when ironically, I was upstairs in my hotel room taking a nap. Even if you’ve been running on empty for weeks leading up to your company’s cornerstone event, I learned the hard way that the first rule of being an attendee is stay awake for the keynotes.

This year is going to be different. Don’t get me wrong, I’m already jittery at the thought of my presentation (we're expecting 7,500+ people!), but the INBOUND 2014 speaker lineup might just make me leave my introvert hat at home for a few days this September. In the mix of over 150 sessions, there are at least seven people I’d like to be in the front row for (I know a few people working the conference that said they’d try to reserve a seat for me). Here’s a little preview of what to expect:

Malcolm_Gladwell-1Malcolm Gladwell- Everybody loves an underdog story. Seeing people succeed when the odds are against them is inspiring. But for some, it makes sense. In his latest book, David and Goliath: Underdogs, Misfits, and the Art of Battling Giant, New York Times bestselling author and New Yorker staff writer Malcolm Gladwell explores how disadvantageous environments may actually spark innovation. By diving into history and psychology, he paints a new picture of the underdog that any entrepreneur can get behind; “I may not be able to outspend you, but I can outwork you”, he writes. As co-founder of a company that started with a handful of employees and no marketing budget and has grown to be what HubSpot is today, I’ve always believed that the size of your brain matters more than the size of your wallet. Gladwell has the smarts and skill in the social sciences to discuss how the society we live in makes it possible for startups and inbound to tackle giants. He’s bringing an entirely new underdog story to INBOUND that I can’t wait to hear.  

 

Sean_Ellis

Sean Ellis- A household name for any bootstrapped startup, Sean Ellis coined the term growth hacking long before it was a buzzword. I invited Sean to do an Ask Me Anything session on inbound.org last year, and users flooded the feed with questions on everything from being the first marketer at Dropbox to founding Qualaroo to how to get started with growth hacking at an early-stage startup. His secret? Passion. He said the first question he asks himself before diving into a project is, are the customers passionate? “If there is no passion for the product, any growth I drove would be temporary.” This is a tried and true test for any early-stage startup.  In his INBOUND talk, Sean will demystify growth hacking. He’ll confirm that to do it successfully, you need to not only be analytical and metrics-driven, but you have to put the customer first. Our motto here at HubSpot is Solve For The Customer (SFTC) and I’m always hungry to learn how other companies and innovators, like Sean, make it look effortless.

 

Danny_Sullivan-1Danny Sullivan- SEO is a crucial component of your inbound marketing strategy. It’s also one of the most challenging. Even the most savvy marketers struggle with optimizing their content and website for search, and Google’s constant changes and updates don’t make it any easier. Needless to say, this topic requires an expert. Cue Danny Sullivan.

Danny is the founding editor of both MarketingLand and Search Engine Journal. Chances are, you’ve not only heard of these sites, but probably check them out frequently to get a marketing trends update and inspire your own efforts. Sure, their content is great, but having an SEO pioneer on your side doesn’t hurt when building an audience either. I have a ton of questions about SEO and some techniques are still a grey area for me. Yes, even co-founders of inbound marketing software companies have a lot to learn; that’s why I plan on bringing a brand new HubSpot notebook to Danny’s talk, ‘All the Right SEO Moves: How to Think Strategically About Search & Avoid Common Traps’.

 

Rand_Fishkin_Head_ShotRand Fishkin- I avoid talking on the phone at all costs. So when I volunteered to chat with Rand on the phone a few years ago, it was a true testament to how much I like him. We had emailed a few times, but when I heard Rand was in the works of raising a round of venture funding, I took the rare opportunity to share some advice on the one thing I might know more about than him. Turns out, I’m not that bad on the phone after all (or Rand is particularly easy to talk to).

As founder and Wizard of Moz, I have no doubts that Rand’s talk, ‘SEO Tactics to Love and Tactics to Leave’, will be awesome.  He's not only one of the smartest people I know, he's also an engaging speaker.  It’s nearly impossible to speak with or listen to Rand without learning something new about connecting with your audience. Needless to say, it was absolutely worth picking up the phone.

 

HitenHiten Shah- A lot of people think Hiten built his career on KISSMetrics and CrazyEgg. In reality, he’s grown to be the influencer he is today by having one, guiding priority: to help people. His Twitter header image says it all: “You will get all you want in life if you help enough other people get what they want.” Whether it’s through launching a business solution like KISSMetrics, sharing advice on his blog, or taking time out of his day to host an Ask Me Anything on inbound.org, Hiten has an infectiously helpful attitude.

I'm confident that his INBOUND talk, ‘Marketing Like a Quant’ will follow suit. See, we all know marketers have a love/hate relationship with data, including Hiten. He used his analytics savvy to co-found two companies that help entrepreneurs, business owners, and marketers tackle their metrics in an increasingly data-driven world. His session will dive into how everyday marketers can effectively analyze data to grow their business, and I’m prepared to learn a few new things. Except that Hiten is a giver, I already knew that.

 

mstewart-homeMartha Stewart- Sleeping through Arianna’s talk last year gave me some much needed rest. But it also means I missed out on a powerhouse female keynote. Luckily, I’ll have the chance to right that wrong at INBOUND 2014 now that Martha Stewart is taking the main stage.

Content is the sole reason we started this whole inbound marketing thing. Turns out, it actually works. Thousands of small businesses have grown and thrived on creating content. It’s less often that I come across a multi-million dollar business that really ‘gets’ it. Martha Stewart is a world-class brand, but the woman behind it is an entrepreneur with some serious content expertise. From her blog, to her website, to social media, the Martha Stewart brand is pumping out valuable, multi-channel content to an audience of millions. Anyone who can scale original content like that is someone whose brain I want to pick.

 

GuyKawasaki11Guy Kawasaki- It’s exciting (and a little scary) to meet people who make you realize how much you don’t know. Guy is one of those people. When I first read his book, Art of the Start, years ago, I was truly astonished by how much he knew about launching a startup. And that’s coming from a startup guy.

From his days as an evangelist at Apple and Motorola to being chief evangelist at online graphic design tool, Canva, today, Guy says he “love[s] the democratization of stuff.” I’ve always believed that power doesn’t come from hoarding knowledge, but from sharing it; it’s inspiring to hear from someone who’s built their career on just that. Seeing him speak at INBOUND, and possibly getting to attend his meet and greet (again, I have some connections) will give thousands of attendees, including myself, a fresh perspective.

There aren't many things that get me excited to get up from behind my computer and interact with other people, but this lineup of folks speaking at INBOUND 2014 is absolutely one of them.

Hope to see many of you OnStartups.com readers there.  If you're an entrepreneur, I guarantee you will love the event and get value from it.  If you attend and don't love it, I'll personally refund your registration fee. And, even though I'll be hiding in corners and looking preoccupied, please say hi.  Helps build character. 



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The Gentle and Visual Guide to Startup Marketing

By Dharmesh Shah on July 8, 2014

There are two things in my professional life that I'm passionate about.

1.  Startups.  I love startups.  It's an obsession.  I've started three companies, angel invested in over 50 and (hopefully) helped thousands more entrepreneurs in some small way through the OnStartups.com community.

2. Inbound marketing.  I love inbound marketing.  It's the idea that's at the heart of my company, HubSpot.  It's about marketing that focuses on attracting customers — not annoying them with interruptions.  It makes marketing about helping people, not harassing them.

Those of you that follow me either here or on the LinkedIn Influencers program know that I've spent hundreds of hours on the HubSpot Culture Code deck.  Now, I'm thrilled to share with you the second most intense deck I've worked on.  Clocking in at 100+ slides as well (what is it with me and large slide decks)?  This time, instead of culture, I talk about startup marketing.  It's my contribution to the startup marketing world.  Like everything else I work on, it's an obsession.  Hope you enjoy it.

 

 

If you'd like to discuss this deck, or startup marketing in general, I'll be doing an “Ask Me Anything” (about this deck, startups or anything) over on the #1 place for inbound marketing discussion.  Come join me.

Here are some highlights for those of you that are not “slide-y” kind of people.

1. Stop ignoring marketing.  Yes, I know you're going to build a killer product that people are going to love.  Marketing can help you find people to love it.  And yes, you can hire a PR agency and hope that you're going to get all this “free” publicity in TechCrunch and what not.  That's fine — but what are you going to do the other 363 days?  You need to invest in marketing.

2. Marketing doesn't have to be sleazy.  The best marketing is inbound which is basically doing what you do best (helping customers).  It's about creating content that is useful for your potential users/customers.  You use that as a tool to bring people in.

3. Stealth mode is for fighter jets, not startups.  If you're worried about somebody stealing your idea, please stop.  Right now.  Worry about how you're going to get customers.  And team members.  And funding.  All of these things are really hard -- if you don't talk about your idea.  

4. If you wait until after your product is out to start marketing, you waited to long. Ideally, your'e writing your first line of content the same day as you're writing your first line of code.  You need to start building brand, reach and credibility as early as possible.  

5. Don't get into an arms race for attention.  You won't win by shouting louder, getting bigger ads or buying a bigger booth at the tradeshow.

6. Don't try to outspend the incumbent.  They have more money than you and can spend money way more stupidly.  As a startup, you need to find marketing that gives you leverage.  Where you get disproportionate, long-term return given the investment. 

7. Don't just hire a CMO (Chief Marketing Officer).  In the early years, everybody in the company should be selling.  Everybody in the company should also be marketing.  You don't need a high-falutin marketing executive from [whatever-company].  You need someone that cares passionately about what you are doing, wants to help people and teach them and can create content and build your brand and reach.

8. Learn the basics of SEO.  There's just too much  traffic to ignore.  The nice thing about organic traffic is a) there's more of it.  b) the marginal cost for those clicks is low.  (Once you have content ranking, you're not paying additional money for each additional click). 

9. Use social media as an amplifier.  It takes time, but if you build a following, social media is a great way to take that awesome content you're producing and spreader it further and wider.

10. Don't assemble your own platform.  This is a bit self-serving (since my company HubSpot provides a marketing platform), but it's still true.  As a startup, you should be spending ALL available calories on making your product better and helping your customers.  Don't rationalize the time for wiring together a bunch of different apps, just because you're smart enough to pick the right tool in each category, and smart enough to get them to talk.  Use those brain cells on the product.

11. Definitely do not write your own CMS. I'm amazed at how entrepreneurs can get lured into this “but it's not that hard” mindset.  Wordpress is an awesome product.  HubSpot has a CMS and blogging app built in.  In this day and age, there is no reason to write your own CMS — unless you're selling your own CMS (in which case, may the force be with you).

...for the rest, you'll have to check out the 116 slides in the deck (it goes quickly).

jumpstart-rocketsBy the way, my company, HubSpot just launched a new program specifically for startups from great accelerators.  It's called Jumpstart.  You should check it out

This has been 5+ years in the making.  You should join because of the reduced price for HubSpot (by about 90% for the first year).  It'll help you get marketing started off on the right foot.  It'll help you DO the things you need to do (blog, SEO, social, landing pages, etc.), KNOW the things you need to know (like what's working and what's not) and GROW your company by pulling it all together and giving you the industry's best support.

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The Most Important Thing to Do Before Building Your Startup

By Dharmesh Shah on June 3, 2014

product_plan

We failed.

After 6 months poring over the code quality and refining the design of our mobile app, my partner and I finally launched it in the app store and the downloads started coming in.

Then after a few days, BOOM. We got punched in the face by reality. No users returned to the app. This was a devastating shock, since most people we spoke to were excited about the idea. Our app allowed you to take photos and ask questions to learn about what you were looking at. It had all the traits of the most-hyped startup trends that year: mobile, social, local. It was early 2011.

Frustrated and determined to find out why no one was using our app, I decided to interview iPhone users who took a lot of photographs to understand if they had visual questions to post. After a few rounds of interviews, where they walked me through their photos, it soon became clear that I had built my product under a crucial, and faulty assumption; I had assumed that people actually had questions about the things they took photos of! What I learned was that these people were often in familiar environments where nothing new piqued their curiosity. Even when they did take photos of something that was interesting, it didn’t bother them enough to exert the extra effort needed to find out more information.The root cause of our failed launch finally dawned on me. The failure wasn’t due to a poorly designed solution; our app simply didn’t solve for a real human need. I had been working under an assumption that we had never validated.

The key to building products users want

Why did it take so long for me to realize I was building a solution for a problem that didn’t exist? Besides the various confirmation biases that often plague entrepreneurs, many fail to recognize these pitfalls early on because they are not taking the time to quickly test risky assumptions before jumping into the thrill of building.

By testing the value of the product, and other assumptions continuously throughout the product development process, entrepreneurs multiply the chances their businesses will acquire a passionate group of engaged customers faster.

Identifying assumptions

An assumption can be any number of things - a user behavior, mentality, or action that needs to be accurate in order for the solution to be viable. The riskiest assumption is the assumption that’s most core to the viability of the business and most unknown, meaning there is little or no data collected that supports the validity of the assumption. Testing the riskiest assumption at the very start of the project reduces the time it takes to find the biggest flaws in an idea and increase the speed at which we can find a better, more viable alternative.

In my example, the riskiest assumption to test early on would’ve been: people have questions to ask about their photos. That is eventually what I went back to test, after my partner and I gave up our salaries and put in months of labor. Testing the riskiest assumption is difficult for many to do and, very often, teams will succumb to hindsight biases and subjective arguing. To mitigate this problem, entrepreneurs need a way to list out their assumptions for any new idea, run an effective experiment, and hold each other accountable to the results.

Testing the riskiest assumption

There are many ways for teams to define and agree on what they’re testing up front. The pain of my failure led me and my co-founder at Javelin, Trevor Owens, to create the Experiment Board, which helps entrepreneurs to do this in a systematic way. Writing down the riskiest assumption focuses team efforts on testing the most important aspect of the business first. Once the riskiest assumption is validated, the team can move on to testing the next riskiest assumption.

One key benefit of the Experiment Board is its ability to help entrepreneurs and teams focus on customer problems and assumptions, rather than jumping into solutions. The steps it brings users through are the same steps an entrepreneur should take with any new business idea:

  1. Identify the customer segments, and the problem being solved.
  2. Brainstorm a list of assumptions.
  3. Determine how the team will know if an assumption is valid.

Validate before building

Let’s see how this works with a case study from Tarikh, founder of Seen.co, a past Lean Startup Machine winner who went on to raise money from Dave Tisch and other top investors.



Continuous Validation

Once an entrepreneur has validated that there is a real customer problem to solve for, the next step is to test how much the solution is worth for the customer. Will they pay, pre-order, or give up something of value to use the service? This measure of demand can be easily tested through a pitch experiment. You can do this with a simple landing page and some Google ads (and yes, we’ve created a tool to help you do just this, it’s called QuickMVP).

The process of identifying and testing assumptions should be ongoing when building a startup. Attend an upcoming Lean Startup Machine in your city (LSM Boston is happening June 6-8; register here), to learn the process and avoid wasting time and money building things people don’t want. Trust me, I learned the hard way.

Register for the Boston Lean Startup Machine on June 6 to 8.

This is a guest post by Grace Ng, Co-Founder of Javelin.com & Lean Startup Machine (LSM), the world's leading Lean Startup workshop. LSM Boston is this weekend June 6th to 8th 2014 and tickets are almost sold out, get yours here and use the code "onstartups" for a 30% discount.

 

 

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5 Mistakes Every Startup Founder SHOULD Make

By Dharmesh Shah on June 2, 2014

“It’s fine to celebrate success but it is more important to heed the lessons of failure” - Bill Gates

Much digital ink has been spilled trying to caution startup entrepreneurs against making mistakes. Type "mistakes entrepreneurs make" into Google and you'll find thousands of articles, sternly forewarning against the most prevalent pitfalls and errors that stand between you and your startup's success.

But wait a second. How many times have you heard "We learn from our mistakes"? As an entrepreneur and investor, I've definitely made some doosies - and if my experience is any indication, not only do we learn from our mistakes, but we learn much more from our mistakes then from our successes.wrong-decision

Then why try so desperately to avoid them? Call me contrarian, but I'd argue that well-positioned mistakes can be quite worthwhile, and should even be encouraged.

So here's an initial list of mistakes that you SHOULD make as a startup founder. Mistakes that are bound to happen anyway. Mistakes you will learn so much from that you'd best make them as early in your entrepreneurial journey as possible. I've also included some recommendations about what to do after you make each mistake.

1. Get Screwed

It's inevitable. Someone - your partner, co-founder, employee, investor, or any other character in your unfolding plot - will mess you over. Someone will break your trust, violate a verbal or even written agreement, cut your compensation, or try to steal your equity or destroy your whole company (or all of the above, if you're me). Someone will do something stupid to scuttle your grand plan.

Accept the inevitable, steady yourself now for the oncoming blow, and just hope it doesn't hurt too much or cause too much damage. A startup is usually an odd mix of people (idea people, tech people, investors and others) thrown together by fate and circumstance in pursuit of a distant, moving target. As clearly as you think you see that target and the path and steps toward it, somebody else will see that path differently or may have a different set of scruples or incentives. That will create friction, and depending on the power balance between everyone involved, can result in someone - maybe you - getting screwed.

Post-Mistake Action: You're thinking, "Why is getting screwed my 'mistake?' I didn't do anything wrong." Look in the mirror. Upon reflection, you'll likely find that what enabled your misfortune was something you did or didn't do. The screwer-screwee relationship requires at least two people, and there are two sides to every story. Even if you clearly weren't "at fault" - you encountered a terrible, crooked person who did you in - you still need to ask yourself how you allowed yourself to do business with that person. Was the person's action foreseeable? Did you do your due diligence on your partner/employee/investor? What did you do or not do that exposed you? As George W. Bush famously said: "Fool me once, shame on you. Fool me twice… shame on…. we can't get fooled again!" (cue The Who). Having been burned once, you'll be much more careful in the future about compromising your principles or allowing yourself to do business with people who may take advantage of you later on.

2. Seek Revenge

This is an adjunct to the above mistake. Once bitten, your natural impulse may be to bite back. You've lost something - tangible, emotional, some future upside or all of the above - and you want to deny the perpetrator those same things or at least the satisfaction of having caused you that loss. You've been wronged, and your reflexive urge is to right the wrong by wronging back.

Go ahead, try it once. I predict that not only won't you be successful, but most likely nothing will happen at all, or worse, it will bounce back at you. If you got screwed, that probably indicates you don't have the leverage, power or ability to exact meaningful revenge anyway. You'll just feel immature, cheap and dirty and the lingering recollection of that bad feeling probably will be enough to prevent you from playing the revenge card again.

Post-Mistake Action: Look forward, not back. The objective of the startup game is to win, and two losses don't equal a win. Rather than dwell on the past, "Revenge it Forward." Your best revenge is going to be your own success. Use what happened to you as an additional driving force, a motivator to prove to yourself, the person who messed you over, and the world, that not only do you deserve better, but that you can achieve better.

3. Tell People Your Venture is in "Stealth Mode"

It's natural to want to keep your cards close to your vest. Perhaps you're afraid someone will steal your idea, or you lack confidence that you've developed it well enough to convincingly describe it to others. The tech industry has even provided you the gift of a cool-sounding cover: "Stealth Mode," which makes you sound more like a covert spy shrouded in secrecy than an unsure rookie plagued by insecurity.

Saying you're in "Stealth Mode" is almost certainly a mistake, for many reasons. First of all it can easily be interpreted as either pompousness or insecurity, which is bad for your credibility. You're also signaling that you don't trust that person, creating a negative feeling that will likely persist even after you're able to elaborate later on. Most importantly, though, you are missing out on potentially invaluable opportunities to use your own network to shape, develop and advance your product or venture. Every person you know, meet or speak with can be a key to your venture's ultimate success.

Post-Mistake Action: Switch to "Get Out There" Mode. You never know who may be a potential customer or investor for your awesome new product, or more likely, who may know someone who could be a customer or investor. There are ways to plant the seeds of curiosity, to scout out a territory, to indicate what market you are targeting, without giving away the store. As Steve Blank advocates, it's critical for the founder to "get out of the building" (physically or virtually) as early as possible, and to start getting feedback from live people very early on and keep iterating based on feedback. By keeping everything a closely-guarded state secret, you are squandering opportunities to connect with people who might ultimately help you achieve Product/Market Fit, partner with you or invest in your venture. Come up with a "teaser" line that tells people enough about what you're working on and who you're targeting to pique their interest, generate confirmation of market problems and pain points, and generate future interest or relevant contacts.

When I founded EverMinder I was happy to discuss it with just about anyone long before it was fully developed. I got great feedback that led me to our first three angel investors, all via referral, all before we launched.

4. Believe that "If You Build It They Will Come"

The problem with the movie "Field of Dreams" is that it planted the phrase "If you build it, they will come" firmly into the common parlance and specifically, into the heads of countless, impressionable startup founders. The popularity of the phrase (and its confirmation in the movie, when Costner builds "it" and "they" magically come) leads some founders to believe, and predict to investors, that they, too, need only to build their amazing new thingy, and the users will come running until the rest looks like a hockey stick.

The problem is that as opposed to ghostly baseball players in Hollywood movies, I can assure you that if you just build "it", "they" will almost certainly not come. In startup theory the "coming" of "they" is called "Market Pull" which almost never happens by itself, even among early adopters. Market Pull needs to follow an intense and iterative period of product design, customer development, Product/Market Fit and hands-on "Technology Push" into the target market, which only if successful begets the glorious Market Pull. You'll have to work hard to make the market notice and care, and probably personally engage your early users individually, and that's fine. If you've hit Product/Market Fit squarely, "they" will eventually come, but only after you've very actively recruited and engaged your early adopters.

Post-Mistake Action: Stop believing stupid movies. If you've quoted "if you build it they will come" then you don't understand enough about Technology Push and Market Pull, customer development, and developing your Minimum Desirable Product. Instead of watching movies, read. A lot. You need to learn about these concepts by immersing yourself in the writings of Steve Blank, Sean Ellis, Andrew Chen, this very blog, and the other great proponents of effective product and customer development, and get up to speed fast.

(Ok, if you're still looking to be inspired by a movie, then watch The Pursuit of Happyness. Listening to voices in a cornfield will get you nowhere. Perseverance in the face of adversity, hustle, understanding and caring passionately about your product and customers, and relentlessly pursuing your goals will give you a shot to win.)

5. "My Favorite Mistake"

This mistake is probably my favorite because, like the Sheryl Crow song, it's complicated. It's the mistake I continue to commit most frequently.

My favorite founder mistake is not appropriately balancing confidence and humility. There's a yin/yang relationship between the two and as you pilot your rocketship forward, you will occasionally find that you’ve leaned too hard to one side or the other.

As a startup founder you need to have a healthy dose of self-confidence. Ok, maybe an unhealthy dose. An overdose. You need to passionately believe that your solution is The Next Big Thing. But overconfidence can be extremely dangerous, for many reasons. It can be misinterpreted by others as arrogance, which can cause damaging interpersonal consequences. If overconfidence morphs into false confidence, It can cloud your vision or your analysis. A great founder must have just as healthy a dose of humility, an understanding of his or her relatively small place in the world. But being too humble can hold you and your venture back….

A great Talmudic sage once wrote "Every person should have two pockets, each with a reminder note that he should refer to in the appropriate circumstance. In one pocket should be a note with the phrase: 'The world was created just for me.' In the other pocket should be a note that reads: 'I am like the duct of the earth.' "

(Five bucks says that's the first time Sheryl Crow and a Talmudic sage were mentioned together.)

Post-Mistake Action: Unfortunately I don't have a clear "post-mistake" recipe for this one. Managing your self-confidence and humility is a push-and-pull balance exercise that you have to keep performing, every day. It's up to you to gauge each circumstances and determine which reminder note applies.

Now that I'm an early-stage investor, I meet with entrepreneurs eager to convince me that they (and their ventures) are awesome. That's great. But I don't want entrepreneurs to sugar-coat their backgrounds. I expect and want them to tell me about their mistakes and failures. I want to hear what they've learned (and also that they've made those mistakes already on someone else's nickel, not mine). A good entrepreneur wants to talk about their mistakes as well as their successes, and a good investor wants to hear about those mistake and lessons without penalizing the pitch.

It's cliché, but nobody's perfect. You're not perfect. Mistakes will happen, and you will make your share. Expect them, embrace them, and analyze them, as those mistakes and the lessons learned will become important, lasting building blocks in your personal development and the development of your company.

So get out there, make some mistakes, learn from them…. And win.

This was a guest post by Ben Wiener (@BeninJLM). Ben is a startup founder and is Managing Partner of Jumpspeed Ventures, a Jerusalem-based micro-fund that invests in early-stage startups.

Topics: guest strategy
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Hiring Employee #1 At A Startup: Expectation vs. Reality

By Dharmesh Shah on May 12, 2014

This is a guest post by Jenn Steele.  Jen is the Head of Growth at RecruitLoop, an online recruitment marketplace based in San Francisco and Australia. Previously of Amazon and HubSpot, Jenn is passionate about growing humans and companies, working out, and wine. Follow her @jennsteele.

I fired the first person I ever hired.

I didn’t expect to have to do that. I expected that I’d be building my team with this person at my side. I expected this person to add value from the get-go. I expected that this would be a long-term professional relationship.hired-fired

Reality, however, was different.

The reality was that I hired someone who didn’t have the aptitude, the technical skills, or the attitude that I needed. He wasn’t a culture fit, either. He didn’t fit in our fast-paced environment at all, and started growling at people in the morning rather than saying “hello”. All told, it felt like a total disaster.

My second hire was a very different story. We worked together for more than five years, remain good friends and wildly respect each other’s abilities.

Fast-forward a few years, after stints at HubSpot and Amazon, I became RecruitLoop’s first hire. The company spent two years in Australia as just four co-founders and the occasional contractor, and then expanded to the US with me (and, now, a bunch of others). In the process, we all learned a lot about hiring that first employee - especially that expectations and reality were occasionally far apart.

Here are the six things that surprised all of us.

1. Co-founders rarely agree on who and what they need.

If you’re a fan of unanimous decisions, stick to a single founder. Inevitably, two or more people will have a difference of opinion. Even if you all agree that you need a developer, you’ll probably disagree on whether they should be remote or local and the number of years of experience they should have. Prepare to disagree and make the time to hammer out your differences.

2. The perfect person doesn’t exist.

Perfect only applies to Disney characters and your imagination. Remember hammering out the differences in your employee requirements? Now you have to be prepared to compromise some more since the perfect person just doesn’t exist. Break down your collective wishes, hopes, and dreams into deal-breakers versus nice-to-haves. Then rank the deal-breakers. That’s the best way to figure out where you’re willing to compromise (and where you’re not).

And be prepared to shift your priorities as you interview candidates. You might fall in love with someone who violates a deal-breaker. It’s either time to flush that candidate or reconsider that deal-breaker (some deals are meant to be broken).

3. The ideal hire will be willing to work for what you’re willing to pay.

When I was looking to leave Amazon and get back into startups, RecruitLoop and I fell in love (erm, professionally, that is). And then we discovered something a bit awkward: my salary (which was low for Amazon and less than I’d made elsewhere) was not even in the ballpark for them. And what I was initially willing to drop to - especially given my move from Seattle to the Bay Area - was still out of the realm of possibility.

You know why I work at RecruitLoop now? We all stretched in ways we didn’t want to. Our CEO negotiated with all the co-founders, and I had to do some pretty heavy negotiating at home (including agreeing not to buy shoes for a year) before we came up with a deal we could all live with. Going through all of the negotiations gently enough to ensure we all still wanted to work with one another in the future was a difficult art to master.

Get ready to stretch for anyone with a bit of experience - and hope they stretch back. You might have to walk away if you just can’t afford them.

4. Management isn’t what you need right now.

The first employees at HubSpot were developers. The first employees at RecruitLoop were growth and support. You know who the first employees weren’t? Middle managers, people who couldn’t GSD, or folks who were more concerned with their careers than with the company.

At a shiny new startup, the last people you want to hire are really good middle managers. Folks who are rockstar individual contributors? Absolutely. High level strategists who are startup junkies and can GSD? With the right vetting, sure. But really good middle managers fail at the two things you need the most: rapidly getting stuff done and pushing the company forward.

Yes, planning for the future is mandatory, but you can always hire managers later - when you need them. If you don’t focus on getting the people who can get your company off the ground through the door first, there won’t be a future to plan for.

5. There’s a LOT more institutional knowledge than you’d expect.

You’ve been in startup world. You might have been closeted in a small room with your co-founders for months (or years) trying to get to the point where you could hire your first employee. What you don’t realize is just how well you know each other as a result of this high-stress, startup-speed scenario.

What you forget at first is that your first hire wasn’t in that small room with you. She doesn’t know not to talk to your CEO before his first cup of coffee or that your CTO doesn’t drink. Your first hire has no clue how to get product specs to the CTO because you’ve always done it via email. Your first hire is completely clueless about your personal lives, so that first team dinner is pretty bewildering.

You’ll never be able to open up someone’s skull, pour in the institutional knowledge, and then seal it back up (although that would be easier). There will always be a ramp-up period. You can cut the ramp-up period in half if you have some initial onboarding conversations that go through everyone’s working style and the history of your sacred cows.

You just have to be patient and actually explain yourself when you have a “cryptic” conversation. You’ll know you need to explain by the befuddled look on the new person’s face.

6. Nothing is forever.

You might not hire the right person. You might have to fire your first hire in the first month or two. Your first hire might be great until you hit 30 people. Or 100. Or 1000. But then they’ll just have to go back to being a startup junkie (or start sucking enough that you have to fire them). Or maybe someone’s spouse will get a job across the country. Whatever happens, this first hire probably won’t stay forever.

But that’s okay. Your first hire won’t stay forever. You might not stay forever. But with the right person, you can still work together now to build an awesome company.

Now that we’re hiring into the double digits (no small feat for a startup) our expectations are actually starting to align with reality. We’ve documented some processes and institutional knowledge, and I (employee #1) feel fully integrated into the core team. We had to get our heads out of the Disney clouds and ground our hiring practices here on earth. That first new hire changes everything!

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Happy Birthday BASIC, Thanks For Making Me Possible

By Dharmesh Shah on May 7, 2014

This month marks the 50th anniversary of the invention of the BASIC (Beginners All-Purpose Symbolic Instruction Code) computer language.

I have fond memories of BASIC -- without it, my life may have turned out very differently.

I went to highschool in a small town in India (Bilimora).  It was the mid 1980s  There were no computers at my school.  Best I knew, there were no personal computers in the entire town.basic-screen

Then, I went to mechanical engineering school in a larger town (Surat).  They had PCs.  6 of them, if I recall correctly.  In a "computer lab".  It was open only a few hours a day, because the room had to be air-conditioned, and air-conditioning was expensive.  In the 2 years that I was there I didn't get to touch any of those 6 computers.  At the time, that wasn't a super-big deal, but I really didn't know what I was missing.

Then, I came to the U.S. to visit my parents in the summer.  They were living in Michigan City, Indiana at the time.  There was a satellite campus of Purdue University out there.  Folks had told me that since I enjoyed math so much, I should check out "this computer stuff".  Purdue had a short "Intro to Computers" class which I decided to take.

Thankfully, getting access to computers was trivial at Purdue (this is the early 90s).  And, that was a good thing, because the first time I worked on a computer, it was love at first sight.  I knew, just knew that this is what I wanted to do.  It just clicked.

That first day, I read both of the manuals that came with every PC -- front-to-back, in one sitting.  The MS-DOS manual and the GW-BASIC manual.  (This was not a particularly impressive feat, as those were quick reads).  Wrote my first (super-simple) programs in BASIC -- but I was hooked.  I had found my calling.

So, even though I had planned to go back to India to finissh my engineering undergrad degree, instead I stayed in the U.S. and enrolled in their computer science program at Purdue.  I would ultimately finish my computer science degree at the University of Alabama in Birmingham.  

Oh, and I worked with a LOT of programming languages and development platforms over the years.  DBase IV, Framework, TurboPascal (which was awesome), Easel, ColdFusion, COBOL, C, C++ and C# -- and eventually, the languages I use mostly today:  Python and PHP.

But, fact is, if it hadn't been that random exposure to computers and access to the BASIC language, I may have never been a programmer.  If I hadn't been a programmer, I likely would never have started a software business.  Never started a second software business.  And never started the company I'm working on now (HubSpot), which has grown to 800 people and is doing pretty well. 

So, Happy Birthday BASIC, and Thanks!

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MA: Lets Nix The Non-Compete Here So We Can Compete Better Everywhere

By Dharmesh Shah on April 10, 2014

The Boston Globe reported this morning that Governor Deval Patrick will propose today a sweeping legislation to make it easier for workers in technology, life sciences, and other industries to move from job to job by banning the non-compete agreements companies use to prevent employees from jumping to rivals.

I for one have been a proponent of just such a move — I think it's been a long time coming.

There's expected to be some conflict as large companies continue to try and maintain this antiquated model of limiting worker mobility despite the fact that there is clear evidence this hinders innovation and in the long-run doesn't help anybody.

California and New York, both regular members in the rankings of top states for venture capital and startup innovation made this change years ago and have been using it to recruit some of the best people from some of our best companies ever since. There's no evidence that abolishing non-competes has hurt them — quite the contrary. 

Here are the reasons why we should support this proposal to kill non-competes in MA:

1.  Companies should have the right to protect their intellectual property and their people.  As it turns out, they already can with non-disclosure agreements and non-solicitation agreements neither of which will be effected by this change. 

2. We're forcing innovation out.  The best and brightest want to work in an ecosystem that maximizes the impact and influence of their work.  By artificially constraining where they can take their expertise we are causing unneccessary friction.  Friction that will cause more talent to leave for more innovation-friendly states.

Here's the irony:  Non-competes do limit competition.  They limit the ability of our innovation economy to compete with the likes of California.

3. Although some companies may think that non-competes are helping them, their value is questionable at best.  Having a standard non-compete in place is one thing — actually trying to enforce it is another. 

4. Innovation is about openness and collaboration.  Company leaders should be focused on attracting the best and brightest talent that will come up with creative ways to meet market needs and drive growth.  The trust and loyalty of these kinds of people is not based on pieces of paper that dictate where they can't work in the future — it's built on transparency and autonomy and how you foster a culture to help them do what they do best now.  Nobody wants to spend calories worrying about artificial and arbitrary rules.  Especially, super-smart, creative folks.

So, if you're on the side of rationality and innovation, do yourself and the community a favor.  Help spread the word.  Here's the campaign page for killing the non-compete. It'll take just 5 minutes.

And, please share this article with friends and colleagues. 

Thanks for your support.  

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Corporate Development 101: What Every Startup Should Know

By Dharmesh Shah on April 2, 2014

The following is a guest post by Chris Sheehan. Chris is COO of TrueLens, an early stage startup in the social marketing space. He is also a board member, advisor and investor in many Boston and NYC startups.  You can follow him on Twitter at @c_sheehan and his blog Early Stage Adventures.

What the heck is corporate development and why should I care?

Back in the first wave of the Internet, I was part of the team at BEA Systems that built up in-house corporate development.  Our charter was simple: add significant market cap value through acquisitions, investments, and partnerships.   Specifically our stated mission: “To support BEA becoming the industry standard ebusiness application platform by leading the process with senior management in developing and managing corporate-wide strategy, acquisitions, equity investments, and selected strategic relationships”abc blocks

For entrepreneurs, I think its helpful to understand the role corporate development plays in larger software companies.  Could be for potential partnerships — maybe an acquisition.  Or, maybe you're growing fast enough yourself to warrant acquiring other companies.  Regardless, it helps to have a basic understanding of what the corporate development team does

What is corporate development?

- most public consumer and enterprise software companies (and increasingly many high growth private companies) have a person or sometimes a team in charge of corporate development
- the mandate varies from pure deal execution to a role that combines strategy, execution, and integration.  Sometimes the charter includes strategic partnerships and minority investing
- for example, at BEA Systems, we adopted the former model.  Each of us were embedded deep in a business unit, working closely with the product, engineering, sales, finance and marketing teams on overall strategy and how strategic alliances, investments or acquisitions could add significant value.  Our team had a solid mix of backgrounds including investment banking, VC, engineering, and operations.  So we covered strategy, deal sourcing/execution (partnership, investment or M&A), integration, and post deal measurement

Is there any point in talking with corporate development unless I am thinking about an investment or acquisition?

- I lean towards the view that it can be very helpful.  It's often hard to navigate Byzantium organization structures from the outside and the corporate development executive can help facilitate who you should be talking to for partnerships/customer relationships.  They can also be incredibly helpful in simply understanding the product and business priorities of divisions
- And most M&A deals typically don’t just magically happen.  Rather, they are often the culmination of bus development/partnership/vendor-customer relationships where fit is tested first, the product is kicked around and deals are somewhat more de-risked.  Developing relationships with corporate development early can prove very helpful later down the line when you might be thinking about investment or acquisition

How would my company be perceived from an acquisition viewpoint?

- the reason for doing an acquisition varies and it’s important to understand where your startup fits.  Some reasons deals are done in the software space include:
            - acquire talent (look at what Yahoo! has done in the mobile space)
            - acquire important pieces of technology (vs build or partner. Quite often time to market pressure pushes companies to buy rather than build)
            - extend the product suite (eg Oracle’s recent acquisition of BlueKai filled an important gap in their Market Cloud suite)
            - acquire new capabilities (eg the acquisition of many cloud/SaaS/mobile companies by larger software companies as they move from on-premise/perpetual license business models)
            - extend the software platform/portfolio into related/new markets  (eg VMWare’s $1.5Bn acquisition of AirWatch is a big bet on the enterprise mobility space)
- I’ve also seen deals that are “change agent” deals, designed to help senior management change the nature and culture of an organization by bringing in new senior executives to be a catalyst for change
- Understanding the “why” from a potential acquirers perspective is key

Types of acquisitions
- very simplistically, software acquisitions tend fall into two broad categories – smaller, tuck-in acquisitions or larger more strategic deals.  Some common characteristics of tuck-in acquisitions:

- small value relative to the market value of the acquirer
- the analysis is often build/partner/or buy
- cash & or stock deals with 1 to 4 year retention packages
- often done in-house (no investment bankers, but sometimes external counsel and accounting diligence)
- simpler integration (but that doesn’t mean it can’t be messed up)

- at the other spectrum are larger strategic acquisitions that will have a significant impact on the acquirer.  Significant could be measured as % of market cap the acquirer is paying, impact on operating margins, earnings per share, etc.
- the much reported on Facebook acquisition of WhatsApp is an example of a significant strategic acquisition, with Facebook spending 10% of its market cap.  These deals often involve investment bankers (Allen & Co advised Facebook while Morgan Stanley, one FB’s underwriters, advised WhatsApp), and investor calls to explain the strategic rationale of the deal (Facebook’s is here)
- prices paid in these deals often reflect the total addressable market opportunity

What’s the typical investment/M&A process?

- at any point in time, corporate development has a pipeline of opportunities which they are tracking.  Some of this is inbound, some outbound (as I was writing this, I looked at one of my old BEA pipelines which had close to 50 opportunities listed, categorized between very high priority, high priority, low/medium priority, no interest)
-  while corporate development plays a key role, finding a sponsor is critical, which could be the CEO, business unit president, head of product/engineering, etc.  This person is the one raising their hand to champion the deal – and being held accountable for the results. How hard or easy this is within each technology company varies greatly.  Knowing insiders can be very helpful (talk to other entrepreneurs who were acquired to give you a sense of process and key players)
- how long it takes to close a deal varies.  Sometimes it’s a relatively quick process, other times it takes months, often driven by the complexity of the diligence and integration process, and the competitive dynamics

Can your VCs help?

- yes, by making the appropriate introductions to companies of interest, either at the corporate development or operations level
- an interesting, early trend, is the institutionalizing of a corporate development team within venture firms, to assist portfolio companies with their sell and buy side strategies.  I think this is a smart move and has potential to add significant value to portfolio companies and help drive a VC firms returns and overall track record.  See Andreessen Horwitz team here.  Their pitch: “helping companies plan their strategic and financial future.  It’s all about anticipating needs, and architecting the right way forward for your company”.

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Expectations vs. Reality: 8 Lessons From The First Year As CEO

By Dharmesh Shah on March 4, 2014

I started working on Foundersuite in the Fall of 2012, and we launched our MVP in early 2013. Prior to this, I'd spent 10 years consulting to startups as a fractional CFO / BD / Ops guy, so I thought I had a pretty good idea of what to expect for my first real rodeo as startup CEO.

I was completely wrong. Here are eight areas where reality diverged the most from my expectations.car bump

1. Identifying customer needs is only a fraction of the product-market-fit battle.

I'm a fan of the lean startup model and we are diligently striving to "build things that people want." But identifying customer needs and creating a solution for those needs is only part of the equation. The other half is removing the 1000 small friction points and barriers to adoption, which is in itself a Sisyphean task.

For example, we launched our Investor CRM product as a tool to keep track of investor discussions- it’s basically a way to bring some “order to the chaos” of fundraising. It’s a slick tool, built on top of APIs from AngelList, LinkedIn, Google Calendar, etc., and we were getting a lot of love-mail when users first signed up, but ongoing engagement was anemic.

It wasn’t until we probed deep via 1-1 calls that we discovered a lot of “blockers” to adoption—for example, many users already have lists of target investors they’ve collected in excel, so we needed to make an import function. As another example, people told us that since the CRM was an empty, blank slate, they didn’t know where to start; so we will soon be pre-populating it with “starter packs” of investors. It’s an ongoing process, but the good news is that every time we remove a major hurdle or friction point, we see a meaningful spike in adoption. Instant gratification!

2. Nobody gives a sh't about what you are doing (at least at first).

IMO, there's an entire generation of entrepreneurs who have a skewed perception that "a great product markets itself." That's bullshit. Sure, there are a few born-viral products like Mailbox or Pebble, but these are the extreme exceptions, not the norms. Most startups, even really good ones, have to make a ton of noise and hustle like hell to get anyone to pay attention. The founders of Xobni put it best a few years ago: "nobody cares about your stupid little startup."

Naturally, I thought we'd be different, that we’d be one of the immediately-viral outliers; I mean, we were a startup making software for startups-- how cool is that, right? Surely we would launch and immediately hit the hockey stick ramp...right?

We did get a nice little bump in adoption when we debuted at Launch.co and were written up in VentureBeat. But the growth spike was short lived, and like most startups, we had to start grinding away; we had to start building the business, brick by marketing brick; we had to, as Paul Graham would say, do things that don't scale.

In our case, this meant building distribution partnerships with incubators, co-working spaces, hackathons, etc. This is high-touch and long sales cycle relationship work (it takes us 2-3 months on average to close each deal); but it’s an effort we believe will lay a solid foundation for future growth.

3. Early evangelists are worth twice-- no, make that 3x-- their weight in gold.

There's a great quote by Brian Chesky of Airbnb where he says: "it's better to build something that 100 people love than 1 million kind of like." It's great advice, and we definitely didn't focus enough time or energy on cultivating “champions” in the early days; instead, I was addicted to vanity metrics like page views.

Why are these early, passionate users so insanely important? Many of the reasons are obvious: they tend to tell others (= free marketing), and they give you really valuable feedback on your product. But the real reason they're worth 3x their weight in solid gold is because their positive notes of encouragement will keep you going every time you take a beating by the universe (and this happens with surprising frequency). I’m pretty sure there’s a feedback faerie out there that knows exactly when to fire over a positive, encouraging note.

Bottom line, the next time I launch a startup, I will religiously spend 75% of my time hanging out with early evangelists, really getting to know them, and making them happy. I'm playing catch-up now.

4. Some people are just not that into you.

Cold reality: many of the people you really want to like you / your company / your product, simply won’t. This came as a something of a shock, since in my previous career as a consultant, I enjoyed really close relations with my clients and was consistently closing upwards of 75% of new prospect inquiries (probably since they were coming pre-qualified as referrals).

But marketing a consulting business is very, very different from marketing a SaaS product, and it’s taken some time to get used to the level of failure / rejection. With Foundersuite, I'm lucky to hit a 25 - 30% success rate with my partnership/BD work. To put it in perspective, this means that literally 7 times out of 10 that I pursue a distribution deal, I get a “no” (or more likely no response at all).

This was hard to adjust to at first, as I tend to get obsessive about winning a deal. It consumes me. For example, there’s an incubator in Palo Alto that we’ve been talking to for months about partnering up with (and we’d even got to a soft verbal "yes"). But then everything suddenly went silent, and it drove me f’ing nuts.

I've now come to realize that although persistence is indeed a critical trait for entrepreneurs, at some point it’s time to recognize when a deal's not going to happen. In short, don’t let “Deal OCD” become a detriment to your overall business.

5. A full sales funnel cures all ills.

I've learned that the best remedy to #4 is to keep the top of the sales or BD funnel overflowing with prospects; in other words, it's all just a numbers game. I've come to view BD work like dating, and as with dating, there are infinitely more potential prospects / partners out there in the world than you could possibly tackle in a lifetime. So when you’re chasing a target that's "just not that into you" move on, and quickly. Move on, and sometimes you'll even find they come around later (always a nice surprise). 

6. Don't sell the product-- sell what users can do with the product.

This is borrowed / stolen directly from Steve Jobs, and it's something I have to beat into my brain every day. There are numerous layers and nuances to it: pitch the benefits not the features; sell the "why" vs. the "what" or the "how."

Ashton Kutcher’s motivational rant in the movie Jobs sums it up nicely: "You can make a great product; but you have to convince people that what you're selling is greater. We're not selling computers; we're selling what they can do with a computer. A tool for the mind. And that, ladies and gentlemen, is limitless. Because people will never stop believing that they could get more out of something; that no matter what you dream, you can do it. And Mac will help you get there." ‘Nuff said.

6. “Thought leaders” are like supermodels—great if you can land one, but…

Our original marketing plan was based on a variation of what Chris Dixon calls the "bowling pin strategy"-- we would get tech influencers and thought leaders to adopt our product, and the startup masses would follow suit. Sounds great in theory, but getting a Paul Graham or equivalent to trial, adopt, use, and endorse your product has about the same probability of success as getting Oprah to plug your book. In short, the odds are long, and although we did land some partnerships with luminaries like TechStars, Launchrock and Startup Weekend, these deals took months of nagging / begging / calling in favors; these guys are simply so bombarded with stuff, its all just white noise.

Instead of adding to the din, we started reaching out to areas of the startup ecosystem where the noise was significantly less; we started pinging incubators, hackathons, and co-working spaces in places like Atlanta and Pittsburgh and Indiana and Hungary and Australia. Dozens or even hundreds of areas have thriving entrepreneurial communities where the need for startup productivity tools is huge; the hunger is real, and we've seen fantastic adoption.  The lesson here is to skip chasing "trophy partners"-- like trying to date a supermodel, they're expensive, time consuming and a hassle to deal with when you do land them. Instead, chase those who need you the most.

7. Building product is waaay more fun than expected.

In my next reincarnation cycle, I want to come back as a product manager. I had no idea how cool this job was until I was forced to step into the role when my original PM left to launch his own thing.

I’ve found that successfully completing the cycle of idea -> prototype -> feedback -> design -> build -> launch -> feedback -> iterate -> collect payment is hugely rewarding and gratifying; I think I'm rather addicted. I'm pretty sure it taps the same pleasure centers in the brain as winning on a slot machine.

8. People will surprise you in awesome ways.

If you've read this far, you'll notice that most of the lessons learned involve accepting failure or overcoming roadblocks and rejection. But a nice takeaway is that people-- often strangers-- will surprise you in delightful ways, too. Literally as I'm writing this, a Foundersuite user emailed me to say he just posted a glowing review / offer on the Facebook page for all Startup Weekend Organizers.

This is a guy who, on his own volition, decided to promote us to a powerful set of folks who collectively touch tens of thousands of entrepreneurs and potential customers. So cool. But it's not that unusual…if you're doing something interesting, and doing it for the right motivations (e.g. ours is that we want to make tools that help entrepreneurs succeed), then people will go out of their way to help. It’s a beautiful thing.

Good luck and thanks for listening,

This is a guest post by Nathan Beckord, CEO of FounderSuite.com

Topics: guest
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Did The 900-Pound Gorilla Just Vanquish Your Startup Or Validate It?

By Dharmesh Shah on February 19, 2014

The following is a guest post by Todd Garland, the founder and CEO of BuySellAds.  Todd is a long-time friend, and was one of the early employees at HubSpot before he set out to build his own startup.  This article is about how Google (the 900 pound gorilla) launched a product that directly competed with Todd's company.  The story is worth reading because almost every entrepreneur with any amount of success will have this happen some day. -Dharmesh

A few week’s ago, Google launched a service that directly competes with what our business has been doing (very successfully) for 6 years now, a service that helps publishers sell ads directly to advertisers. While I have thought about the “what if’s” and the scenarios surrounding a goliath competitor taking us on before, I never thought this day would actually come.

The first hour

I was numb – not in a bad way, but just numb; uncertain what to think, what to do, while attempting to make sense of, and digest, what had just happened. I scrambled a defensive comment together to post on TechCrunch who covered Google’s product release.

todd techcrunch message

Then, I composed an equally haphazard tweet:

todd tweet

… to which our supporters rallied around (ever so slightly) with support in the form of likes and re-tweets. “Ha”, I thought to myself, “don’t mess with us Google”, and the kind of bravado Google ad execs celebrating the release likely got a kick out of (if they even noticed…).

My team and I continued to talk about this, attempting to understand what it meant for our business. As a startup CEO, it’s times like this when the pressure is on. You have to sharpen your thoughts quickly and be able to articulate to your team how this might affect everything.

I’m uber-competitive, like most people trying to build big businesses, but sometimes being “uber-competitive” also means you venture into the “uber-defensive” state of mind. Lucky for me, I have a co-founder who helps me keep a cool head. All this to say: during the first hour you really just need to keep your cool and give yourself time, and some space, to let your thoughts process.

Knee-jerk reactions like those I made don’t actually do much for you, or the business. It’s best to just stay quite and give yourself time.

As the first hour came to a close it started to become evident that the BuySellAds world as we knew it wasn’t actually going to implode upon us. The following are my key takeaways from the 900-pound gorilla entering the ring with us:

Be pragmatic

The truth is that if Google actually wants to compete with your business, there is a decent chance you will lose. Google wins everything. Sure, there are outliers… Facebook, Twitter, et al who became so large that it was too late by the time Google entered the ring. The point is that most businesses the size of mine will get crushed if Google truly wants to compete… especially in the ad space. While the direct ad sales space is interesting, Google crushing my business will have an infinitesimally small impact on their balance sheet.

For the last 6 years, they’ve had bigger fish to fry (until now)

I discovered that they had actually started working on this product about 4 years ago (two years after BuySellAds first launched). Which means one of two things:

1. It could be that the direct ad sales landscape is just starting to mature enough to the point where they think it’s worth making a play.

2. Perhaps they are just closing off one of their flanks as this space starts to gain traction.

Competition from Google is a blessing in disguise

There are many reasons for this:

1. There’s no better way to get the most out of life, than knowing that one-day you will die. The very threat of a larger competitor will help us sharpen our product and our pitch to customers.

2. We have learned quite a bit that they have yet to learn about the direct ad sales space. Believe it or not, we have a hand up in experience in this specific space.

3. We’ve had a series of competitors over the last 6 years who haven’t seemed to achieve blazing success (despite raising large sums of money), which always worried me. Sure, it’s fun to think that you’re doing such a great job that you are beating them, but the truth is that they aren’t blazing a trail by us because the market just isn’t there. Trust me, our balance sheet, while showing signs of “success”, doesn’t have a hockey stick (yet). Any competitive market that is worth being in usually has at least a few solid competitors duking it out.

4. Smart people work at Google, and smart people typically like to work on things that are interesting with the hopes of achieving some level of success. Sure, not every product Google launches turns to gold; however, somebody smart at Google got the concept for this product past the $100 Million Dollar Man, who gave it his blessing to be worked on. That’s a positive signal for our space in general.

5. A teeny-tiny wee bit of added validation. Similar to my previous point, anything a company the size of Google does is noticed. They have far greater reach than BuySellAds, and there’s a good chance that they will end up sending us a decent amount of business simply because we have one of the best competitive solutions in the space.

Nothing actually changes

This is the most important takeaway. Sitting here a few weeks since Google’s launch, I can tell you with absolute certainty that nothing has actually changed. Looking back at the 6 years we’ve spent building BuySellAds, it’s clear that any time we spent thinking, researching, or reacting to our would-be competitors was a complete waste of time. In fact, there’s no better way to waste time than to think about (or even follow) what your competitors are doing. The only thing that truly matters are YOUR customers. I can’t tell you how hard it has been to get this engrained into my mind. It is by far the most important thing in building a business (to focus on your customers), yet so hard to practice when you see other activity and the glorious tech-headline touting presumed (or actual) success. They call it “customer driven development” not “competitor driven development” for a reason.

I must say, 6 years feels like a very long time looking back. We’ve written a ton of code, been through hell and back, and are still here. We’re bootstrapped, have been profitable, grown quarter over quarter, made the Inc500 (the only popularity contest that involves your balance sheet…), and while it certainly would be fun to coast off into the sunset, I feel like we’re just getting started. There is no better way to reinforce this feeling than welcoming the 900-pound gorilla into the ring. Everybody loves an underdog, and for us, it’s time to get to work.

Topics: guest strategy
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Exit Strategy Is An Oxymoron

By Dharmesh Shah on January 29, 2014

In early meetings, if a VC ever asks you what your exit strategy is, you should run, not walk to your nearest…um…exit.

You want your investors to be more curious about how you're going to enter a market than how they're going to exit their investment.

Thankfully, I hear much less talk about exit “strategies” in the startup world than I used to.  Back in the day, no business plan was complete without a discussion of exit strategies.  And, they almost invariably came down to the same two options: Here are the list of companies that might buy us…and we could go public! exit icon

Today, most tech entrepreneurs don't even write business plans (which is good, because nobody reads them), let alone have a detailed discussion on potential exit strategies.

Here's why I think an exit strategy is an oxymoron.

The purpose of a business is to build something of value for customers — which in turn creates value for stakeholders.  When you're walking out onto the field, you should be asking yourself “how do I best play this game?” not “Hey, once the game is over, how do I exit the arena?”

Planning your exit is a good thing when entering airplanes, theaters and bar brawls (of which I have no clue, I've just been watching too much Banshee) — not when entering a market.

My advice:  Spend your calories crafting strategies for how you will build value, how you will connect to potential customers — and how you will differentiate yourself from everyone else.  Leave the exit planning for when you actually need to figure out an exit.

By the way, I have no problems with startups exiting.  Happens all the time, and is part of the circle of life in the startup world.  I've been on both sides of the table (sold a startup, acquired some startups).  My problem is when entrepreneurs are forced to unnaturally focus on the exit -- and mistakenly calling such things a "strategy".  

Topics: strategy
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A Tech Founder's Guide To Picking A Non-Tech Founder

By Dharmesh Shah on December 18, 2013

There are many articles and blogs claiming to have THE list of things to do to find the perfect technical cofounder - as if it’s that easy to find a cofounder in general. From my purview at FounderDating, however, one of the most important and least-discussed (in the press, at least) questions is from technical entrepreneurs. For the last year the longest- running trending topic on FD:Discuss (the Q/A section of the site) is: how do technical cofounders evaluate non-technical cofounders? yin yang colorful

Why It’s Hard

When you’re technical and interviewing or planning to work with other people who are technical, you’re used to giving them objective “tests” that help you determine their abilities, white board problems, coding projects, pair-programming sessions. Even if you’re not technical and you have someone do a coding project, you can easily show it to technical friends and advisors and quickly get their expert opinions. Of course, this isn’t enough to decide whether you should work with someone -- especially as a cofounder -- but it’s at least cutting to the core of the skills question. (You also need to address the chemistry/personality question.)

Unfortunately, there isn’t a white board test equivalent for business folks that really mimics these (if anyone has one please share). You can get a rough idea of how they think, but there isn’t a concrete “result” to help you figure out if they are any good e.g. can they acquire customers, can they recruit someone, etc.

The Most Common Mistakes

You don’t know what you don’t know. And that leads many potential technical cofounders to fall back on criteria that seem important but are typically false positives. A few of the most popular characteristics people tell us they look for that aren’t good indicators on their own:

1. Expert in the field you’re interested in - I guess this is nice if there is no chance that the idea will change industries (read: almost never). But some of the most successful companies were started by people that had no experience in their industry, and that’s precisely why they were able to change it. Kevin Hartz didn’t have a background in ticketing nor did Max Levchin in payments. Often times having spent a career in an industry means you can’t re-think it.

2. Top schools or top companies on their resume - It’s nice to tout, but if you joined Facebook as the 4000th employee this just doesn’t tell you much - good or bad.

3. Built a prototype - This is helpful but only in that it shows they can DO and not just talk. But it’s unlikely you’ll want to inherit that code or that the idea will remain the same.

What To Look For and How

As a non-technical cofounder your job ranges from product to hiring to taking out the trash. There isn’t one test or one white board problem to give, but here are the characteristics you should be looking for:

1. High FSO (Figure.Sh*t.Out) quotient - When you start a company or a side project there are few guarantees. Pretty much the only one I can make is that there will be a large body of work that comes your way that neither you nor your cofounder(s) have ever faced before. This heap of work will far outnumber the portion you have actually encountered. Can your cofounder figure sh*t out? And can they do it quickly? Being amazing at one thing is nice, but honestly not what you should optimize for in a cofounder. Founders are typically just “good enough” at a slew of things: fundraising, product, partnerships, etc. You can hire for the very specific positions later, right now you need an all around athlete –calls plays and executes at different positions

2. His GSD (Get.Sh*t.Done) quotient - The sheer volume of work that needs to get done when you start a company is, well, never ending. It’s great to be able to talk to crowds and VCs but given a list of 20 things that you need to do, can they prioritize and knock them off at an impressive rate (especially the ones they haven’t done before - see #1)? You should feel totally confident that when they say they are going to do something it will get done -- and done exceptionally well.

3. High Determination Quotient - OK, so I lied: There are two guarantees I can make about starting a company - the second is that you will get rejected (over and over again). Can this person handle that kind of negative feedback? How long does it take them to get back up? This is the reason having previously been a cofounder or joined a startup as an early employee is important. It shows that they’ve been to battle, have scars and are opting back in. It’s less the industry and more the psychological experience that matters. Paul Graham has a famous essay on Determination. Cliff notes version: “We learned quickly that the most important predictor of success is determination.” This means you need to work on something together long enough to hit a road block (or four) and see how they react.

4. High Communication Quotient - There are actually two parts to this requirement.

i) Can they speak your language? You can’t expect them to know as much about engineering as you do. But do they make an effort to understand? Have they worked with engineers before and comprehend the questions to ask? If you don’t know the answer, ask to talk some of these previous co-workers. A non-technical cofounder learning to code is an encouraging sign – not necessarily because they’ll be contributing meaningfully on the engineering side, but more as a helpful signal that this person is curious and wants to understand your language.

ii) Can they communicate with others effectively? This means investors, potential employees, customers. If you have a SaaS product, can they sell the first customer? If you have a consumer-focused product, can they go get an alpha group to test and then gather their feedback and work off of it? Can they present to a crowd and get them excited? That could mean a startup weekend crowd or a group of students; you don’t have to wait until you’re pitching investors to figure this out.

You may have noticed that you can’t figure out #s 1-4 in just a few meetings. The best way to figure all of this out is -- to work together first. Start a side-project. These quotients are exponentially easier to calculate when you’re working on something real together. It doesn’t matter if it’s the idea you actually end up working on, you’ll see far more revealed doing this than you will over 10 coffees or hypothetical white board sessions. Yes, that also means you can’t find the right partner in just a few weeks. So be constantly putting yourself out there.

These aren’t the only things to look for -- there are big questions around motivation and alignment and of course personality fit -- but these are much more telling characteristics than a resume-based checklist.

This was a guest post by Jessica Alter.  Jessica is the co-founder & CEO of FounderDating, the premiere online network for entrepreneurs to connect, share, and find co-founders. Previously, she led Business Development and was GM of Platforms at Bebo (before it was acquired by AOL). She is also a mentor at 500 Startups and Extreme Startups.


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How To Launch A Startup Without Writing Code

By Dharmesh Shah on October 21, 2013

There is an unspoken rule: to launch a startup, you need to build a product, and to do that you need someone that can write code.

Whether that means chasing down a technical co-founder, learning to code, or even building that "Lean MVP" - the conventional wisdom is that without tech abilities you're nothing more than a dude (or dudette) with a Powerpoint.rocket launch

A growing number of startups, however, are quietly disproving this assumption. 

They're getting their first customers with minimal technology, and often no code at all. Instead of building fancy technology from the outset, they're hacking together inexpensive online tools such as online forms, drag-and-drop site builders, advanced Wordpress plugins, and eCommerce providers. 

They're jumping right in to serve customers in any way possible - heading right for their first paying customers. 

Most importantly, unlike the majority of their peers, by the time they start building a product, they already have a humming business.

How are they doing it?

Focus on Serving Customers Instead of Building a Product

Successful founders all know one thing: it's more important to serve a customer than it is to build a product.

This is the mindset you must get into when you start out. Most entrepreneurs are narrowly set on building a product that they lose sight of the real goal - to solve a problem for a customer.

Or, as Ben Yoskovitz eloquently put it,

"Customers don’t care how you get things done – just that you get it done and solve their pain."

Replace Technology with People

Think about the hardest part of the business you want to build. The part that would require the most complex development - the true innovation that no one else does.

Can a real person perform these tasks manually? 

For many startups, this was the secret to massive success:

David Quail is a super talented software engineer, with one exit already under his belt. He wanted to solve his ultimate annoyance: scheduling meetings over email. 

David's original idea was to build an artificial intelligence tool that could read an email chain and automatically schedule the event. But this would take months if not years. 

His shortcut to launching a business ASAP? He simply set up an email address for his customers to "CC" that forwarded to him, and did the work manually at first to prove that customers were willing to pay.

Over time he automated more of the service - but not before he already knew there was clear demand and was making revenues.

Another example - a marketplace:

Tastemaker is a marketplace connecting interior designers with homeowners for small design gigs. They started by contacting interior designers and building a physical list of those interested in extra work. 

They then asked their network who needed help with interior design - and made the connection, processing payment themselves. 

The Tastemaker founders used pen and paper to solve their customer's needs and prove the market. They then built their online platform in parallel (which eventually became their core business).

You've probably heard many famous stories like ZenLike and Tastemaker. They range all the way from companies like Groupon or Yipit (raised $7.3M), to Aardvark (acquired by Google) and Diapers.com (acquired by Amazon). 

What did they have in common starting out? At the core of many businesses, instead of fancy algorithms, you would have found the founders themselves, like the "man behind the curtain" in the Wizard of Oz, working hard, acting as the secret sauce.

Use These Off the Shelf Solutions

While your core tech might in fact be a service starting out, you can wrap it with an online presence, digital interactions, and the administration of a true technology business. 

In short, you can act, look, and smell like a fully automated online company that employs a posse of software developers and an in-house graphic designer.

* Use e-commerce services to accept payments and even subscriptions using "hosted payment pages" - requiring zero code.

* Let your customers interact with you through sophisticated online forms you can publish (and brand) using drag-and-drop editors.

* Build a support knowledge base and community forum with Zendesk, Uservoice, or GetSatisfaction

* Use copy-paste widgets from around the web like contact forms, Skype buttons, live chat, etc.

* Use simple-yet-sophisticated website creators to publish your central website and glue together all the tools into one presence. Strikingly and Unbounce are great for beautifully designed landing pages. 

I could go on listing these forever (well, I did here). As you can see, the web is full of tools that let you conjure entire features with the click of a mouse. 

The key is to always search for what you want before reinventing the wheel. Chances are someone has already thought of how to make your life easier.

The Hidden Treasures of Wordpress

To most of us, the Wordpress brand connotes a free blog, or a simple way to create a content website for non-technical folks.

But the true magic of Wordpress is the ability to extend its functionality to create many kinds of web platforms - while keeping your hands (mostly) free of code.

Wordpress itself is free, and you can purchase inexpensive plugins that automatically transform your website into a membership site, ecommerce portal, social network, and even daily deals site.

Instead of spending thousands on a designer, you can buy a high-end theme for around $40 and customize it to your brand. If you have a bit more saved up, you can hire a local Wordpress expert for a few hours of their time for small custom tweaks and a personal tutorial. And, if you don't want hosting headaches, you can use WPEngine (hi, Jason!).

Wordpress is one of the most incredible tools on the web for non-technical entrepreneurs. There's a bit of a learning curve, depending on how you want to use it, but definitely a faster option than finding a developer or learning to code. 

It puts fate into your own hands.

Put It All Together

Go back to that core customer need, and think of how to satisfy it by any means. Now how can you make that solution accessible? What would the process be for finding you and reaching out? How can you charge and provide support? 

Chances are good that you can pull it all off yourself. If not, consider starting a bit smaller than you originally imagined, if only to start generating revenues today and fund your development.

Once you have your first few customers, you'll have a very good picture of where your business is going, and what technology you absolutely need to build - and very clear motivation. 

Does working this way pay off? 

Tech companies started this way have sold for between $50-$540 million, or have gone public. They are growing at double digit rates. And they launched in a matter of weeks or months - not years.

If this approach makes you uncomfortable - that's great. It's a sign that you're learning to think differently. However, entrepreneurs presented with this approach often have similar gut feelings:

What Will Investors Think?

They will think you are clever, resourceful, flexible, persistent - and know how to focus on the right things.

To quote one of our investors, Len Brody, on his portfolio: "I call them the workaround culture... [they] just work around anything - and you have to."

If for any reason they are put off by your creativity and resourcefulness, then you're not talking to the right investors.

What About Scaling?

This is a very understandable fear. It's a scary situation to think, "Great, we got our customers, and now we're going to disappoint them."

Don't let that thought paralyze you. Growth is rarely if ever a black and white, rocket-ship-spike. It's a steady process that leaves you plenty of time to transition between solutions.

In other words, there's a spectrum between do-it-yourself and full-robot-revolution. You might hire a few people in the meantime (with the revenue that their hire would naturally generate) while also developing a scalable technology.

As most entrepreneurs will tell you the way you get your first 50 customers certainly won't be the way you get your first 5,000. 

For those of you feeling held back by your lack of technical skills - or deep in development muck  - ask yourself, what can you do *today* to get your first customer. 

Give it a shot. In contrast to paying a developer, you don't have a lot to lose. Do whatever you need to do to get your business going. 

Remember: you're not here to build a product - you're here to solve a problem. And you certainly have the skills to do that.

***

Want more specifics, examples, and tools? Check out my newest Skillshare course, How to Launch Your Startup Without Any Code (use code ONSTRTPS for %15 off)

This is a guest post by Tal Raviv.  He is the co-founder of Ecquire.

Topics: guest strategy
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How The Business of Software Conference Changed My Life

By Dharmesh Shah on October 14, 2013

tl;dr:  If you work in the business of software the one must-attend event is the Business of Software (Boston, Oct 28th  –  30th 2013)

Note from Dharmesh:  This is a guest post from Patrick Foley.  I normally don't post articles that promote an event — but Business of Software is not a normal event.  It's the ONLY conference that I've spoken at 5 years in a row (an am speaking again this year).  It's the only conference for which I stay at a hotel in Boston (5 miles from where I live) just so I can hang out with the people attending the conference as much as possible.  It's that good. You should attend.  (Note: I am not affiliated with the organizers, my selfish reason for convincing you to go is so I can meet more awesome people).business of software

ABSTRACT: If you’re not satisfied with some aspect of your career, go to a great conference like Business of Software. The best conferences can dramatically alter your perspective and ultimately change you.

Four years ago, I attended my first Business of Software conference. Back then, I was a technical evangelist for Microsoft, and since my customers were other software companies, I thought I knew all I needed to know about this “business of software.”

Obviously, I was wrong. For three days I listened to amazing speakers like Jason Cohen (founder, WPEngine) explain how the different personal goals of founders have an enormous impact on their business actions – meaning you should pay more attention to advice from founders with similar personal goals. I was inspired to hear Peldi Guillizoni (founder, Balsamiq) explain how he built his business – and how his journey actually started while working for a big company (hey, just like me!). I was shocked to hear Joel Spolsky’s very intimate description of how funding really works. I learned measurement concepts from Dharmesh Shah (founder, HubSpot) that I didn’t even know were knowable. I was genuinely moved by the stories from these founders and all the other brilliant speakers. And that was just the first year for me (more great speaker videos from 2010, 2011 and 2012).

At a great conference, the attendees are as important as the speakers. Many of the people I’ve met at Business of Software have become my friends and advisors. One became my cofounder in my first effort at a building a software company (a story for another day). There’s a bond that develops among Business of Software attendees that’s hard to describe. Part of it is that the speakers are highly engaged attendees themselves – something you don’t see often – this is their community, their tribe, and the speakers clearly look forward to being a part of the event from both sides of the stage.

There was something about attending that conference in person that shook me to my core and sparked a passion for learning how software companies really work and what makes them successful (spoiler alert: it’s freaking hard). Yes, I already worked for one, but Microsoft is HUGE – I was a deckhand on a battleship. Although I was working with other software companies, I was ultimately selling to them … you don’t learn how things really work in that situation. I even had a podcast that allowed me to speak with some brilliant founders … but it took being in a room with all these people at once to change me. BoS changed me. (I wrote about that special year and even have a manic podcast episode describing it.)

Great conferences like Business of Software aren’t cheap, but they’re a great investment. Microsoft paid my way to a couple of conferences a year – that’s a HUGE perk of working for an established company! If you work for a company that has multiple layers of management, then they probably have a conference budget already. Use it! I attended Business of Software on Microsoft’s dime in 2010 and 2011. Last year, I took vacation time and paid my own way, because I was preparing to leave my job.

This year took me in another direction. When it became clear that my product company wasn’t going to work, it was still time to leave Microsoft, so I reluctantly returned to consulting. I was a consultant for 14 years before joining Microsoft, and I’m pretty good at it – but I still felt defeated. Sometimes you just gotta lick your wounds, recover, and figure out a new path. I figured I’d build up my financial resources for a few years as a consultant and then try again to build a software company.

But then a crazy thing happened … a few weeks ago, a couple of friends that I met at Business of Software contacted me about a job. They have a small, very successful software company, and they think I could help with their next stage of growth. WOW! I didn’t see that coming. I’ll have my hands in all parts of the business, improving anything I can and learning everything I can. It’s not a startup (they’ve already found product/market fit), but it’s actually a better fit for me at this point in my life, because it provides greater financial stability, and it will allow me to experience how a successful company operates. A while back, I asked Jason Cohen for life/career advice, and this was exactly the sort of situation he said I should be looking for. It’s PERFECT.

I’m sure you can guess the call-to-action of this post by now … sign up for Business of Software and GO. It just might change your life. The best work I did for Microsoft stemmed from Business of Software. Then it inspired me to leave Microsoft and pursue work that I like even better. And now my dream job FOUND ME because I went to Business of Software.

My new company and I haven’t actually finalized my role or my start date yet … we’re going to formalize things in 2 weeks at Business of Software … I hope to see you there! It’s going to sell out, so you need to jump online and order your ticket now. My understanding is that it’s going to be several hundred dollars more expensive next week (if you can get in at all). If you’re on the fence about going, feel free to contact me (pf@patrickfoley.com) to talk about it.

Topics: guest Event
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2 Mental Exercises For Battling "It Won't Work" Syndrome

By Dharmesh Shah on September 20, 2013

Every company has ideas that come up (sometimes frequently).  And, based on the stage of the startup and the degree to which the idea is unconventional, there are always good, rational reasons why the given idea can't possibly work.  There are also bad, irrational reasons too.  The problem is, it's hard to tell the difference.bad idea

Here are some of common reasons why something won't work:

1) We've debated this several times before and have decided it wouldn't work.

2) We've tried this before, it didn't work.

3) Doesn't really fit our sales model.

4) It's not appropriate for our industry.

5) It might work for tiny/small/large/huge companies, but we sell to tiny/small/large/huge companies, and it won't work for them.

6) Our investors/board would never agree to it.

7) It might work, but we can't afford the risk that it won't.  (Note: When someone says “it might work…but…” they're almost always thinking: It won't work)

8) Our team/plan/pitch-deck is not really setup for that.

9) We could try it, but it's a distraction.  (Note: This often means “I've already decided it's not going to work, but I can tell I need to convince you we shouldn't try it…”)

There are many, many more reasons why any given idea won't work, but the above are a sufficient sample for this article. Oh, and by the way, I have at various points in time made all of these very same arguments myself (“I have met the enemy” and all that)

2 Mental Exercises To Try

Now, here are a couple of mental exercises to try when you or you or your team is stuck.

Exercise #1: What if I told you that it's working really, really well for XYZ Company?  How do you think they made it work?

The idea here is to assume the idea is good and has worked for a company very similar to yours.  Then, ask yourself (or your team):  Now that we know it worked for them, what do we think they did to make it work? 

What this does is mentally nudge you to think about how to work through whatever the obvious limitations to the idea already are.

Example: I know that nobody in our industry uses a freemium model because the infrastructure/support costs are just too high.  But, we just learned that XYZ Company is launching a free version.  What do we think they did to make it work?

Exercise #2: What if we had the proverbial gun held to our heads and we had to do [x]?

The idea here is to assume/accept that the decision to implement the idea has already been made — presumably by some higher authority.  Now, assuming that, what would you do to make the best of it?

Example: Our major investors just told us that before they can agree to funding our next round, we need to build an inside sales team.  They think inside sales teams are the bomb.  We can't afford not to listen to them — what do we do to make the best of the situation?  If we had to build an inside sales team, how would we go about doing it?

Note:  In neither case am I suggesting that you mislead your team (or yourself, in case you're like me and have conversations with yourself late at night).  These are meant to be mental exercises, just to help drive discussion and analysis.  Though I'll confess, there is a small part of me that wonders what would happen if one did make the hypothetical seem real (at least for a short period of time).

What do you think?  Any mental tricks or tactics you've used (or thought of using) to help break-through conventional thinking?

Topics: strategy
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The Growth Hacker's Dilemma: Process vs. Tactics

By Dharmesh Shah on August 27, 2013

After conducting nearly 100 interviews with some of the world’s best growth hackers on Growth Hacker TV, I have become keenly aware of a certain tension that is in the growth hacking ecosystem. Some growth hackers choose to emphasize the process of growth hacking while others choose to see growth hacking as a set of tactics that can be applied to various scenarios.


First, let me define the growth hacker’s process. There is no one single agreed upon order of operations, but a growth hacker’s process is based loosely on the scientific method. If you can remember high school, the scientific method is basically the following:


  1. Question - Why do visitors leave our registration flow after the first page?

  2. Hypothesis - They might be leaving because page two has too many form fields present and this scares them away.

  3. Prediction - If we have more registration pages, but less form fields on each page, then our completed registrations will increase in statistically significant ways that could not be the product of chance.

  4. Testing - For the first 2 weeks of September we will run an A/B test, showing 50% of new visitors our current registration flow, and showing the other 50% our new registration flow which increases the number pages but decreases the fields per page.

  5. Analysis - The results show that our new registration flow had 27% more completions than our current registration flow, and this is statistically significant enough to conclude that we should implement our new registration flow.


Here is where things get interesting. Some startups will actually use this scientific method (or something similar) as a means of gaining insights about their product, thereby enabling them to make progress. Others, however, will not have a rigorous process like that listed above, but they will instead use the results of other people’s experiments. Put another way, some startups have a process, other startups just implement the tactics (best practices) that are the results of someone else’s process. If someone read about the above experiment on Quora then they might adapt their registration flow without a scientific process in place to support such a move.scale tradeoffs


The question is, which kind of startup should be applauded and which should be reprimanded? It might seem obvious to celebrate the rigors of the scientific method and side with any startup that uses such a process. However, I think there is a case to be made for both kinds of companies. Obviously, if someone doesn’t run the experiments then we will never arrive at the tactics in the first place. The tactics are the byproduct of someone’s hard work and that should be appreciated, but think about how the scientific community actually operates. The scientific method is a tool that serves the entire scientific community, and the results of that tool are often fair game for the community. Scientists don’t expect each other to run every relevant experiment for their personal endeavors. Newton said, “If I have seen further it is by standing on the shoulders of giants.” Why can’t a startup simply use the results, as discovered by their fellow entrepreneurs in lab coats, as a benefit of the community?


The truth is, there are pros to both ways of thinking, which I’ll list below, but I don’t want us to view growth hacking as only a process or only a set of tactics and simultaneously miss the community aspect of our enterprise. Here is how I see things:


  • Pros of Process Oriented Startups

    • Without process oriented startups we would have no tactics.

    • They are able to find new growth hacks when old ones cease to work.

    • By understanding the process, their implementation of any given tactic will be more nuanced and effective.

    • They are more self sustaining, able to use the community, but not be entirely dependent on it.

  • Pros of Tactic Oriented Thinking

    • Allows smaller startups, with less funding, to implement tactics very cheaply.

    • It is an entry point into growth hacking which is more accessible than experimentation, even though it might lead to experimentation later on.

    • Not every experiment needs to be ran by everyone. Some best practices are near universal and can just be applied. We all do this to some degree whether we realize it or not.


So, what is the answer to the dilemma? Is growth hacking a process or a set of tactics? Well, both, and here is what that means practically. If you are in an organization that has a growth hacking process in place then see yourself as a part of a larger community. We are grateful for your work, but you don’t need to be pompous about your place in the universe. Share what you find, grow our collective knowledge base, and understand that not every company will imitate you, and that’s ok. If you are in a non-process oriented startup that is still trying to use growth hacking principles then be extremely appreciative of the companies that are supplying these best practices, and consider creating your own process so that you can give back to the community as much as you take from it.


Startups aren’t going anywhere, and growth hacking is here to stay as a robust methodology for growing them. Whether you are in the lab, or reading the research paper that was spawned from someone else’s lab, understand that this is a community, not a zero sum game.


This article was a guest post by Bronson Taylor who is the host and co-founder of Growth Hacker TV, where the experts on startup growth reveal their secrets.

Topics: guest marketing
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Welcome Back Kathy, We Left The Internet On For You

By Dharmesh Shah on July 30, 2013

draumurDanceKathy Sierra was once among the world’s most popular tech bloggers. On her smart, funny, and vivid blog Creating Passionate Users, she tackled neuroscience, presentations, and how to build software that makes users kick ass. She helped develop the reader-centric Head First series of books for O'Reilly Publishing, and traveled the world giving speeches at tech events. 

But in 2007, just as I took my first tentative steps into the world of social media, that all came to a screeching halt. Sierra became the target of a campaign of online harassment so severe that both Sierra and blogger Chris Locke ended up on CNN discussing the case.

Since then, she's lingered in almost total obscurity online. She threw her considerable passion and drive into learning to ride Icelandic horses as an experiment in better understanding how people learn and what it takes to achieve mastery.

But she stayed off the internet. For a while she was on Twitter -- then she left even that behind.

Over the course of my startup and social media adventures for the last few years, I took heart knowing she was still out there. She would pop up anonymously to comment on blog posts I had linked to via Twitter. I would email to see how things were going.

I went to see her in California in January 2012. We rode her horses and talked about the impact of gamification on learning and productivity. It was invigorating to see her mind in full swing, albeit privately.

But she didn't blog again; not for more than 6 years.

But Now, Kathy's Back!

As of this week, one of my all time favorite bloggers has returned to the world of blogging and the internet at a new site she playfully calls Serious Pony, in a salute to some of her favorites: The Oatmeal, Commander Taco, and Lonely Sandwich.

“I missed blogging,” she says. “For the past couple of years I kept telling myself that I was going to start up again.”

On her new blog, Sierra will write about a few topics that have become important to her during her hiatus. One is exploring new research on how to develop skills and knowledge, which Sierra calls “how to be bad-ass.”

Another topic is what Sierra calls “the API of you,” which is about the ways companies use gamification and other techniques to manipulate consumers, and how to spot those techniques and resist them.

“There are a huge pile of books that have been published in just the past few years about how to manipulate, seduce, and make things addictive -- how to work on people’s brains,” she says. “But the number of books designed to help you fight back, as a human, as a consumer? It’s like one book,” she says.

Her first post -- "Your app makes me fat" -- playfully digs into the topic of products that drain cognitive resources.

We're looking forward to hearing much more. We’re especially excited about her return to blogging because Sierra, who inspired our founders so much we have a conference room named after her in our newest expansion, has agreed to speak at HubSpot’s INBOUND conference in August. This will be her first public appearance since her return. We can't wait to hear her talk on Word of Obvious: competing in a post-word of mouth world.

Want to hear firsthand what makes us such big fans of Kathy? Attend her talk and many others at INBOUND 2013. Fans can save 30% off the ticket price with offer code KATHYSIERRA. 

This was a guest post by Laura Fitton (@pistachio), inbound marketing evangelist at HubSpot. Dan Lyons contributed to the reporting for this post.

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The Most Important Word When Building Your Personal Brand

By Dharmesh Shah on July 24, 2013

Do your colleagues have a choice word for you? If not, here's why you want them to…

Sometimes one word can make all the difference.describe the image

I was at a conference and a friend who runs a startup introduced me to one of his friends, who was looking for a new opportunity. “I’d like you to meet Joe,” he said. “He’s great.”

I’m sure Joe is talented. I’m sure Joe is skilled. I’m sure Joe is, in fact, great.

But I only remember Joe because of something that happened a few minutes later. Another friend introduced me to one of his product managers. “This is Michelle,” he said. “She’s relentless.”

In the dictionary, “great” means remarkable in degree or effectiveness. “Great” is a wonderful word, especially when used to describe someone… but like “awesome” and “outstanding,” “great” is used so often to describe people that it has lost much of its meaning. When just about everyone is great… no one is great. Great is no longer impactful or memorable.

When described as “great, however remarkable in degree or effectiveness he may be, Joe seems like – however unfairly – just one of many. He doesn't standout.

But “relentless” – who can forget relentless? Hear the word and you instantly think of someone so determined, so persevering, so persistent and tenacious that nothing, absolutely nothing, can stand in her way.

A “great” product manager you might forget. A “relentless product manager you remember for a long, long time.

Authentic Positioning Matters – Especially for Individuals

Many companies, as Al Ries describes in his classic marketing book Positioning, try to own a single word or phrase in the minds of customers. For Mercedes it’s “luxury.” For Volvo it's “safety”. At my company HubSpot it’s “inbound”.

The goal of positioning is to create an immediate and direct connection in the minds of consumers; that’s what branding is all about.

Individuals need to think about positioning, too. Where Tony Hsieh is concerned, that word is “culture.” Where Eric Ries is concerned it’s “lean.”

So imagine you ask a colleague or a boss or a customer for to pick one word that describes you and they aren’t allowed to use words like awesome, fantastic, great, terrific, etc. They have to pick a specific, non-generic word. What word would they choose?

The word they choose – for better or worse and, where you’re concerned, intentional or unintentional – is your positioning in the minds of the people you work with. That’s how they see you. That’s how they think of you.

That is how they remember you.

What is Your Most Important Word?

The cool thing is, you get to choose how people view you. As long as your actions constantly and consistently match your positioning, as long as you are intentional in thought and action, you can determine the immediate and direct connection people make when they see, hear, or think about you.

What one word best describes you? Better yet, what one word do you want to describe you?

Here are a few possibilities – in the right circumstances these are all wonderful qualities:

· Insightful

· Shrewd

· Ferocious (hopefully in a good way)

· Unflinching

· Indomitable

· Irreverent

· Scrupulous

· Relatable

· Determined

So, back to the original question: What is the one word that can transform your career? As you've probably guessed — it's different for everyone. But, if you can find yours, it can have a profound impact on your person brand, and hence your career.

A short, powerful exercise…

Make a list of the adjectives you want people to repeat after they meet you, talk to you, see or read about you... what do you want other people to think of when they think of you?

Make your list. Then boil it down to the one word you want to encapsulate you – and, in effect, your personal brand. (If you don’t, other people will definitely decide it for you.)

Decide how you want to be defined.

Now, share your one word in the comments below. If you can't quite get it down to just one word, that's OK (I'm an easy going guy) — pick 2 or 3 words. But, leave them in the comments. We're not going to hold you to it, but the simple act of writing them down and sharing them is super-helpful. And, it will help others come up with their words.

I'll kick things off with the words I'd like people to associate with me: creative.

Read, think, GO!

Leave your one (or two) words in the comments.

Topics: marketing
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31 Short Highlights From "Disciplined Entrepreneurship"

By Dharmesh Shah on July 23, 2013

As many of you may know, MIT is near and dear to my heart. As my co-founder, Brian Halligan likes to say, “HubSpot was born out of the loins of MIT”.  As such, I like to stay in touch and speak at MIT as often as I can.  Over the years, I've built up a relationship with many of the people there. The leader of the entrepreneurial efforts at MIT for the past four years has been my friend the energetic and successful entrepreneur himself, Bill Aulet. While my “geek center of gravity” style is different than Bill’s (“business center of gravity” but loves technology), I have come to really appreciate what he has been accomplishing at taking MIT’s entrepreneurial education/training efforts to a new level. Recently I got a pre-release copy of his book, “Disciplined Entrepreneurship: 24 Steps to a Successful Startup” and my appreciation was taken to a whole new level. There is an art and science to entrepreneurship in that there is a body of knowledge that can improve entrepreneurs’ odds of success significantly, and it definitely involves discipline.disciplined entrepreneurship small

While it would have been more appropriately titled “Disciplined Entrepreneurship: 24 Steps to getting the Product-Market fit right when launching your high growth new venture as a standalone or inside a large company but also relevant to existing entrepreneurs who want to revitalize their startups” I realize that would have been a bit too long so I accept the shorter version. It really is a breakthrough guide on how to launch new products for entrepreneurs in a systematic manner. It is very complementary to what is already out there by Eric Ries, Steve Blank, Alex Osterwalder while deftly incorporating classics such as Crossing the Chasm, Blue Ocean Strategy, Innovator’s Dilemma, Democratizing Innovation and many more – as well as (humbly) Inbound Marketing. It pulls many different elements together very nicely in what Bill appropriately calls a “toolbox approach”.

The book is not only an invaluable framework (make sure to order early & sign up to get the poster – it is super helpful and very complementary with the book) but also has many interesting insights. The following are thirty five short highlights from Bill with convenient tweetable links so you can let your friends know about this and spread the good word of disciplined entrepreneurship.

31 Tweetable Insights from “Disciplined Entrepreneurship: 24 Steps to a Successful Startup”:

1) Entrepreneurship Education Crisis: Demand soaring yet high quality supply does not scale; gap filled by storytelling [tweet]

2) To build scalable eship education, we need frameworks that are flexible yet rigorous; valuable yet not constraining [tweet]

3) Hypothesis testing is unquestionably great but the question is which hypotheses do you test & in what order [tweet]

4) 1st Law of Eship: The single necessary & sufficient condition for a business is a paying customer [tweet]

5) 2nd Law of Eship: WOM (Word of Mouth) is critical to success of a high growth startup [tweet]

6) 3rd Law of Eship: We are an attacker w/ dramatically less resources than the defender so have 2 b much more efficient [tweet]

7) 4th Law of Eship: We have to have the unit economics work in a reasonable period of time [tweet]

8) 5th Law of Eship: We have to have a core (something that will be unique & very hard to duplicate) to be great [tweet]

9) 24 Steps are grouped into 6 themes & starts not with your technology or product but with "Who is your customer?" [tweet]

10) The 1st hypothesis 2 test is whether you have a well defined target customer who has a problem & money 2 pay 2 fix it [tweet]

11) Disciplined Entrepreneurs r not driven by 1 customer nor by spreadsheets but by a well defined target customer group [tweet]

12) Once mkt is selected, must deselect rest. Deselect = discipline. Every1 loves to select; no1 likes 2 deselect [tweet]

13) Q: Is deselection important? Steve Jobs: "I'm as proud of what we don't do as I am of what we do." - Ans: Hell yes! [tweet]

14) Build the company from the customer back & not from what you want out. Target Customer 1st, Product 2nd [tweet]

15) Primary Customer Research is essential: Walk in your customers' shoes - economically, emotionally & socially [tweet]

16) In eship, specificity wins & generalities don't - hence eship is about the quest for the holy grail of specificity [tweet]

17) Don't make your persona a composite, make it real person. This ends debates much faster & more effectively [tweet]

18) Validate your persona by listing 1st 10 customers & check to persona; also derisks & gives team confidence & focus [tweet]

19) "What can you do for your target customer?" - it must be specific, compelling & unique [tweet]

20) "How does your customer acquire your product?" maybe boring but essential - often overlooked [tweet]

21) "How do you make money off your product?" - unit economics of COCA vs. LTV must work [tweet]

22) "How do you scale your business?" - b/c limited resources, must start small & plan 2 grow big [tweet]

23) We need to train our entrepreneurs to have the spirit of a pirate & the execution skills of a Navy Seal Team [tweet]

24) "It is more fun to be a pirate than to join the navy" - Steve Jobs & embraced by MIT entrepreneurs [tweet]

25) MIT has spirit of a pirate ("creative irreverence" = hacking) but also enormous discipline hence success in eship [tweet]

26) Entrepreneurial Myth: "Entrprnrs are undisciplined" Wrong, great ones have enormous self-discipline [tweet]

27) Gr8 entrprnrs derisk risk & only bet when they know the odds are in their favor & there is a big payoff [tweet]

28) Fake it B4 U Bake It: Don't build until u have derisk market w/ real customers; build a site & market test 1st [tweet]

29) Don't build a plant to produce dog food until you prove the dogs will eat it. Logic is not enough, u need real proof [tweet]

30) Wisdom is scar tissue & scar tissue comes from failing & learning in the process. @24StepsofEship is based on wisdom [tweet]

31) "Truth will set you free" rather "Action will set you free" [tweet]

 Which is your favorite? Which do you disagree with? Would love to hear your thoughts in the comments.

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How I Hacked The Startup Launch Conference Circuit

By Dharmesh Shah on July 15, 2013

The following is a guest post by Nathan Beckord.  Nathan is founder/CEO of Foundersuite which provides software and templates for founders.

We launched my startup Foundersuite in June of 2013 with nearly 800 startups on our platform, several strategic partnerships, and press coverage by VentureBeat.

Nearly all this traction came from hustling, pitching, and “launching” at 5 different startup events, at a total out-of-pocket cost of $883.

Here’s how we did it. You can do some of this too.nathan small

Event #1: Startup Exits Conference, January 17

What it is: Startup Exits is an event I produce two or three times a year focused on “hacking the exit process.” We run it at Rocketspace, and it draws a crowd of about 150 entrepreneurs and VCs looking to connect with corporate acquirers.

What I did: Since this event is my baby, I had the liberty of inserting a 2-minute preview of Foundersuite into the mix. To ensure the maximum number of eyeballs, I staged my demo right before the segment with John O’Farrell of Andreessen Horowitz, who I knew would be a big draw.

To avoid the risk of an embarrassing crash or bug, I mainly showed screen shots of the product instead of an actual demo. I also framed it as something coming down the pipe, vs. any kind of actual “launch”-- a very, very soft sell.

Result: By giving a “sneak peek” we were able to get initial feedback on our product (this was the first time anyone outside the company had seen Foundersuite.) The overall reaction was good, which provided a boost to morale. This event also served as a “deadline” to hit, which rallied the dev team and got us focused.

What I could've done better: We had a registration page to collect beta users, but it wasn’t fully baked-- 10% of those who tried to register got spit out of the system. Also, we had no structured way to collect feedback, which is so critical to do early and often.

Cost: Nothing. In fact I made a small profit on the event, which went straight back into development. :)

Takeaway: Of course, I had the inside advantage here. It takes some effort, but putting on events is surprisingly easy-- and it gives you a captive audience to pitch whatever you’re hustling. And no, I'm not suggesting you host events just to peddle your stuff.  The event should need to exist and focus on delivering value to the audience.

Event #2: SFBeta “DeveloperWeek Edition,” February 4

What it is: SF Beta is a bi-monthly mixer held at 111 Minna, a bar-cum-art gallery in the SOMA area of SF. Roughly a dozen startups set up demo tables, and it draws about 150 attendees. This event was held to coincide with Developer Week, and it focused on platforms and APIs.

What I did: I printed up two Foundersuite t-shirts from Zazzle-- one for me, and one for my product guy, Victor. Huzzah! We were official! I also printed up stickers and business cards, and I brought along a 27” Apple monitor. At the event, we put out a cardboard box and offered free beer for developers in exchange for their business card, and we ran demos of the product all night.

Result: This event served as a good catalyst to finally get our “game face” on and produce some marketing collateral. It also forced us to polish and tighten our pitch. In the end, we got about 40 new beta users to sign up. In addition, we made friends with a few external developers, and got their perspective on the product vision-- useful, since we eventually plan on opening up an API.

What I could've done better: Realistically, it was too early for us to start courting developers; although there was interest in building on Foundersuite, there’s nothing for them to do (yet). It might be tough to re-engage later.

Cost: $250 for the demo table, $88 for shirts, and $100 for stickers and cards. Also about $60 for follow-up beers with a couple engineers.

Takeaway: Find a small or low-key event for your first “coming out” party; use it as a shakedown cruise to tighten the screws and hone your messaging.

Event #3: VatorSplash, February 13

What it is: VatorSplash is an evening event of about 400 attendees that includes an on-stage startup pitch competition, a keynote, and VC panel discussions. There is also a demo pit for 30 companies. It’s held about 3 or 4 times a year in SF, LA and New York.

What I did: Because Vator was held only a week after SFBeta, I basically recycled the demo table setup. For extra visibility, I printed a large foam board placard at Kinkos and duct-taped it to the wall behind the table.

Result: The demo pit was somewhat empty, except during intermissions. Nonetheless, we had a strong run of investors stop by and check out our software. These visits led to a couple great follow-up meetings with guys like Mike Walsh and George Babu, both of whom provided some awesome feedback. We also signed on about 40 new beta users.

What I could’ve done better: I should have hired someone to run the booth, as the action was really in the main ballroom. Also, the event had an after party featuring the BSD-heavy band, Coverflow-- think VCs and ex-Facebook execs. If I’d been really ambitious, I would’ve rallied for some additional networking fun.

Cost: Zero. My friend Russ Bertuccelli was one of the sponsors and hooked me up with a free table, and we used the collateral left over from SF Beta.

Takeaway: Don’t be discouraged if a demo event is slow or mellow; it's the quality of the interactions that matters, not the quantity.

Event #4: Launch.co Festival, March 4, 5, 6

What it is: Along with TechCrunch Disrupt and DEMO, the Launch Festival is one of the largest startup events of the year. It’s put on by consummate hustler and promoter Jason Calcanis, and is held at the cavernous Design Center.

This thing was massive-- 50 companies demo’d their wares on stage over the course of three long, grueling days. The organizers claim 6,000 people registered, and I’d estimate that at peak times, close to 4,000 were actually there. The list of VC judges and sponsors reads like a startup founder’s dream. In short, this was showtime.

What I did: First let me start off with what I didn’t do-- I didn’t land a spot on stage, though not for lack of trying. I used LinkedIn to see how I was connected to Jason, and then worked every connection, avenue and back-channel to get intros and endorsements. He was responsive, but no stage time for me; however, I did get a free demo table out of these efforts.

Since this was such a large show, we pulled out all the guns. I brought along Victor and also hired my charismatic friend Rebecca Harris to run the booth with me, and that was money well spent. Not only did she master our pitch in about 15 minutes, but it allowed me to get out and wander the halls, which led to some great strategic partner discussions.

We also ran a “mildly guerrilla” marketing campaign at the show; for example, we changed our tagline from the plain “Startup Management Software” to the more provocative “Tools To Get Startup Sh*t Done” and plastered this slogan on our t-shirts, materials, and signage. Right before each lunch break, I would fan a dozen Foundersuite stickers on the lunch tables, which surprisingly, drove a number of people to our booth, while Rebecca did the same at the coffee stations.

Result: This show set in motion several things that, four months later, are still paying dividends. For example, we did a deal with Hack Reactor to use their students for a few projects. We also landed a free Ruby engineer for the summer via a deal with Innovation Norway. I met the folks from Draper University, which led to a speaking gig to their entire student class, and we struck marketing partnerships with two incubators. In addition, we gained about 150 new users and collected an absurd amount of feedback and new product ideas from the hundreds of folks who stopped by our booth.

What I could’ve done better: I still ruminate on how we could have better hacked the application process to land a spot on stage; we were probably dinged a few points when we temporarily took down the beta wall, as Jason saw it and called us on it (this conference is aimed at startups in stealth, who are making their first real debut).

Having a dubstep-blasting rainbow bubble machine (or at least a full-size banner display tower) might have helped, as the level of professionalism WRT booth accessories was a notch higher here-- our neighbor had a futuristic police car with a siren and flashing lights, while we were still using our cardboard box with the “Drop Your Card, Win Free Beer” call to action written on the side in red marker.

Cost: Parking was $15 per day x 3 days = $45. Rebecca cut me a deal and charged $240 for two days of demo help. New T-shirts and other collateral was about $100.

Takeaway: If you pay for-- or get selected into-- one of the large demo events, don’t hold back; such events can “make” your fledgling company.

Event #5: SFNewTech, April 24

What it is: SFNewTech is one of the longest running demo events around. Once a month, six new startups take the stage for an efficient format: 5 minutes of live product demos, followed by 5 minutes of audience Q&A. It’s a fun and casual vibe, held at a nightclub.

What I did: I got a slot as the third speaker to take the stage. Since Foundersuite has a lot of moving parts-- e.g., we have 4 separate software modules as well as template collections-- it was a challenge to demo it all in under 5 minutes. Thus, I gave a super-quick, high-level summary of everything, then drilled into one module, Investor CRM, to show the user flow.

During the demo, I focused mainly on the value proposition for the founder-rich audience. I also spent roughly 20 seconds of the opening explaining why we’re doing what we’re doing-- our mission-- and about 20 seconds at the end showing where we’re going next, which was a nice way to “bracket” the core content of the demo.

Result: This event generated about 55 new users, some great social media activity, and we got a cool video out of it. Also, a writer for Venture Beat was in the audience; he followed up afterwards, and we gave him the exclusive on our launch coverage.

What I could’ve done better: I wish I’d lost about ten pounds and got a decent night’s sleep before going on stage. :)

Cost: Free; the ringleader, Myles Weissleider, is a friend.

Takeaway: Getting stage time in front of a large audience of target customers is extremely efficient marketing.

...and that’s how we successfully hacked our launch. Net-net, our results by the numbers:

5 pitch events

~5000 relevant people exposed to our product

~300 new users of our product + an additional ~500 new users via viral loops

2 partner deals

1 speaking gig

3 interns, all technical

1 major media placement (and several smaller ones)

Lots of fun and new friends

---------------------

Total cost: $883

...a pretty decent ROI, IMO.  But remember, your mileage will vary (I had some inside connections which kept costs relatively low)

Nathan  @foundersuite @startupventures

Want more? For the extended mix, I now present “Key Tips & Lessons Learned”:

Use the novelty of being the “new new thing.” The period between your private beta and your public launch is a special time, when interest levels and curiosity about your startup run unusually high; you basically have a brief window where you can leverage the lure of the “sneak peek” to effectively generate buzz, get feedback, and make friends. Use it to your advantage.

Be an all-consuming, feedback-eating machine. Events are Customer Development on steroids-- so figure out a structured, efficient way to collect and process the avalanche of feedback and ideas you will get. To be honest, we didn’t do a great job of this-- I’m still finding business cards and scraps of paper with user comments scribbled on the back. But the feedback we were able to process has been priceless.

 

Play to the motivations of the event producers. Almost all of the event organizers I worked with were cool people, genuinely motivated to see startups succeed. But they are also building their brands, and / or trying to turn a profit on their productions. They are looking for interesting companies that people will talk about, and in doing so, create a halo effect around their event. Be that interesting company. Make it memorable for their audience.

Pay it forward. You may have noticed that I was “hooked up” for free at nearly every event; this wasn’t by accident. In most cases, when someone set me up with a demo table or pass, it was 10% because I’m a nice guy, and 90% because I’d helped him or her out on some previous initiative. No one’s keeping score; but when you’ve been paying it forward long enough, it’s amazing how receptive your network is to helping out when it’s your turn to ride the startup roller coaster.

 

Being cheap increases your ROI. Demo events are fun a great way to engage potential users and investors in a casual, low-risk way. But they take a lot of time and energy; in the case of the bigger ones like Launch Festival, they suck up the better part of a week. They can also be expensive-- TechCrunch Disrupt Startup Alley will set you back $1995. Work your network for the free booth hookup, or ask the producers for the “pre-funded startup” rate. Volunteer to work the door in the morning, or offer to promote the event to your network for a free pass. (Related note: It helps to have built a network that folks are interested in leveraging).

Start the SEO clock ticking. Many startup founders repeatedly delay their launch because they’re not “ready,” and I definitely get the desire to avoid putting out a bunch of crap too soon, as public scrutiny can be brutal. But as Paul Graham eloquently writes, startups need to release early and often; in addition to getting user feedback, there’s a ton of value in making some noise and laying down an online presence early in the game. For example, it helps you to establish your social media voice (something we did way too late). Also, getting your logo on a few high-traffic sites will help boost your SEO; both the Launch Festival and SFNewTech events are still driving a steady flow of organic traffic.

 

Still here? Color me impressed. I’ll leave you with a few tips for hacking your onstage pitch and demo booth:

Make your demo short and sweet. Get your product demo to < 3 minutes (5 minutes max). Keep it high level-- skip all the tiny product features and nuances that are important to you, but often turn into a confusing rat hole for people seeing your product for the first-time. With a shorter demo, not only will you be able to talk to more people over the course of the show, but you’ll have better attention and retention of what you’re offering.

End with a call to action. What do you want people to do after they’ve listened to your demo? Do you want them to register on your site? Introduce you to users? Give you feedback? Invest in you? The CTA may differ depending on who’s listening; for example, at the SFBeta event, we printed two giveaway cards, one for developers and one for users. Each had a specific call to action of what we wanted to happen next. Bottom line: if you don’t have an “ask” connected to your demo, then you’re just expelling warm air and sound.

WIIFT? For on-stage demos, build your pitch story line using the “what’s in it for them” framework (them being the audience). In other words, don’t show what your product does; rather, explain how it benefits your users, who ideally-- if you’ve picked your event right-- are also the folks listening to you onstage. If you can’t use the WIIFT approach, at least explain why you’ve built what you built. People love origin stories and mission-driven companies.

Staff appropriately. Always have at least two people giving demos-- crowds come in waves, and a solo founder won’t be able to efficiently process the queue. But never have more than three booth staffers out front-- that just makes for a crowded booth and will scare people off.

Usher along the salesmen. One of the annoying parts about having a table or booth is that you’re “captive prey”, and inevitably, you’ll get booth visitors who feign interest in what you’re doing, but who are really trying to sell you something-- banking, insurance, HR services, etc. Without being an ass, quickly end the conversation by asking for their card, saying, “awesome-- thanks for stopping by” and shaking their hand. Remember why you’re there: to talk to as many interested, relevant parties as possible. Keep the pipeline flowing.

Be polite (ish) to competitors. Another annoying element of the demo table is when competitors come sniffing around. A key identifier is when a person has obviously intentionally turned their name badge around, or tucked it under their sport jacket. I don’t suggest you worry too much about this-- most attractive markets are plenty big enough for multiple firms. But one way of heading this off is by asking them where they work before launching into your demo-- then if it’s clearly a competitor (or an investor in a competitor), give the abridged demo version without the secret sauce.

Have fun with it. You’re living the dream, pitching and hustling your startup baby. ‘Nuff said.

<END. Really.>

Topics: guest marketing
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9 Reassuring Qualities Of The Truly Confident

By Dharmesh Shah on July 3, 2013

Do you sometimes lack confidence?  Good.  Because truly confident people sometimes feel insecure.  They sometimes feel uncertain.  Show me someone who claims they are confident all the time and I'll show you someone who's not truly confident.

First things first: Confidence is not bravado, or swagger, or an overt pretense of bravery. Confidence is not some bold or brash air of self-belief directed at others.

Confidence is quiet: It’s a natural expression of ability, expertise, and self-regard.

I’m fortunate to know a number of truly confident people. Many work with me at HubSpot, others are fellow founders of their own startups some of whom I've met through my angel investment activity. But the majority are people I’ve met through my career and who work in a variety of industries and professions.describe the image

It comes as no surprise they all share a number of qualities:

1. They take a stand not because they think they are always right… but because they are not afraid to be wrong.

Cocky and conceited people tend to take a position and then proclaim, bluster, and totally disregard differing opinions or points of view. They know they’re right – and they want (actually they need) you to know it too.

Their behavior isn’t a sign of confidence, though; it’s the hallmark of an intellectual bully.

Truly confident people don’t mind being proven wrong. They feel finding out what is right is a lot more important than being right. And when they’re wrong, they’re secure enough to back down graciously.

Truly confident people often admit they’re wrong or don’t have all the answers; intellectual bullies never do.

2. They listen ten times more than they speak.

Bragging is a mask for insecurity. Truly confident people are quiet and unassuming. They already know what they think; they want to know what you think.

So they ask open-ended questions that give other people the freedom to be thoughtful and introspective: They ask what you do, how you do it, what you like about it, what you learned from it… and what they should do if they find themselves in a similar situation.

Truly confident people realize they know a lot, but they wish they knew more… and they know the only way to learn more is to listen more.

3. They duck the spotlight so it shines on others.

Perhaps it’s true they did the bulk of the work. Perhaps they really did overcome the major obstacles. Perhaps it’s true they turned a collection of disparate individuals into an incredibly high performance team.

Truly confident people don’t care – at least they don’t show it. (Inside they’re proud, as well they should be.) Truly confident people don’t need the glory; they know what they’ve achieved.

They don’t need the validation of others, because true validation comes from within.

So they stand back and celebrate their accomplishments through others. They stand back and let others shine – a confidence boost that helps those people become truly confident, too.

4. They freely ask for help.

Many people feel asking for help is a sign of weakness; implicit in the request is a lack of knowledge, skill, or experience.

Confident people are secure enough to admit a weakness. So they often ask others for help, not only because they are secure enough to admit they need help but also because they know that when they seek help they pay the person they ask a huge compliment.

Saying, “Can you help me?” shows tremendous respect for that individual’s expertise and judgment. Otherwise you wouldn't ask.

5. They think, “Why not me?”

Many people feel they have to wait: To be promoted, to be hired, to be selected, to be chosen... like the old Hollywood cliché, to somehow be discovered.

Truly confident people know that access is almost universal. They can connect with almost anyone through social media. (Everyone you know knows someone you should know.) They know they can attract their own funding, create their own products, build their own relationships and networks, choose their own path – they can choose to follow whatever course they wish.

And very quietly, without calling attention to themselves, they go out and do it.

6. They don't put down other people.

Generally speaking, the people who like to gossip, who like to speak badly of others, do so because they hope by comparison to make themselves look better.

The only comparison a truly confident person makes is to the person she was yesterday – and to the person she hopes to someday become.

7. They aren’t afraid to look silly…

Running around in your underwear is certainly taking it to extremes… but when you’re truly confident, you don’t mind occasionally being in a situation where you aren't at your best.

(And oddly enough, people tend to respect you more when you do – not less.)

8. … And they own their mistakes.

Insecurity tends to breed artificiality; confidence breeds sincerity and honesty.

That’s why truly confident people admit their mistakes. They dine out on their screw-ups. They don’t mind serving as a cautionary tale. They don’t mind being a source of laughter – for others and for themselves.

When you’re truly confident, you don’t mind occasionally “looking bad.” You realize that that when you’re genuine and unpretentious, people don’t laugh at you.

They laugh with you.

9. They only seek approval from the people who really matter.

You say you have 10k Twitter followers? Swell. 20k Facebook friends? Cool. A professional and social network of hundreds or even thousands? That’s great.

But that also pales in comparison to earning the trust and respect of the few people in your life that truly matter.

When we earn their trust and respect, no matter where we go or what we try, we do it with true confidence – because we know the people who truly matter the most are truly behind us.

So, what do you think?  Are there qualities of truly confident people that I've missed?  Would love to read your thoughts in the comments.

Note: The original version of this article was published as part of my participation in theLinkedIn Influencers program.  The article was very well received. It got 1.1 million views and has generated 4,000 comments.  This is v2 of the article with some minor edits. -Dharmesh

Topics: leadership
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The Long Shadow Of The Valley Reaches Berlin

By Dharmesh Shah on June 26, 2013

This following is a guest post by Jonathan Gebauer.  Jonathan is the founder/CEO at exploreB2B, based in Berlin, Germany.  

There is a lot of talk about startup hubs world wide – the places where the next Facebook will originate from, the next Instagram, the next Pinterest. I am from one of these places, Berlin, the capital of Germany. There is no lack of technology startups in this city.

But to be a place where new technologies and innovations thrive – well, there are a lot of things missing.

I was born in Berlin, I live here and we founded exploreB2B here. I breathe the air of this city and feel at home. But when we started, the air tasted different – I thought I could feel a vibe in the air that consisted of innovation in the startup scene. Today I know: this taste was more hype than vibe.shadow megaphone

A story that got me thinking

Let me start with something that has recently happened to us, and which inspired me to write this article. I received an email from a US based VC which read: “Hey, we love what you are building at exploreB2B, let us know if you would like to talk to us.”

(I am sure Silicon Valley startups receive these every week.)

So far so good – naturally I wrote back. When they found out that we are located in Germany everything turned stone cold. They replied how sorry they were but since we are located in Germany, they would need to inform their European team and they would get in touch.

Their European team never got in touch. So far, not so global.

This is no big deal – it just got me thinking. Why is it that the European arm of a Venture Capital firm seems to think and act so differently from their U.S. counterparts?

This also was not the first time something like this happened to us. The story of our PR failures has already been published. We Berliners often make ourselves believe that Berlin will become the “next Silicon Valley” – but being second does not matter. Silicon Valley is not going away – so: who cares about Berlin?

The exceptions: Berlin startups that reached international fame

There are, of course, exceptions to the general rule. Innovative tech companies that reach international fame and success. Let me list the few that come to my mind: Soundcloud, ResearchGate, Aupeo, Wooga.

The same timespan in the US has brought us: Facebook, Instagram, Pinterest, Dropbox, Zynga, Box, Yammer, Foursquare, Twitter, Quora, Groupon, LinkedIn… The list goes on.

There are a lot of things missing here. And the successful cloning of successful US startups (which happened with Facebook, LinkedIn, Groupon, and many more here in Germany) is not the same as innovation.

Tech is not global – why no startup hub can really prosper without Silicon Valley’s support

 

At first glance, Berlin seems to have it all. There are startup competitions every other day, meetups, hackathons, conferences, … There is a network of business angels and investors, the city has had a couple of exits recently. A couple of tech blogs write about the city’s tech companies (both in German and English). With Ashton Kutcher’s not-so-recent investments in Amen and Gidsy a slice of Hollywood glamour was introduced. The area in the city center where most startups reside likes to be called “Silicon Allee” now – noting a resemblance to Silicon Valley.

There also is a lot of talent in the city – talent, which startups can hire. Three universities and multiple “Fachhochschulen” offer a supply of well educated developers and marketing minds while the city’s historic background shows a tradition for risk-taking – including the risk to start your own company.

But technology and innovation needs more than just founders and employees.

It needs a community and this community needs to include established tech people and companies as well as access to the traditional economy. Not just people who are new to the industry but also professionals from companies of any size and stage. It needs access to the likes of Apple, Microsoft, Google. You need to be able to see the shining light of Bill Gates talking on stage. You need investors who have a crap-load of money to invest on nothing but a crazy idea and feeling in their gut. You need access to marketing experts that can give advice, to tech companies that provide exit perspectives.

Berlin does not have those things.

Silicon Valley can provide this to other so called startup and tech hubs. It does so in some cases. But other tech hubs currently only exist by way of Silicon Valley’s support. They get as big and as successful as Silicon Valley allows them to be.

We Berliners might not admit that this is a fact, but we do know it in our hearts. A common first prize in our startup competitions is a trip to the valley. Or office space in the valley. Or a trip to attend a tech conference Or… You get the picture.

The consequences for young companies

 

This situation forces companies in other startup hubs to adjust. In Germany, the Samwer brothers face a lot of criticism for their cloning operations of international and US startups. It is true: they have been involved in cloning Groupon, Facebook, Zappos, Pinterest, Fab, Amazon, and many more. What is also true, is: This is a way to deal with our situation. Cloning companies also means you have access to information on how marketing strategies will perform and how you can achieve growth. When expertise and support is lacking, this is a valid way to replace it.

Another strategy is to prepare for an early exit. Selling your company early for comparatively small sums seems to be quite common in Germany – creating concepts for a global approach is not. The latest example for this is the formerly hyped startup Gidsy (which got famous by the Ashton Kutcher investment) – which just sold out to a competitor in a not so glamorous way.

There is no tech community in Berlin – just a startup community. This makes it hard for companies to break out of the startup hemisphere. Gidsy was criticized for its lack of professionalization, but you have to ask the question: How can a group of crazy founders get professional if there is no community to help with the process?

The few exceptions to these rules are companies and founders that usually readjust their geographic locations sooner rather than later. Soundcloud has offices nearly everywhere, others are moving their operations to San Francisco.

How to bend the rules: A way out for those that still want to think big

 

I do not like rules that cannot be bent – and I do not like to go small when others hit it big. I like to compete and I do not like failure. I did not invent exploreB2B for a small audience and I do not want to think small. In a world where creative minds are thinking up solutions, there are always options to become more competitive.

Those of us being unlucky enough to have founded our companies in places like Berlin, London, Paris or Sao Paolo still have a lot of options – the whole tech industry was created by people who bent the rules but refused to be bent by them.

In the beginning I told you about a VC not noticing where we are located – well, this sort of thing happens to me all the time. I receive emails, tweets, Facebook messages asking me whether I will be able to come to a meetup in San Francisco, or New York, or London… I always answer: “Hey, I am in Berlin.”

Most of the time the next message is: “Ok, give me a call when you are back.”

The way out for us is to stop worrying about Silicon Valley. In today’s world it is like any other place in the world: a place on the map.

I get emails from London, have Skype calls with bloggers in France, worked with a PR agency in the US (that didn’t go so well…), had articles published on an Australian blog (Big thank you to Jeff Bullas).

The community we need is there – you do not have to see people face to face to be able to get their advice. When you are creating a company on a global scale stop thinking narrow. Never limit yourself to the things you can do in your city.

By doing that we will force Silicon Valley to do the same. The big investments might not yet have reached our startup hubs, but they will come.

We need to stop picturing ourselves in direct competition with Silicon Valley – Berlin will never become “the next Silicon Valley”. But it does have its own strengths. As does London, as does any other city in the world. Each one of those places should play on its own strength – instead of highlighting its shortcomings in comparison to the Bay Area.

For Berlin, I can think of a lot of strengths: the talent supplied from universities, its geographic position and its history of being a place where eastern and western Europe unite, its history of being a place where people take risks.

We need to play our local strengths – and remove our weaknesses by acting globally.

Think less local.

We are entrepreneurs, we are founders, we are innovators. We were born to break the rules

What's your take?  What should entrepreneurs do to make tech innovation truly global?

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12 Unconventional Interview Questions Entrepreneurs Should Ask

By Dharmesh Shah on June 5, 2013

Where potential employees are concerned, obviously skills are important. Yet we’ve all seen fabulously talented individuals become a team that was far less than the sum of its parts.

While expertise is important, cultural fit can be just as – if not more – important. It's something we obsess over at my company, result in what we call our Culture Code (that describes how we think about talent and culture at HubSpot).job interview small 2

As a result your interviews should focus on more than just skills and qualifications. You also need to ask questions to probe whether candidates will fit into your organization: Are they likely to play well in your particular sandbox? Will their work style and personality complement your team?

Will they not just survive but thrive in a fast-paced, often-chaotic startup environment?

Do your homework before the interview and you should already have a good sense of whether the candidate has the right blend of skills and experiences to be able to do the job well. So definitely dive deeper into an exploration of talent and expertise, but also ask questions to determine whether the candidate can do the job well in your organization – because hiring even one employee who doesn’t fit your culture creates a culture debt you may never pay off.

Keep in mind how the candidate answers is important, but the conversations that follow– since a great interview is a conversation, not an interrogation – can reveal even more:

1. “What concerns do you have about our company?”

Strange question? Not really. No company – and no job – is perfect for any employee (even its founders.) Every company and every job has its challenges and potential downsides.

The candidates you want to hire don’t think your company is perfect; they’ve done sufficient research to know that while yours is not the perfect company and the job is not the perfect job, yours is a company they want to work for because they can thrive, make a difference, develop and learn and grow and achieve… and be a key part of taking your company to even greater heights.

And as a result they’re willing to honestly share their concerns – because they trust you run a company that values openness, honesty, and transparency.

2. “What is the toughest decision you had to make in the last few months?”

Everyone makes tough decisions. (Well, at least everyone you want to hire does.)

Good candidates made a decision based on analysis or reasoning. Great candidates made a decision based on data and on interpersonal considerations – because every important or meaningful decision, no matter how smart it looks on paper, eventually has an effect on and must be carried out by people.

A company at its core is made up of people. Great employees weigh both sides of an issue, considering the “business” aspects as well as the human impact.

3. “Tell me about a time when you had to slog your way through a ton of work. How did you get through it?”

We all are required to at least occasionally place our noses on the grindstone. Most people can slog through the drudgery because they have to.

The candidates you want to hire can take on a boring task, find the meaning in that task, and turn it into something they want to do.

Great employees turn the outer-directed into the self-directed – and in the process, perform at a much higher level. And gain a greater sense of fulfillment.

On the flip side…

4. “What were you doing the last time you looked at a clock and realized you had lost all track of time?”

We do our best when a task doesn’t feel like work but feels like what we are meant to do.

I have never met an exceptional candidate that didn't at one point have this feeling where time didn't matter. Call it being “in the zone” or “flow” or whatever you want — all great people experience it.

This ability to commit passionately to a project/task is particularly important for high-growth businesses. These moments of high-creativity and high-productivity are often when the best ideas come.

Explore what candidates feel they were meant to do. A lack of experience is less important when a candidate has hunger and drive. And, if someone isn't passionate enough aboutsomething (whether it's related to their job or not) you should worry as to whether there's anything at your company that is going to get them fired up.

Why? You can teach skills… but you can’t teach love.

5. “Describe a time you felt you were right but you still had to follow directions or guidelines.”

Surprisingly, this question can be a great way to evaluate a candidate’s ability to follow and to lead.

Poor candidates find a way to get around the rules because they “know” they were right. Or they follow directions but allow their performance to suffer because they don’t believe in what they’re doing. (You’d be surprised by how many interviewees will admit they didn’t work hard because they felt angry or stifled and expect you to feel their pain.)

Good candidates did what needed to be done, especially if time was of the essence, and later found the right moment to bring up the issue try to improve the status quo.

Great candidates did what needed to be done, stayed motivated… and helped others stay motivated and get things done, too. In a peer environment, an employee who is able to say, “I’m not sure what we’re doing makes perfect sense, but it might, so let’s knock it out!” is invaluable.

In a leadership environment, good leaders are able to debate and argue behind closed doors and then fully support a decision in public, even if they (privately) disagree with that decision.

No employee agrees with every decision, every process, every “best practice”… what matters is how they react and perform when they don’t agree.

6. “What book do you think everyone on the team should read?”

This is one of my favorite questions. It's partly because I just love books and always looking for new ideas — but partly because most great people always have had a book that they found to be super-useful and like sharing with others. If the person can't think of a single book that they'd recommend to others, that's a warning sign. Either they don't enjoy reading — or possibly, they don't think that the kinds of things they need to learn can be found in books. Both worry me.

Curiosity is a wonderful indicator of intellect and, oddly enough, modesty, because curious people are willing to admit they don’t know and are then willing to work to learn what they don’t know. Curious people also tend not to be cynics (see “Skeptics vs. Cynics: Which Are Toxic?”).

Every business needs employees who can set their egos aside and ask questions. Every business needs employees who are willing to say, “I don’t know how – can you help me?”

7. “Tell me about a time you felt company leadership was wrong. What did you do?”

I certainly don’t have all the answers. And I’m definitely not always right. So I want people to question my perspectives; push back when I come to conclusions; ask, “Why?” and, sometimes more critically, “Why not?”

Power is gained by sharing knowledge, not hoarding it, so we make uncommon amounts of information available to everyone in my company, HubSpot. We don’t want to just “win” debates. We want to be right. We want to make smarter decisions and support smarter behavior.

So we want employees who aren’t afraid to take that information and run with it… and challenge, in a healthy way, each other and executive leadership. Especially executive leadership.

8. What does, “This parrot is no more!” mean to you?

Walk around some companies and you’ll hear Monty Python (the quote above), or Office Space, or Spinal Tap, or Seinfeld quotes tossed around all the time. That’s because recognizable quotes are like verbal shorthand, getting across in one or two sentences what normally takes much longer to explain. And, speaking of Seinfeld (of which both my co-founder and I are fans), one of the quotes we use all the time is “Why don't you just tell me the movie you want to see…” (from the classic MoviePhone episode).

The candidate doesn’t have to recognize the quote or cultural reference you make. In itself that’s not important – but if your team has, say, a quirky sense of humor, it’s awesome if the candidate does, too.

And just in case you don’t get much of a response to this question, go to…

9. “What movie, no matter how many times you’ve seen it, do you have to watch when it’s on?”

Same thing. A favorite movie can indicate a lot about a candidate’s personality. I can watch Moneyball over and over because it’s an entertaining movie filled with lessons on business and entrepreneurship.

One candidate may love a story about overcoming the odds. Another may love a comedy. Doesn't matter. The question really helps you learn more about the person (not their skills). This question often leads to a fun, engaging conversation.

10. “Tell me about the last time a co-worker or customer got angry with you. What happened?”

When your company is focused on getting (stuff) done conflict is inevitable. The candidate who pushes all the blame – and the responsibility for rectifying the situation – on another person is one to avoid. Better is the candidate who focused not on blame but on addressing and fixing the problem.

Best of all are the people who admit they were partly or completely at fault (because it always takes two to do the conflict tango), took responsibility, and worked to make a bad situation better.

Every business needs employees who will admit when they are wrong, take ownership for fixing the problem, and most importantly learn from the experience.

11. “What business would you love to start?”

Startups naturally attract entrepreneurs-in-training. That’s awesome: Sure, they may leave someday to start their own companies, but in the meantime your business benefits from their entrepreneurial spirit, drive, and attitude.

And they’re much more likely to fit in to your organization, since they immediately embrace the differences in working for a startup rather than a corporation.

What type of business they would like to start may not matter; what does matter is the fact they have ideas and hopes and dreams – because if they do, they will bring those ideas and hopes and dreams to your business.

12. “What would you most like to learn here that would help you in the future?”

This is somewhat of a follow-up to question 11. If they do have a startup in mind that they'd love to start someday. It's revealing to figure out where they think they need help (finance? marketing? sales?) The other benefit of this question is that it sends a signal to the individual that we care about growing people. The saying at HubSpot is “We don't want to just build a great company, we want to build great people.”

Now it’s your turn: Take a look at the qualities and attributes of your top performers. Think critically about the business culture you’re trying to create. What questions should you ask – and what conversations should you try to spark – that will help you identify the qualities and attributes your business needs? Yours may be different than these – which only makes sense since every company and every company culture is different.

And in the comments below, please share unconventional interview questions you like to ask!

Topics: recruiting
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14 Revealing Signs You Love Your Startup Job

By Dharmesh Shah on May 23, 2013

You may not be frequently giving out an embarrassingly gushing smile and you might not write little love notes during your lunch break. But, there are ways to tell if you love your job.

Of course, no job is perfect -- even the best of relationships have their down days. We all have to do things we don’t like. I love working at HubSpot, it's the best job I've ever had (but, that's by design). But, even I have “off” days where I'm not spending all my time doing things I absolutely love.love my job small

So all of the following may not be the case all of the time.  But when you love your job, many of the following should be the case much of the time:

1. You don’t talk about other people; you talk about the cool things other people are doing.

“I hear Michelle has really improved our customer happiness scores.” or  “I’d love to know how Mike managed to rescue that sale.” “Sherry developed a new tool that's made our lives so much better.”

When you love your job you don’t gossip about the personal failings of others. You talk about their successes, because you’re happy for them – and because you’re happy with yourself.

2. You think, “I hope I get to…” instead of, “I hope I don’t have to…”

When you love your job it’s like peeling an onion. There are always more layers to discover and explore.

When you hate your job it’s also like peeling an onion – but all you discover are more tears.

3. You see your internal and external customers not as people to satisfy but simply as people.

They aren't numbers. You think of them as real people who have real needs.

And you gain a real sense of fulfillment and purpose from taking care of those needs.

4. You enjoy your time at work.

You don't have to put in time at work and then escape to life to be happy. You believe in enjoying life and enjoying work.

When you love your job, it’s a part of your life. You feel alive and joyful not just at home – but also at work.

5. You would recommend working at your company to your best friend…

In fact, you can't stop talking about how cool your company is and the awesome work you're doing even when you're away from work. Your friends and family are envious.

6. You enjoy attending meetings.

No, seriously, you enjoy meetings. Why? Because it’s fun to be at the center of thoughtful, challenging discussions that lead to decisions, initiatives, and changes – changes you get to be a part of.

7. You don’t think about surviving. You think about winning.

You don't worry much about losing your job. You're more worried about not achieving your potential. Not being as impactful as you can be.

8. You see your manager as a person you work with, not for.

You feel valued. You feel respected.

You feel trusted.

9. You don’t want to let your coworkers down.

Not because you’ll get in trouble or get a bad performance review, but because you admire them – and you want them to admire you.

10. You hardly ever look at the clock.

You’re too busy making things happen. When you do look at the clock, you often find that the time has flown.

11. You view success in terms of fulfillment and gratification – not just promotions and money.

Everyone wants to be promoted. Everyone wants to earn more.

You definitely feel that way too… but somewhere along the way your job has come to mean a lot more to you than just a paycheck. And if you left this job, even if for a lot higher salary… you would still miss it.

A lot.

12. You leave work with items on your to-do list you’re excited about tackling tomorrow.

Many people cross the “fun” tasks off their to-do lists within the first hour or two.

You often have cool stuff – new initiatives, side projects, hunches you want to confirm with data, people you want to talk to – left over when it’s time to go home.

13. You help without thinking.

You like seeing your colleagues succeed, so it’s second nature to help them out. You pitch in automatically.

And they do the same for you.

14. You can't imagine being somewhere else.

You're having too much fun.  Learning too much.  

How many of the above statements apply to you and your job?

If you said:
0-3: You may want to find a new job. Life is too short.
4-6: You don't hate your job... but you don't love it either. What can you do differently?
7-10: You really enjoy your job and the people you work with
11-14: You are deeply, madly in love with your job! (and your friends are definitely jealous!)
Topics: culture career
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The Why and How Of Updating Your Angel Investors

By Dharmesh Shah on May 20, 2013

There’s a massive amount available on the interwebs on how to improve the odds for success in new ventures. But almost nothing concrete is available on the care and feeding of your investors. You can do all of the Lean Startup experimentation you want, but we’re here to tell you that one of the the easiest and most underrated skills that a startup CEO needs is knowing how to keep your investors updated, excited and engaged.good news bad news small

The reason is:  The CEO is the investor's  user interface into the business.  It's how investors see what's going on, and in some minimal ways, interact with the business.

We polled several early stage investors (including ourselves) that have 30+ investments each under their belts, and asked them their advice for entrepreneurs on how best to communicate with them and update them on the business. Here are the results.

1) Write your investors consistently. probably every 1-2 months (if you're early stage), and every 2-3 months if you're a bit further along. If you have a regular advisory board or board of directors meetings, that's a good time to send out an update. This is preferable to phone calls, both for you and for them. If you’re smart, you’ll send this letter out, in more or less similar form, not only to your investors but also to mentors, advisors and staff. And if you do ever follow up with calls, they’ll be up to speed and more productive.

2) Keep it short. 2 pages, max. Your investors want to know what’s going on, but they don’t need to hear every detail.

3) Use a template. We like the TechStars one. Katie Rae and Reed Sturtevant of TechStars Boston teach their companies to communicate with mentors in a way such that each letter builds on the previous one. Typically, the letter gives both highlights and low-lights since the previous communication, sets some short term goals, and then reviews the progress—or lack thereof—on the goals set earlier. Just knowing that you will be producing a report card helps focus you on the important stuff and ensures that things don’t get forgotten. Check out the investor update template for a sample.

4) Remind them what you're doing (now).  I know this is going to sound strange, but often your investors are not doing as good a job as they could keeping up with all your activities, news, tweets and pivots.  Always include a one sentence description of what you're doing (now) just as a friendly reminder.  A side benefit to this is that it forces you to write (and read) your one sentence description.  This is one of the hardest tasks in startup-land.

5) Tell them the one or two strategic problems you are wrestling with. Got a few hard decisions? You’d be surprised how quickly an investor will respond. And odds are pretty good that they’ve seen this movie before and can help you come to a better decision. If it’s personnel-related, though, you may wish to be more circumspect.

6) Keep it honest, but don’t tell your secrets. Would you be comfortable if this email ended up in public, or in the hands of your competitors? If not, consider editing it down.

7) Always have 1-3 direct asks. Looking for some specific introductions? Ask. Need to source some key personnel? Ask. Want them to share some important news on their social media networks?  Don’t be proud, don’t be shy, just ask. 90% of the time, the investor will probably not be able to help, but in the 10% of the time they can help, it's often pure gold.

8) Cast a wide net, but bcc. The more people you can keep up on your company, the more likely it is someone will be able to help you out, and the more you can leverage your network. But respect your investors’ privacy, and make sure you are not revealing any confidences in the letter. (I still screw this up—when in doubt, leave it out.) One idea would be to setup a simple mailing list so you're not trying to type in email addresses manually every time.

9) ARCHIVE all correspondence in a shared folder. Your investors will be grateful that they don’t have to be organized. This tip is so simple, yet almost no one does this. Your investors have more on their plate than just you. Make it easy on them by putting everything they need to see into one folder which they can reference. Send each letter by email (don’t make them have to hit links or print out attachments,) but include a link to the shared folder with the full archive. Inside, have all of your historic correspondence, and perhaps even your latest pitch deck, any financials you want them to see, etc. You might consider having two separate folders—one complete one, for the inner circle, and one that’s been redacted down for the broader crowd.

Startups fail for lots of reasons— but one of the most common one is that they run out of money. Informed investors are generally happier investors—and at a minimum more capable of helping. And, if you're out raising another round sometime, chances are, your angel investors are the one's that can help make intros. It's easier for them to do that if they hear from you more often than once every 12-18 months when you need some paperwork signed.

Remember, this exercise is as much for you as it is for them.  

This entire process should take you less than an hour or two a month and it's worth it. Besides, if you do it right, you'll actually find that it helps you to write these updates -- and it's not a complete waste of time.  

This article was a collaboration between Ty Danco and Dharmesh Shah. Ty is CEO/co-founder of BuysideFX and an angel investor/mentor (you should be reading his blog). Dharmesh is founder/CTO of HubSpot, runs OnStartups.com and is an angel investor in over 40 companies (you can follow him on twitter @dharmesh).

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Startup PR Tip: To Get Press, Don't Pitch Your Product

By Dharmesh Shah on May 16, 2013

Entrepreneurs that are looking to get attention from bloggers and journalists will often pitch their businesses themselves or though a PR agency.

It's sad that most of those pitches fall flat and are likely to be completely ignored. A waste of time and money for everyone.product pitch small

For example, here’s a pitch from a PR professional. I’ve changed it slightly to avoid embarrassing anyone:

“I’m working with a wonderful new business… The owners grew up together and decided to go into business… it’s a story I’m sure your readers will care a lot about!”

Uh, no. It's unlikely that people are going to care about this story.

Don’t get me wrong. I’m sure the entrepreneurs are great people, but many entrepreneurs can tell a tale of struggle and euphoria and heartbreak and someday, against all odds, turning their dreams into reality and making their business a success. While occasionally readers might be inspired or motivated, for the most part we’re just not that interested in other people’s stories. Unless those stories are particularly remarkable we're more apt to just keep living our own dreams and writing our own stories. So, the things we're interested in is not other people's stories, but information that helps us write our own.

So what should you do if you’re trying to spread the word about new products and services, landing new customers, bringing investors onboard… all the stuff you hire PR agencies to do for you or, more likely, try to do on your own?

If you’re looking for press, forget the formulaic, cookbook approach to crafting a winning media pitch. That approach may result in coverage in a few outlets… but not the ones you really want.

Quick rule of thumb: Any media outlet that will do a story based on a crappy pitch is a media outlet that will get you crappy exposure.

Let’s pretend you’re thinking about pitching me an article idea for OnStartups.com (which has a modestly sized, but awesome audience).  You can apply the following to any media outlet or blog, though.

Here’s what to do and not to do:

Don’t tell me your story is unique.

No offense, but it really isn’t. There are thousands of Ramen noodle stories. There are thousands of 3 am “Eureka!” stories. There are thousands of maxed-out credit cards, relatives won’t return your calls, last-minute financing savior stories.

Your story is deservedly fascinating to you because you lived it (just as my story is fascinating to me), but to the average reader your story sounds a lot like every other entrepreneur’s story. Claiming your story is unique creates an expectation that, if not met, negatively impacts the rest of your pitch.

And if your story truly is unique, I’ll know. You won’t have to tell me.

Don’t tell me how much a little publicity will help you.

Never waste time by explaining how this could be a win-win relationship or, worse, by claiming you want to share your wisdom because you simply want to help others.

I know you want publicity, and I know why. I get it. I've been there. We’re cool.

Know what I’ve done recently.

It’s easy to think, “Hey, he recently wrote about choosing a co-founder, so I should pitch a story about how I help people find co-founders”

Um, probably not. If just wrote about co-founders. I’m probably good for a little bit on that topic. Never assume one article indicates an abiding fascination with a particular topic.

But do feel free to pitch if you aren’t a member of the choir I just preached to. Different points of view catch my attention; same thing, different day does not.

Know my interests.

You certainly don’t need to know I enjoy late-night walks on the beach. (Hey, who doesn’t?) But skim a few posts and you’ll know I have a soft spot for company culture, startup funding and startup marketing

So if you really want to get my attention, don’t use the tried-but-in-no-way-true “mention you really enjoyed something recent the writer wrote” approach.

Instead put your effort into finding an angle that may appeal to my interests. If you can’t be bothered to do that you’ll never get the publicity you want.

Forget a profile piece.

Straight profile pieces that tell the story of a business are boring. (At least I think so, which is why I don't post those)

The best articles let readers learn from your experience, your mistakes, and your knowledge. Always focus on benefiting readers: When you do, your company gets to bask in the reflected PR glow.

So,readers don’t want to know what you do; they want to know what you know. If you started a company, share five things you learned about landing financing. If you developed a product, share four mistakes you made early on. If you entered a new market, share three strategies you used to steal market share from competitors.

And while you may think the “5 steps to” or “4 ways to” approach is overdone, keep in mind readers love them… and even if I decide not to frame the story that way, developing mental bullet points ahead of time is a great way to organize your information (which helps me) and ensure you have great talking points (which definitely helps you.)

Realize that the more you feel you need to say… the less you really have to say.

Some people think bloggers are lazy and look for stories that write themselves. I can’t argue with the lazy part, but I really don’t want to read a 1,000-word pitch with a comprehensive overview of the topic and a list of semi-relevant statistics. The best products can be described in a few sentences, and so can the best pitches:

So now let’s get specific. Pretend you’re crafting your pitch:

Remember: forget what you want.

Many people think, “Wow, it would be awesome if OnStartups.com ran a story about our new product—think of the exposure! So many VCs would read it! We're looking for funding!"

Maybe so, but unless you focus on how readers can benefit from the story (learning about your new product isn’t a benefit to readers), that’s not going to happen.

Then, think about what I want.

I want to inform and occasionally – hopefully – entertain readers; the more you can help me accomplish that goal, the more interested I am in what you have to say.

Then craft your pitch with publicity as a secondary goal.

In the example above, the PR pro didn’t offer readers anything. His only focus was on getting publicity to benefit his clients.

Flip it around and focus solely on how you can benefit readers. When you do, your company will benefit by extension.

For example, if you want to spread the word about:

· New products or services: Share four lessons learned during the product development process; describe three ways you listened to customers and determined how to better meet their needs; explain the steps involved in manufacturing products overseas, especially including what you did wrong.

· Landing a major customer: Describe how you changed your sales process to allow you to compete with heavy hitters in your industry; share three stories about major sales that got away and what you learned from failing to reel them in; detail the steps you took to quickly ramp up capacity while ensuring current customers needs were still met.

· Bringing in key investors: Explain how you helped investors embrace your vision for the company; describe four key provisions that create the foundation for a solid partnership agreement; share the stories of three pitches to VCs that went horribly wrong and how those experiences helped you shape a winning pitch.

Sound like a lot of work? It is, but it’s worth it. When you offer to help people solve problems and learn from your mistakes, bloggers and writers will be a lot more interested.

More importantly, readers will be more interested in the news you want to share because first you helped them—and that gives them a great reason to be interested in your business.

Topics: marketing PR
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The Pitch Deck We Used To Raise $500,000 For Our Startup

By Dharmesh Shah on May 8, 2013

buffer-seed-round-deck.003One of the big no-no’s we’ve learnt about early on in Silicon Valley is to publicly share the pitchdeck you’ve used to raise money. At least, not before you’ve been acquired or failed or in any other way been removed from stage. That’s a real shame, we thought. Sharing the actual slidedeck we used (and one, that’s not 10 years old) is by far one of the most useful things for others to learn from. In fact, both Joel and I have privately shared the deck with fledging founders to help them with their fundraising. On top of that, our case study is hopefully uniquely insightful for lots of people. Here is why:
  • Half a million is not a crazy amount: It’s therefore hopefully an example that helps the widest range of founders trying to raise money.
  • Both Joel and myself are first-timers: We couldn’t just throw big names onto a slideshow and ride with it. We had to test and change the flow and deck a lot.

Ratio thinking

One of the most important elements, that we had to learn during our fundraising process was the concept of “Ratio thinking”. Jim Rohn, the famous motivational speaker, probably explained it best:
“If you do something often enough, you’ll get a ratio of results. Anyone can create this ratio.”
It sounded simple enough as a concept to us, but man, this was one of the toughest things to learn. Here is how Joel described it in a recent article on ratio thinking:
“The law of averages really comes into play with raising investment. Overall, we probably attempted to get in contact with somewhere around 200 investors. Of those, we perhaps had meetings with about 50. In the end, we closed a $450k seed round from 18 investors. Perhaps the most important part of our success in closing that round was that Leo and I would sit down in coffee shops together and encourage each other to keep pushing forward, to send that next email asking for an intro or a meeting. In many ways, the law of averages is the perfect argument that persistence is a crucial trait of a founder.”
I believe that this is in fact one of the most valuable things to know up front. It requires a huge volume of work and meetings.

How to read this deck: It builds up to one key slide – Traction

If you go through the deck, you will quickly realize that the one key slide was the traction slide. We quickly realized that as first time founders, this was probably our only way to raise any money: By focusing everything on the traction slide. Here is how Joel describes this in his article on raising money as a first-time founder:
“So my advice for first time founders who want to raise funding is almost always to put that thought aside until you have good traction. Instead, focus completely on traction. Focus on product/market fit. When you have good traction, it becomes much easier to raise funding.”
 

Avoid confusion: Our second most important slide – competition

Another thing we quickly realized when raising money was this. Although investors were very interested in talking to us, especially because of our early traction, talks then stalled. Why? The social media space seems very crowded. From the outside, it looks like there are dozens and dozens of apps all doing the same thing. On the inside, you however quickly realize that there really aren’t that many options.

The question was almost always timed at the exact moment in each meeting: “So, aren’t there lots of other apps doing the same?” And we explained to them about the TweetDecks and Seesmics and that Buffer is different and so forth. That never worked. So after lots of meetings, we realized that the competition question (in our case) created the most friction and eventually left people too confused and not interested any more. We took some time aside and made this slide as easy to understand as possible and explain Buffers positioning without creating all the friction: buffer-seed-round-deck.011 

The slidedeck

Without any further explanation, here it is:

A note on transparency

With Buffer, our goal is to take our ideas of transparency for our company to a whole new level. That’s why it was very important for us to make this slide deck public. This slide deck is far from perfect. As previously mentioned, it probably falls into the average category. But it was what at the end of the day helped us raise the funds to turn Buffer into the company it is today. So it’s hopefully a real-world case study that clearly shows what is important and what might not be so helpful for investors to know about. We want to continue publishing our ideas and thoughts about topics that get rarely talked about. Joel and I will be around to answer any further questions you might have on our fundraising process. Please post anything you have in mind in the comments below.

This is a guest post by Leo Widrich (@leowid), co-founder of Buffer.  Note: I'm an angel investor in Buffer and my company HubSpot has a little bit of overlap in functionality in our Social Inbox product.


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5 Startup Hiring Mistakes That Can Crush Your Culture

By Dharmesh Shah on April 29, 2013

Remember your first business loan? Or, if you're like many entrepreneurs, you may have initially bootstrapped your startup by buying some stuff on your credit card. You were excited and apprehensive: Excited because now you had the cash to invest in your business, apprehensive because you had just taken on a debt you would have to repay.

But that was okay, because you were confident you could create more value than the interest you would pay. Even though you eventually have to pay off a financial debt, gaining access to the right resources now often marks the difference between success and failure.

That’s true for financial debt – but it’s almost never true for culture debt. describe the image

Culture debt happens when a business takes a shortcut and hires an employee with, say, the “right” the skills or experience… but who doesn't fit the culture. Just one bad hire can create a wave of negativity that washes over every other employee, present and future – and as a result, your entire business.

Unfortunately the interest on culture debt is extremely high: In some cases you will never pay off the debt you incur, even when a culture misfit is let go or leaves.

Here are five all-too-common ways you can create culture debt that can keep your startup from achieving its potential:

1. You see the ivy and miss the poison

The star developer who writes great code… but who also resists taking any direction and refuses to help others… won't instantly turn over a new interpersonal leaf just because you hire him.

The skilled salesperson who in the short-term always seems to outperform her peers… but who also maneuvers and manipulates and builds kerosene-soaked bridges just waiting to go up in flames… won’t turn into a relationship building, long-term focused ambassador for your company just because you hire her.

The interview process is a little like a honeymoon. You see the best the candidate has to offer. If a prospective employee doesn't look like a great fit for your culture before he is hired, he definitely won’t be after he’s hired.

Never risk making a deal with the culture-fit devil. The soul of your company is at stake. Seriously.

2. You discard the attitude and play the skill card

Skills and experience are worthless when not put to use. Knowledge is useless when not shared with others.

The smaller your company the more likely you are to be an expert in your field, so transferring those skills to new employees is relatively easy. But you can't train enthusiasm, a solid work ethic, and great interpersonal skills – and those traits can matter a lot more than any skills a candidate brings.

According to this study only 11% of the new hires that failed in the first 18 months failed due to deficiencies in technical skills. The majority failed due to lack of motivation, an unwillingness to be coached, or problems with temperament and emotional intelligence.

Think of it this way: The candidate who lacks certain hard skills might be a cause for concern, but the candidate who lacks the beliefs and values you need is a giant culture debt red flag.

3. You try to sell a used car

It’s tempting to over-sell a candidate on your company, especially when you desperately need to fill an open position and you've been recruiting for seemingly forever.

Don’t sell too hard. Great candidates come prepared. They've done their homework. They already know whether your company is a good fit for them based on what they've read about you online. The really great recruits might have been stalking your company for many weeks or months -- seeing what the company feels like.

Describe the position, describe your company, answer every question, be candid and forthright, let your natural enthusiasm show through… and let the candidate make an informed decision. But, don’t oversell.

The right candidates recognize the right opportunities – and the right cultural fit. If you have to try too hard to convince someone, and the love is unidirectional, it's not setup for long-term success.

4. You mistake the rumblings for hunger

Nothing beats a formal, thorough, comprehensive hiring process… except, sometimes, a dose of intuition and gut feel.

At my company HubSpot (grew from 0-500 employees in 6 years) there are five key attributes we value:

· Humble. They’re modest despite being awesome. They’re self-aware and respectful.

· Effective. They get (stuff) done. They measurably move the needle and immeasurably add value.

· Adaptable. They’re constantly changing, life-long learners.

· Remarkable. They have a super-power that makes them stand out: Remarkably smart, remarkably creative, remarkably resourceful…

· Transparent. They’re open and honest with others – and with themselves.

In short, we look for people with H-E-A-R-T, because they help us create a company we love. So we always weigh our impressions against more qualitative considerations. You should too. Think of it this way: The more experience you have – the more lumps you’ve taken and hard knocks you’ve received and mistakes you’ve made – the more “educated” your “gut.” While you should never go on intuition alone, if you have a funny feeling about a candidate… see that as a sign you need to look more closely.

And look more closely.

For a detailed insider’s peek into how we think about culture at HubSpot, check out our Culture Code slides (embedded below for your convenience).

Bottom line: Define the intangibles you want in your employees and never compromise by hiring a candidate who lacks those qualities.

5. You decide to double down

There are two basic kinds of risk you can take on a potential employee.

First the worthwhile risks: Taking a shot on a candidate you feel has more potential than her previous employer let her show; taking a shot on a candidate who is missing a few skills but has attitude in abundance; taking a chance on a candidate you feel certain brings the enthusiasm, drive, and spirit your team desperately needs. Those are good chances to take.

Now the foolish risks: Taking a shot on a candidate with a history of performance issues that you hope will somehow develop a strong work ethic; taking a chance on the candidate who left his last two jobs because "my bosses were jerks;" taking a shot on the candidate who has no experience yet only wants to talk about how quickly and often she will be promoted.

Why do you rationalize taking foolish risks? You're desperate. Or you're lazy. Or you have "other issues to focus on." Or you figure your culture is strong enough to withstand the impact of one ill-fitting employee.

Don't take foolish risks. They almost always turn out badly. Occasionally take potentially worthwhile risks, because they can turn out to be your most inspired hires and, eventually, your best employees.

And never, ever take a chance that creates high-interest culture debt.

The cost to your organization is just too high. And, life is short.

A variation of this article was also posted as part of my participation in the LinkedIn Influencers program

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12 Terrible (But Hilarious) Places To Work [slides]

By Dharmesh Shah on April 22, 2013

work runAfter the week we've had in Boston this week, I found it hard to focus on any overly heavy work this weekend.

So, instead, I created the slide deck below.  This is unlike the prior deck I worked on (Culture Code), which had 150+ slides, and proved to be useful.  This one is 14 slides, takes a minute to go through and is almost 

completely without use.  

But ye, it's fun. Hope you enjoy it.

 

(And, disclosure: This was not completely for amusement.  There's a call-to-action at the end, and the deck is intended to collect some data and tips for an upcoming talk I'm giving).

Oh, and as you'll see from the deck, I'm not the best comedic writer in the world, so if you have a better caption for some of those slides, please leave them in the comments.  

Thanks for indulging me every now and then. Now, back to real work.

Topics: humor
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3 Biggest Mistakes When Choosing a Cofounder

By Dharmesh Shah on April 18, 2013

After spending a significant portion of the last couple of years talking and collaborating with countless entrepreneurs (through FounderDating) a few clear themes have emerged around partnering with cofounders. We’ve noticed some valuable best practices…as well as some very common mistakes. In the hopes that we can save more entrepreneurs some time and heartache, here are three of the biggest mistakes:woman troubled

1. Need

I actually don’t like to spend a lot of time convincing people they need a cofounder. There are enough people out there that either came to that conclusion right away, or felt the pain of not having one and realized it pretty quickly. Sooner or later, people will usually figure it out. For their sake, I hope that it’s sooner rather than later. But let me briefly to explain why the right cofounder is important (emphasis on “right”).

You don’t know what you don’t know

That’s always true, but in the case of starting a company or even a side project, you should assume that the body of knowledge you’re missing is vast. There is no way to make up for it all, but if your cofounder has complimentary skill sets, it will help shrink the missing body of knowledge. Chances are that it’s not only your role or the areas you know well that are tough to do and tougher to learn. It’s not a coincidence that, according to the Startup Genome Project, balanced teams with one technical founder and one business founder raise 30% more money, have 2.9x more user growth and are 19% less likely to scale prematurely than technical or business-heavy founding teams.

Your emotional partner

Beyond skill sets, starting a business is a test of your emotional will. Do you have any friends that are single parents? It’s not merely twice as hard, it’s exponentially harder than raising a child with a partner. Your cofounder is your partner – through every decision, every idea, each and every up and down of the emotional roller coaster. Only a cofounder will feel the high and lows like you do. Advisors and friends are great, but they aren’t nearly as emotionally invested as you are.

2. Approach

How do you approach someone about potentially being a cofounder? So many people start by thinking about an idea. I get that. It incites passion, you get excited, feel like there is something tangible to work on. But then you start thinking about a cofounder and pitching or hard selling someone on a specific idea. That [almost] never works. Chances are so good that your idea will change - either somewhat or completely - that Vegas wouldn’t even lay odds on it. So, let’s say you hard sell someone on the idea, they fall in love with it … and then the idea changes. Then what are you left with? Fall in love with the person, not the idea.

Even worse is pitching someone as though you’re offering a job that centers around your idea. The people you want to be your cofounder don’t just want to work on an idea, they want to be a part of something bigger. FounderDating ManagingDirector for Vegas and CTO/Cofounder of Wedgies, Jimmy Jacobson, sums it up perfectly:

“When I get someone pitching me an idea, I hear ‘I need someone to build my idea. I can't pay you in cash, so have some equity.’ That's not attractive to me. I have a LinkedIn account full of spam from recruiters, developer groups I belong to get spammed by people like this as well. This is why FounderDating exists. I don't want to work on a wine app. I want to work with awesome people, and if the idea we pick is a wine app, so be it.”

An idea is just that, AN idea. When the dust settles, it’s not likely to be THE idea, so don’t lead with it.

3. Timing

Which brings me to the final and probably most common mistake: When should you start thinking about a potential cofounder? The quick answer is ‘always.’ Huh? Yep, unless you’re in the throes of starting a new company full-time, you should always have a side project, something you’re curious about. It doesn’t have to be the next big thing. But it is the best way to start working with people you think could be cofounder material and figure out if a partnership might be feasible.

All too often I hear people say, “I’m not ready for a cofounder. I want to have the idea first.” At least 6-12 months before you quit your current full-time gig and “take the leap”, you should start talking to potential cofounders and working on side projects together. This gives you time to work with multiple people, and to walk away from relationships that aren’t clicking. It also affords the opportunity to learn so much about yourself - styles you like and don’t like, attributes you value and those you can do without.

When you wait until you’ve settled on an idea and even have a little bit of money committed (often conditional upon having a cofounder) you feel, well, more desperate. You’re much more likely to leap into the arms of the first person that agrees to work with you. Waiting until the end leads to bad decisions and relationships that really don’t work because, like it or not, you feel desperate. Searching for the right cofounder is a process and it’s vitally important, so start early.

Finding your partner should not be the last thing you do, it should be the first thing you do.

As an entrepreneur I’ve learned a lot from my own mistakes, but in this case you can learn a lot from the mistakes we’ve seen others make. Find the right cofounder is game changing – make sure you approach it like you would a partner and make it an early priority.

This was a guest post by Jessica Alter.  Jessica is the Cofounder & CEO of FounderDating, the premier online network for entrepreneurs to connect, share and help one and other. Previously, Jessica led Business Development and was GM of Platforms at Bebo (Acquired by AOL). She is also a mentor at 500 Startups and Extreme Startups. 

Topics: guest team
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Does HubSpot Walk The Talk On Its Culture Code?

By Dharmesh Shah on April 11, 2013

A couple of weeks ago, HubSpot shared our culture code deck (http://CultureCode.com) — a document that describes what we believe and how we work. 

The presentation, despite being 150+ slides long and on a topic that doesn't involve celebrities, cat photos or currently trending topics has been remarkably well received. It has had over 340,000 views.  It's one of the most viewed presentations on slideshare in the past year. I've received many, many emails and tweets with positive comments about the culture code deck (thanks!)

Deck is included below, for your convenience, in case you haven't seen it yet.

 

 
describe the imageNow that the deck is out there and has garnered so much interest, I thought it might be valuable to dig into some of the core tenets of the HubSpot Culture Code and try to do an honest assessment of how well we live up to the tenets. Or, stated differently, how well do we "walk the talk"?  In the deck itself, when a particular tenet was more aspirational than descriptive, we tried to call it out.  (I think this candor is one of the reasons people like the deck). But the call-out doesn't always capture the degree to which we live up to the ideal, so we're double-clicking here.

So, here are the core tenets with a self-score on how well HubSpot lives up to the tenet. Of course, even this take is biased (I'm a founder, and all founders are naturally biased about their startups) and it's a qualitative judgment call. On my list of things to do is to see if we can make this more measurable. But, that's a topic for another day. 

1. We are as maniacal about our metrics as our mission.

Score: 9.5/10

Lets break this one down a bit.  First of all, we are very passionate about our mission to transform marketing and move the world towards more inbound and creating marketing people love.  It's a noble vision, it's a big one — and we invest in it and mostly live up to it.

Mission score: 9/10:  I dock us a point because we do have some outbound marketing in our mix of marketing spend.  We're not pure inbound marketing. We spend some money on PPC, some telemarketing and some paid online channels.  Not a lot — but enough to deduct a point.

Metrics score: 9.5/10:  We really are maniacal about our metrics.  We pore over data.  We slice and dice things like customer cancellation data, SaaS economics metrics, employee happiness surveys, marketing channel data.  I've talked to many, many startups and fast-growing companies.  Of those, HubSpot is one of the most data-driven and metrics-obsessed companies I know.

2. We obsess over customers, not competitors and “Solve For The Customer”

Score: 8/10

The statement itself is mostly true (we spend 99% of our time worrying about customers and very little time worrying about competitors), but the underlying mantra of “Solve For The Customer” is not yet as true as we'd like it to be. 

We get points for the way we have handled pricing and packaging over our 6+ year history.  We have raised prices almost every year, and each time, we go out of our way to grandparent our existing customers and reward them for putting their belief in HubSpot.  So, on this front, I think we do really well.

We deduct points because the overall experience of HubSpot is not as smooth as it could be.  It's not customer-friendly enough.  We sometimes make decisions that are for our self-interest or convenience rather than customer happiness.  We're working on this.

We're getting better at having people call B.S. on decisions or directions that are not in the customers' interest.  People will speak up with questions like “What's in it for the customer?” or “How is this solving for the customer?” or “Seriously?”.  On the one hand, it feels good that people can be open and candid when they don't think we're living up to the SFTC (Solve For The Customer) credo.  On the other hand, in an ideal world, these non-customer-happiness focused things wouldn't have to be called out, because we'd always be acting in the customers' interest.  It would be natural and second-nature.  But, we're a metrics-obsessed, goals-oriented, for-profit company — so it may take some work and practice to have SFTC be natural, 100% of the time.  In the meantime, we'll continue to try and catch ourselves before we make decisions that don't make sense for the customer long-term.

3. We are radically and uncomfortably transparent.

Score: 9.5/10

We are super-duper, hyper transparent — and our transparency level has moved up over the years, not down.  We share all sorts of crazy things with every employee.  For example, one of the posts on our wiki goes into detail on every funding round we've done.  Details include the What the valuation was, what the common strike price was, how much money was raised, how much dilution there was, etc.  

We share just about everything.  And, the things we don't share (like individual salaries), we're deliberate and clear about.  Deducted half a point simply because nobody's perfect and we can always be better.

4. We give ourselves the autonomy to be awesome. 

Score: 8/10

We're good, but not great in terms of giving ourselves autonomy.  HubSpotters have a fair amount of freedom.  You can run with an idea.  Most things don't require permission.  You can talk to anybody in the company, including the founders about whatever you want.  We don't have formal policies and procedures for most things (our default policy on most things is “use good judgment”).

So, why the lower score?  A few things:  First, although we philosophically believe in the “work whenever, wherever” idea, this is not universally enjoyed to the same degree by every HubSpotter.  We trust our team leaders to do what is right for their groups and use good judgment.  We're also a bit conflicted because the data overwhelmingly shows that working together in the same office leads to more creativity and productivity.  So, we understand the importance of co-location, but don't want to force it and take away freedom.  For now, we've straddled the issue.  Bit of a cop-out.

Our unlimited vacation policy has been a good thing (it's been in place for over 3 years).  But, there were a couple of issues.  First, some of us didn't really feel like they could take vacations without negatively impacting their work.  Second, we had growing suspicion that on average people might be taking less vacation than they should.  We didn't know if this was true, since we don't track vacation days — but we wanted to make certain that “unlimited vacation” didn't turn out to be “no vacation” for anyone at HubSpot.  So, we made a tweak: Everyone has to take at least two weeks of vacation a year, or face ridicule by their peers.  We've also tweaked some things to make it more likely that people do the right thing and take regular vacations. 

5. We are unreasonably picky about our peers.

Score: 8.5/10

This is true. We are really, really picky about our peers.  We're fortunate to have a lot of interest in the company, and for every open position we get many (often hundreds) of candidates.  So, we can afford to be picky.  It's actually harder to get a job at HubSpot than it is to get into MIT. Our acceptance rate is lower.

The reason for deducting a couple of points is related to the attributes we look for (Humble, Effective, Adaptable, Remarkable and Transparent). For the most part, HubSpotters manifest these attributes — we try to make sure of this during the recruitment and interviewing process.  But, we don't always get it right.  So, we get a negative point for that. 

Also subtracting a half point because not only do we make hiring mistakes sometimes (despite our best efforts), we're not as good as we should be at calling people out when they do un-HubSpotty things.  For example, we have being “Humble” as a core attribute (it's actually been an attribute from the beginning).  But, not everyone acts in humble ways, and we often fail to call it out. Part of having a great culture is defending it.

6, We invest in individual mastery and market value.

Score: 8/10

Though we've always believed in investing in our people and wanting to “build not just a company we're proud of, but people we're proud of”, this hasn't been explicit in our culture code until recently. So, we have some work to do here.

First, we're going to take a hard look at where our “discretionary culture spend” (aka “employee happiness expenses”) — which, incidentally is over a million dollars a year.  We want to shift our budget to things that help increase mastery and market value. Things like education and leadership training.  Yes, we enjoy parties and celebrations too (and those are important), but all things being equal, we want to invest these dollars (in our people), not spend them

But until then, we still get an 8 on this front.  We can do much more.

7. We defy conventional “wisdom” as it's often unwise.

Score: 8.5/10

This culture attribute goes towards how much we question the status quo and do things differently.  We're actually pretty good at this.  Good, but not great. We get points for things like not having offices and executive perks.  Our radical transparency and openness defies conventional wisdom.  We're one of the few private companies that publicly shares its key financial data (like revenues) every year.

8. We speak the truth and face the facts.

Score: 9/10

We have a very strong culture of facing the facts and reality.  Nobody is allowed to walk around with rose-color glasses on. We don't brush problems under the rug. We don't hide from issues. If anything, we can be faulted for being too critical sometimes.  We also do a great job of speaking the truth and being candid about the problems we see in the organization.  This happens in meetings, in hallways, over email and on the wiki.  When problems show up (as they do regularly), we are usually quick to react.

9. We believe in work+life, not work vs. life

Score: 8/10

This one is a bit squishy and hard to measure.  Generally, we do a really good job of work-life fit.  Mostly flexible hours, unlimited vacation, centrally located and relatively easily accessible office.  All of those things help.  Things that fall into this bucket that we're not great at is diversity — particularly gender balance and getting more women into leadership roles.  We're “leaning in” on this, and hope to get much, much better at this over the next few months.  Stay tuned.

10. We are a perpetual work in progress.

Score: 9.0/10

This one's a bit of a gimme (note to self: We need to replace this tenet with something that's more substantive and less platitudinal).

We don't sit on our laurels.  We celebrate victories big and small — but celebrations are short-lived.  Though we are pleased with our modest success so far, we recognize that there is still much work to be done.  We're constantly trying to improve how we run the busines and ourselves.

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Clear Eyes, Full Heart: Beating The Series A Crunch

By Dharmesh Shah on April 9, 2013

The following is a guest post by Alan Wells, co-founder & product designer at Glyder. [Disclosure: I'm an angel investor in the company. -Dharmesh]

It has been widely reported that at there will be least 1,000 orphan startups this year - companies that raised a seed round last year and will fail to raise follow on financing.  The popular opinion in the tech press is that most of these 1,000 orphan companies will die due to lack of capital. As a founder, it's hard not to let this influence your thinking - with all the talk of failing fast, acqui-hires, and overnight success stories, it's easy to believe that your only options are to find a soft landing or shut down and try again with something else. And compared to sticking it out, walking away is most certainly the easier path (although it might make you a punk).

But I believe that in those 1,000 orphan startups, there are great companies - companies that can still put a dent in the universe, companies that can break through if the founders stick to it. Ben Horowitz says that all great CEOs have one thing in common: they don't quit, and at Startup School last year, this theme played out over and over again. Almost every founder that spoke went through a trough of sorrow that lasted 18-24 months before things really started to click for their companies.hang in there

Maybe it’s coincidental that the trough of sorrow is usually just a bit longer than the runway you have after an average-sized seed round, but I’m beginning to believe that great companies are often the product of these trying circumstances. Unfortunately people don’t like to talk about what’s not going right with their companies, and there’s not much discussion going on around what founders are doing to successfully navigate these waters.

I’m the founder of a startup that recently decided to double down and do our best to beat the series A crunch, and in the interest of focusing on the road instead of the wall, I wanted to share some of the things I’m learning as we find a way forward.

Acknowledging Your Reality

Founders are optimistic people, so it's easy for us to believe that if we just add this one thing to our product, hit that one key metric, or sign that one partnership deal, investors will come banging on our door begging to give us money. However, if you know things aren't going well or you are already having trouble raising your next round, what your startup needs more than anything is a lucid founder that can realistically assess the situation and identify a path forward.

Doing an honest appraisal of the things that were and weren’t working in our business was an important moment for our decision to press forward. Inside the head of a founder, things can seem great one minute and terrible the next, so getting outside perspective can be valuable as a check to your instincts and emotions. Meeting with advisors and existing investors also helped us get some third party perspective about trends in the market and issues we’re facing.

Understanding Why You're Not Fundable

As a startup founder, you're working in a four dimensional problem space: team, product, market, and timing. Hopes and dreams are often enough to raise money at the seed stage, but in my experience, you need more than that for your next round: you need to convince investors that you're the right team building the right product for the right market at the right time.

If you've been fundraising for three months and haven't gotten a check yet, something is probably wrong in one or more of these areas. Understanding what's wrong is critical to figuring out your path forward, and investors that pass can be the best source for understanding what the missing pieces are.

Until recently, I don’t think I quite appreciated the complexity of getting all this right at the same time, especially when you throw in the added complexity of trying to match up with the various investment theses and historical biases of top tier firms. As Ben Horowitz said, “this is not checkers; this is mutherfuckin’ chess.” Getting useful information isn't always easy - most investors seem to be worried about offending founders and prefer high level statements like "not enough traction" over candid feedback about the holes they see in your business.

I want to thank a few folks that were candid and helpful to us in this way - Ashu Garg (Foundation Capital), Thomas Korte (AngelPad) and James Currier were among the the people that gave us really insightful, critical feedback.

The Founding Team Gut Check

With some honest datapoints on the investor perspective of your business, you have the information you and your co-founders need to have a gut check conversation about the state of your business. You'll likely find your product, market, team or timing are in conflict with what investors see as likely to be a homerun, and you need to decide how to respond to that mismatch.

In our case the problem seems to be mainly around market - we're targeting very small businesses, a fragmented market where there is no historical precedent for big winners being built within the timeline that venture investors need for their 10x returns. We're well aware of the historical challenges in serving this market, but we believe that due to a number of new trends, big winners will emerge in this space in the next 3-5 years. Very few investors agree with us.

Our focus on very small business is one of the founding principles of our company, and we believe deeply in the potential that lies in serving this market. Our conviction in serving this market increased when we launched Glyder and started seeing the positive user response to the product. Because of this conviction, we decided that we would rather continue focusing on this market than switch to a different target market, even if that means we're not fundable in the short term.

Having an open and candid conversation with our team about the challenges to our company was a great chance to gauge everyone's commitment to the business. Building our business without more capital will be difficult, but when everyone voiced renewed desire to keep going forward, it helped me as the CEO get excited about figuring out how to do it.

Moving Forward & Changing Tactics

Paul Graham likes to tell founders that "the surest route to success is to be the cockroaches of the corporate world." The analogy works particularly well for orphan startups, because without additional capital, you must be resilient, resourceful and self-sufficient as quickly as possible. Here are some of the changes we’ve made as we continue building our business.

Incentivizing Existing Investors to Stay Involved and Excited 

Before we started trying to raise a new round, we gave our existing investors the opportunity to put more money into the company on fairly favorable terms. The cap on this new note was lower than the cap that we had previously raised money on - although our business was much further along, the funding environment had changed as well, and we wanted to make the decision to put additional capital in easy for our existing investors.

We also went back and amended the documents for all investors who had put money in on the higher cap and gave them the lower cap instead. This is unusual, not legally required, and meant that we were giving up additional dilution.

Why would we voluntarily increase dilution? Our investor group includes friends & family, angels, and the great team at 500 Startups. Our relationships with most of them started long before this company, and we hope they will extend far into the future. These relationships motivate us to keep building the business - they trusted us with their hard earned dollars, and although they all know the risks of betting on our startup, we want to show them results. When it comes to a decision like the one we made with the cap change, the cost in dilution was well worth the goodwill it generated among our investors. It also demonstrated our commitment to acting with integrity even when things aren't going according to plan.

Re-evaluating the Product Roadmap

As we heard the skepticism from potential investors while trying to raise more capital, product priorities were the first thing to change for us. We no longer have the luxury to focus on user growth over monetization, so our entire product roadmap shifted to focus on revenue. Our app, once offered for free (to maximize signups) is now a paid download. We don't have the luxury of supporting users that aren't willing to pay for what we make.

Lowering Burn Rate 

In addition to shifting product priorities to revenue, we also made dramatic reductions in burn rate so we could reach profitability faster. This meant letting several team members go - by far the hardest decision in this entire process - and asking remaining team members to take a pay cut (we softened the blow with this by giving additional equity). The changes in product and burn rate have put us on a path to reach cash flow positive before we run out of capital.

Preparing For Battle

In addition to the tactical changes in our business, the process we’ve gone through in the past three months has mentally and emotionally prepared our team for the road ahead. We know who we are and what we’re working toward, we’re aware of and very comfortable with the contrarian stance we’re taking, and we believe the long term opportunity is well worth the short term sacrifices we are making. As they say on Friday Night Lights, “clear eyes, full hearts, can't lose.”


I think Andrew Chen had it right when he said, "there’s always another move." If you’re the founder of a startup staring headfirst at the Series A Crunch and you can find the will to keep going, your job is to find that next move and make it happen. I hope to see more discussion on how companies are sticking with it and navigating the trough of sorrow. If you're in the midst of this process and need someone to bounce ideas off, drop me a note at @alanwells.
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How To Survive a Ground-Up Rewrite Without Losing Your Sanity

By Dharmesh Shah on April 8, 2013

aka: Screw you Joel Spolsky, We're Rewriting It From Scratch!

This is a guest post by Dan Milstein (@danmil), co-founder of Hut 8 Labs.

Disclosure: Joel Spolsky is a friend and I'm an investor in his company, Stack Exchange (which powers the awesome Stack Overflow) -Dharmesh

So, you know Joel Spolsky's essay Things You Should Never Do, Part I? In which he urgently recommends that, no matter what, please god listen to me, don't rewrite your product from scratch? And lists a bunch of dramatic failures when companies have tried to do so?

First off, he's totally right. Developers tend to spectacularly underestimate the effort involved in such a rewrite (more on that below), and spectacularly overestimate the value generated (more on that below, as well).

But sometimes, on certain rare occasions, you're going to be justified in rewriting a major part of your product (you'll notice I've shifted to saying you're merely rewriting a part, instead of the whole product. Please do that. If you really are committed to just rewriting the entire thing from scratch, I don't know what to tell you).

If you're considering launching a major rewrite, or find yourself as the tech lead on such a project in flight, or are merely toiling in the trenches of such a project, hoping against hope that it will someday end... this post is for you.jump rewrite

Hello, My Name is Dan, and I've Done Some Rewrites

A few years back, I joined a rapidly growing startup named HubSpot, where I ended up working for a good solid while (which was a marvelous experience, btw -- you should all have Yoav Shapira as a boss at some point). In my first year there, I was one of the tech leads on a small team that rewrote the Marketing Analytics system (one of the key features of the HubSpot product), totally from scratch. We rewrote the back end (moving from storing raw hit data in SQLServer to processing hits with Hadoop and storing aggregate reports in MySQL); we rewrote the front end (moving from C#/ASP.Net to Java/Tomcat); we got into the guts of a dozen applications which had come to rely on that store of every-hit-ever, and found a way to make them work with the data that was now available. (Note: HubSpot is now primarily powered by MySQL/Hadoop/HBase. Check out the HubSpot dev blog).

It took a loooong time. Much, much longer than we expected.

But it generated a ton of value for HubSpot. Very Important People were, ultimately, very happy about that project. After it wrapped up, 'Analytics 2.0', as it was known, somehow went from 'that project that was dragging on forever', to 'that major rewrite that worked out really well'.

Then, after the Analytics Rewrite wrapped up, in my role as 5 Whys Facilitator, I led the post-mortem on another ambitious rewrite which hadn't fared quite so well. I'll call it The Unhappy Rewrite.

From all that, some fairly clear lessons emerged.

First, I'm going to talk about why these projects are so tricky. Then I'll pass on some of those hard-won lessons on how to survive.

Prepare Yourself For This Project To Never Fucking End

The first, absolutely critical thing to understand about launching a major rewrite is that it's going to take insanely longer than you expect. Even when you try to discount for the usual developer optimism. Here's why:

  • Migrating the data sucks beyond all belief

I'm assuming your existing system has a bunch of valuable data locked up in it (if it doesn't, congrats, but I just never, ever run into this situation). You think, we're going to set up a new db structure (or move it all to some NoSQL store, or whatever), and we'll, I dunno, write some scripts to copy the data over, no problem.

Problem 1: there's this endless series of weird crap encoded in the data in surprising ways. E.g. "The use_conf field is 1 if we should use the auto-generated configs... but only if the spec_version field is greater than 3. Oh, and for a few months, there was this bug, and use_conf was left blank. It's almost always safe to assume it should be 1 when it's blank. Except for customers who bought the Express product, then we should treat it as 2". You have to migrate all your data over, checksum the living hell out of it, display it back to your users, and then figure out why it's not what they expect. You end up poring over commit histories, email exchanges with developers who have long since left the company, and line after line of cryptic legacy code. (In prep for writing this, when I mentioned this problem to developers, every single time they cut me off to eagerly explain some specific, awful experience they've had on this front -- it's really that bad)

Problem 2: But, wait, it gets worse: because you have a lot of data, it often takes days to migrate it all. So, as you struggle to figure out each of the above weird, persnickety issues with converting the data over, you end up waiting for days to see if your fixes work. And then to find the next issue and start over again. I have vivid, painful memories of watching my friend Stephen (a prototypical Smart Young Engineer), who was a tech lead on the Unhappy Rewrite, working, like, hour 70 of an 80 hour week, babysitting a slow-moving data export/import as it failed over and over and over again. I really can't communicate how long this takes.

  • It's brutally hard to reduce scope

With a greenfield (non-rewrite) project, there is always (always) a severe reduction in scope as you get closer to launch. You start off, expecting to do A, B, C & D, but when you launch, you do part of A. But, often, people are thrilled. (And, crucially, they forget that they had once considered all the other imagined features as absolutely necessary)

With a rewrite, that fails. People are really unhappy if you tell them: hey, we rewrote your favorite part of the product, the code is a lot cleaner now, but we took away half the functionality.

You'll end up spending this awful series of months implementing all these odd edge cases that you didn't realize even existed. And backfilling support for features that you've been told no one uses any more, but you find out at the last minute some Important Person or Customer does. And, and, and...

  • There turn out to be these other system that use "your" data

You always think: oh, yeah, there are these four screens, I see how to serve those from the new system. But then it turns out that a half-dozen cron jobs read data directly from "your" db. And there's an initialization step for new customers where something is stored in that db and read back later. And some other screen makes a side call to obtain a count of your data. Etc, etc. Basically, you try turning off the old system briefly, and a flurry of bug reports show up on your desk, for features written a long time ago, by people who have left the company, but which customers still depend on. This takes forever all over again to fix.

Okay, I'm Sufficiently Scared Now, What Should I Do?

You you have to totally own the business value.

First off, before you start, you must define the business value of this rewrite. I mean, you should always understand the big picture value of what you do (see: Rands Test). But with rewrites, it's often the tech lead, or the developers in general, who are pushing for the rewrite -- and then it's absolutely critical that you understand the value. Because you're going to discover unexpected problems, and have to make compromises, and the whole thing is going to drag on forever. And if, at the end of all that, the Important People who sign your checks don't see much value, it's not going to be a happy day for you.

One thing: be very, very careful if the primary business value is some (possibly disguised) version of "The new system will be much easier for developers to work on." I'm not saying that's not a nice bit of value, but if that's your only or main value... you're going to be trying to explain to your CEO in six months why nothing seems to have gotten done in development in the last half year.

The key to fixing the "developers will cry less" thing is to identify, specifically, what the current, crappy system is holding you back from doing. E.g. are you not able to pass a security audit? Does the website routinely fall over in a way that customers notice? Is there some sexy new feature you just can't add because the system is too hard to work with? Identifying that kind of specific problem both means you're talking about something observable by the rest of the business, and also that you're in a position to make smart tradeoffs when things blow up (as they will).

As an example, for our big Analytics rewrite, the developers involved sat down with Dan Dunn, the (truly excellent) product guy on our team, and worked out a list of business-visible wins we hoped to achieve. In rough priority order, those were:

  • Cut cost of storing each hit by an order of magnitude

  • Create new reports that weren't possible in the old system

  • Serve all reports faster

  • Serve near-real-time (instead of cached daily) reports

And you should know: that first one loomed really, really large. HubSpot was growing very quickly, and storing all that hit data as individual rows in SQLServer had all sorts of extra costs. The experts on Windows ops were constantly trying to get new SQLServer clusters set up ahead of demand (which was risky and complex and ended up touching a lot of the rest of the codebase). Sales people were told to not sell to prospects with really high traffic, because if they installed our tracking code, it might knock over those key databases (and that restriction injected friction into the sales process). Etc, etc.

Solving the "no more hits in SQLServer" problem is the Hard kind for a rewrite -- you only get the value when every single trace of the old system is gone. The other ones, lower down the list, those you'd see some value as individual reports were moved over. That's a crucial distinction to understand. If at all possible, you want to make sure that you're not only solving that kind of Hard Problem -- find some wins on the way.

For the Unhappy Rewrite, the biz value wasn't perfectly clear. And, thus, as often happens in that case, everyone assumed that, in the bright, shiny world of the New System, all their own personal pet peeves would be addressed. The new system would be faster! It would scale better! The front end would be beautiful and clever and new! It would bring our customers coffee in bed and read them the paper.

As the developers involved slogged through all the unexpected issues which arose, and had to keep pushing out their release date, they gradually realized how disappointed everyone was going to be when they saw the actual results (because all the awesome, dreamed-of stuff had gotten thrown overboard to try to get the damn thing out the door). This a crappy, crappy place to be -- stressed because people are hounding you to get something long-overdue finished, and equally stressed because you know that thing is a mess.

Okay, so how do you avoid getting trapped in this particular hell?

Worship at the Altar of Incrementalism

Over my career, I've come to place a really strong value on figuring out how to break big changes into small, safe, value-generating pieces. It's a sort of meta-design -- designing the process of gradual, safe change.

Kent Beck calls this Succession, and describes it as:

"Design changes are usually most efficiently implemented as a series of safe steps. Succession is the art of taking a single conceptual change, breaking it into safe steps, and then finding an order for those steps that optimizes safety, feedback, and efficiency."

I love that he calls it an "art" -- that feels exactly right to me. It doesn't happen by accident. You have to consciously work at it, talk out alternatives with your team, get some sort of product owner or manager involved to make sure the early value you're surfacing matters to customers. It's a creative act.

And now, let me say, in an angry Old Testament prophet voice: Beware the false incrementalism!

False incrementalism is breaking a large change up into a set of small steps, but where none of those steps generate any value on their own. E.g. you first write an entire new back end (but don't hook it up to anything), and then write an entire new front end (but don't launch it, because the back end doesn't have the legacy data yet), and then migrate all the legacy data. It's only after all of those steps are finished that you have anything of any value at all.

Fortunately, there's a very simple test to determine if you're falling prey to the False Incrementalism: if after each increment, an Important Person were to ask your team to drop the project right at that moment, would the business have seen some value? That is the gold standard.

Going back to my running example: our existing analytics system supported a few thousand customers, and served something like a half dozen key reports. We made an early decision to: a) rewrite all the existing reports before writing new ones, and b) rewrite each report completely, push it through to production, migrate any existing data for that report, and switch all our customers over. And only then move on to the next report.

Here's how that completely saved us: 3 months into a rewrite which we had estimated would take 3-5 months, we had completely converted a single report. Because we had focused on getting all the way through to production, and on migrating all the old data, we had been forced to face up to how complex the overall process was going to be. We sat down, and produced a new estimate: it would take more like 8 months to finish everything up, and get fully off SQLServer.

At this point, Dan Dunn, who is a Truly Excellent Product Guy because he is unafraid to face a hard tradeoff, said, "I'd like to shift our priorities -- I want to build the Sexy New Reports now, and not wait until we're fully off SQLServer." We said, "Even if it makes the overall rewrite take longer, and we won't get off SQLServer this year, and we'll have to build that one new cluster we were hoping to avoid having to set up?" And he said "Yes." And we said, "Okay, then."

That's the kind of choice you want to offer the rest of your larger team. An economic tradeoff where they can chose between options of what they see when. You really, really don't want to say: we don't have anything yet, we're not sure when we will, your only choices are to keep waiting, or to cancel this project and kiss your sunk costs goodbye.

Side note: Dan made 100% the right call (see: Excellent). The Sexy New Reports were a huge, runaway hit. Getting them out sooner than later made a big economic impact on the business. Which was good, because the project dragged on past the one year mark before we could finally kill off SQLServer and fully retire the old system.

For you product dev flow geeks out there, one interesting piece of value we generated early was simply a better understanding of how long the project was going to take. I believe that is what Beck means by "feedback". It's real value to the business. If we hadn't pushed a single report all the way through, we would likely have had, 3-4 months in, a whole bunch of data (for all reports) in some partially built new system, and no better understanding of the full challenge of cutting even one report over. You can see the value the feedback gave us--it let Dan make a much better economic choice. I will make my once-per-blog-post pitch that you should go read Donald Reinertsen's Principles of Product Development Flow to learn more about how reducing uncertainty generates value for a business.

For the Unhappy Rewrite, they didn't work out a careful plan for this kind of incremental delivery. Some Totally Awesome Things would happen/be possible when they finished. But they kept on not finishing, and not finishing, and then discovering more ways that the various pieces they were building didn't quite fit together. In the Post-Mortem, someone summarized it as: "We somehow turned this into a Waterfall project, without ever meaning to."

But, I Have to Cut Over All at Once, Because the Data is Always Changing

One of the reasons people bail on incrementalism is that they realize that, to make it work, there's going to be an extended period where every update to a piece of data has to go to both systems (old and new). And that's going to be a major pain in the ass to engineer. People will think (and even say out loud), "We can't do that, it'll add a month to the project to insert a dual-write layer. It wil slow us down too much."

Here's what I'm going to say: always insert that dual-write layer. Always. It's a minor, generally somewhat fixed cost that buys you an incredible amount of insurance. It allows you, as we did above, to gradually switch over from one system to another. It allows you to back out at any time if you discover major problems with the way the data was migrated (which you will, over and over again). It means your migration of data can take a week, and that's not a problem, because you don't have to freeze writes to both systems during that time. And, as a bonus, it surfaces a bunch of those weird situations where "other" systems are writing directly to your old database.

Again, I'll quote Kent Beck, writing about how they do this at Facebook:

"We frequently migrate large amounts of data from one data store to another, to improve performance or reliability. These migrations are an example of succession, because there is no safe way to wave a wand and migrate the data in an instant. The succession we use is:

Convert data fetching and mutating to a DataType, an abstraction that hides where the data is stored.

Modify the DataType to begin writing the data to the new store as well as the old store.

Bulk migrate existing data.

Modify the DataType to read from both stores, checking that the same data is fetched and logging any differences.

When the results match closely enough, return data from the new store and eliminate the old store.

You could theoretically do this faster as a single step, but it would never work. There is just too much hidden coupling in our system. Something would go wrong with one of the steps, leading to a potentially disastrous situation of lost or corrupted data."

Abandoning the Project Should Always Be on the Table

If a 3-month rewrite is economically rational, but a 13-month one is a giant loss, you'll generate a lot value by realizing which of those two you're actually facing. Unfortunately, the longer you solider on, the harder it is for people to avoid the Fallacy of Sunk Costs. The solution: if you have any uncertainty about how long it's going to take, sequence your work to reduce that uncertainty right away, and give people some "finished" thing that will let them walk away. One month in, you can still say: we've decided to only rewrite the front end. Or: we're just going to insert an API layer for now. Or, even: this turned out to be a bad idea, we're walking away. Six months in, with no end in sight, that's incredibly hard to do (even if it's still the right choice, economically).

Some Specific Tactics

Shrink Ray FTW

This is an excellent idea, courtesy of Kellan Elliot-McCrea, CTO of Etsy. He describes it as follows:

"We have a pattern we call shrink ray. It's a graph of how much the old system is still in place. Most of these run as cron jobs that grep the codebase for a key signature. Sometimes usage is from wire monitoring of a component. Sometimes there are leaderboards. There is always a party when it goes to zero. A big party.

Gives a good sense of progress and scope, especially as the project is rolling, and a good historical record of how long this shit takes. '''

I've just started using Shrink Ray on a rewrite I'm tackling right now, and I will say: it's fairly awesome. Not only does it give you the wins above, but, it also forces you to have an early discussion about what you are shrinking, and who in the business cares. If you make the right graph, Important People will be excited to see it moving down. This is crazy valuable.

Engineer The Living Hell Out Of Your Migration Scripts

It's very easy to think of the code that moves data from the old system to the new as a collection of one-off scripts. You write them quickly, don't comment them too carefully, don't write unit tests, etc. All of which are generally valid tradeoffs for code which you're only going to run once.

But, see above, you're going to run your migrations over and over to get them right. Plus, you're converting and summing up and copying over data, so you really, really want some unit tests to find any errors you can early on (because "data" is, to a first approximation, "a bunch of opaque numbers which don't mean anything to you, but which people will be super pissed off about if they're wrong"). And this thing is going to happen, where someone will accidentally hit ctrl-c, and kill your 36 hour migration at hour 34. Thus, taking the extra time to make the entire process strongly idempotent will pay off over and over (by strongly idempotent, I mean, e.g. you can restart after a failed partial run and it will pick up most of the existing work).

Basically, treat your migration code as a first class citizen. It will save you a lot of time in the long run.

If Your Data Doesn't Look Weird, You're Not Looking Hard Enough

What's best is if you can get yourself to think about the problem of building confidence in your data as a real, exciting engineering challenge. Put one of your very best devs to work attacking both the old and the new data, writing tools to analyze it all, discover interesting invariants and checksums.

A good rule of thumb for migrating and checksumming data: until you've found a half-dozen bizarre inconsistencies in the old data, you're not done. For the Analytics Rewrite, we created a page on our internal wiki called "Data Infelicities". It got to be really, really long.

With Great Incrementalism Comes Great Power

I want to wrap up by flipping this all around -- if you learn to approach your rewrites with this kind of ferocious, incremental discipline, you can tackle incredibly hard problems without fear. Which is a tremendous capability to offer your business. You can gradually rewrite that unbelievably horky system that the whole company depends on. You can move huge chunks of data to new data stores. You can pick up messy, half-functional open source projects and gradually build new products around them.

It's a great feeling.

---

What's your take?  Care to share any lessons learned from an epic rewrite?

Topics: guest technology
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Measuring What Matters: How To Pick A Good Metric

By Dharmesh Shah on March 29, 2013

Ben Yoskovitz is the co-author of Lean Analytics, a new book on how to use analytics successfully in your business. Ben is currently VP Product at GoInstant, which was acquired by Salesforce in 2012. He blogs regularly at Instigator Blog and can be followed @byosko.

We all know metrics are important. They help report progress and guide our decision making. Used properly, metrics can provide key insights into our businesses that make the difference between success and failure. But as our capacity to track everything increases, and the tools to do so become easier and more prevalent, the question remains: what is a worthwhile metric to track?

Before you can really figure that out it's important to understand the basics of metrics. There are in fact good numbers and bad numbers. There are numbers that don't help and numbers that might save the day.

First, here's how we define analytics: Analytics is the measurement of movement towards your business goals.

The two key concepts are "movement" and "business goals". Analytics isn't about reporting for the sake of reporting, it's about tracking progress. And not just aimless progress, but progress towards something you're trying to accomplish. If you don't know where you're going, metrics aren't going to be particularly helpful.

With that definition in mind, here's how we define a "good metric".

A good metric is:

  • Comparative

  • Understandable

  • A ratio or rate

  • Behavior changing

A good metric is comparative. Being able to compare a metric across time periods, groups of users, or competitors helps you understand which way things are moving. For example, "Increased conversion by 10% from last week" is more meaningful than "We're at 2% conversion." Using comparative metrics speaks clearly to our definition of "movement towards business goals".

A good metric is understandable. Take the numbers you're tracking now--the ones you think are the most important--and show those to outsiders. If they don't instantly understand your business and what you're trying to do, then the numbers you're tracking are probably too complex. And internally, if people can't remember the numbers you're focused on and discuss them effectively, it becomes much harder to turn a change in the data into a change in the culture. Try fitting your key metrics on a single TV screen (and don’t cheat with a super small font either!)

A good metric is a ratio or a rate. Ratios and rates are inherently comparative. For example, if you compare a daily metric to the same metric over a month, you'll see whether you're looking at a sudden spike or a long-term trend. Ratios and rates (unlike absolute numbers) give you a more realistic "health check" for your business and as a result they're easier to act on. This speaks to our definition above about "business goals"--ratios and rates help you understand if you're heading towards those goals or away from them.

A good metric changes the way you behave. This is by far the most important criterion for a metric: what will you do differently based on changes in the number? If you don't know, it's a bad metric. This doesn't mean you don't track it--we generally suggest that you track everything but only focus on one thing at a time because you never know when a metric you're tracking becomes useful. But when looking at the key numbers you're focused on today, ask yourself if you really know what you'd do if those numbers go up, down or stay the same. If you don't, put those metrics aside and look for better ones to track right now.

http://www.flickr.com/photos/circasassy/7858155676/


Now that we've defined a "good" metric let's look at five things you should keep in mind when choosing the right metrics to track:



  • Qualitative versus quantitative metrics

  • Vanity versus actionable metrics

  • Exploratory versus reporting metrics

  • Leading versus lagging metrics

  • Correlated versus causal metrics


1. Qualitative versus Quantitative metrics

Quantitative data is easy to understand. It's the numbers we track and measure--for example, sports scores and movie ratings. As soon as something is ranked, counted, or put on a scale, it's quantified. Quantitative data is nice and scientific, and (assuming you do the math right) you can aggregate it, extrapolate it, and put it into a spreadsheet. Quantitative data doesn't lie, although it can certainly be misinterpreted. It's also not enough for starting a business. To start something, to genuinely find a problem worth solving, you need qualitative input.

Qualitative data is messy, subjective, and imprecise. It's the stuff of interviews and debates. It's hard to quantify. You can't measure qualitative data easily. If quantitative data answers "what" and "how much," qualitative data answers "why." Quantitative data abhors emotion; qualitative data marinates in it.

When you first get started with an idea, assuming you're following the core principles around Lean Startup, you'll be looking for qualitative data through problem interviews. You're speaking to people--specifically, to people you think are potential customers in the right target market. You're exploring. You're getting out of the building.

Collecting good qualitative data takes preparation. You need to ask specific questions without leading potential customers or skewing their answers. You have to avoid letting your enthusiasm and reality distortion rub off on your interview subjects. Unprepared interviews yield misleading or meaningless results. We cover how to interview people in Lean Analytics, but there have been many others that have done so as well. Ash Maurya’s book Running Lean provides a great, prescriptive approach to interviewing. I also recommend Laura Klein’s writing on the subject.

Sidebar: In writing Lean Analytics, we proposed the idea of scoring problem interviews. The basic concept is to take the qualitative data you collect during interviews and codify it enough to give you (hopefully!) new insight into the results. The goal of scoring problem interviews is to reduce your own bias and ensure a healthy dose of intellectual honesty in your efforts. Not everyone agrees with the approach, but I hope you'll take a look and try it out for yourself.

2. Vanity versus Actionable metrics

I won't spent a lot of time on vanity metrics, because I think most people reading OnStartups understand these. As mentioned above, if you have a piece of data that can't be acted upon (you don't know how movement in the metric will change your behavior) then it's a vanity metric and you should ignore it.

It is important to note that actionable metrics don't automatically hold the answers. They're not magic. They give you an indication that something fundamental and important is going on, and identify areas where you should focus, but they don't provide the answers. For example, if "percent of active users" drops, what do you do? Well, it's a good indication that something is wrong, but you'll have to dig further into your business to figure it out. Actionable metrics are often the starting point for this type of exploration and problem solving.

3. Exploratory versus Reporting metrics

Reporting metrics are straightforward--they report on what's going on in your startup. We think of these as "accounting metrics", for example, "How many widgets did we sell today?" Or, "Did the green or the red widget sell more?" Reporting metrics can be the results of experiments (and therefore actionable), but they don't necessarily lead to those "eureka!" moments that can change your business forever.

Exploratory metrics are those you go looking for. You're sifting through data looking for threads of information that are worth pursuing. You're exploring in order to generate ideas to experiment on. This fits what Steve Blank says a startup should spend its time doing: searching for a scalable, repeatable business model.

A great example of using exploratory metrics is from Mike Greenfield, co-founder of Circle of Moms. Originally, Circle of Moms was Circle of Friends (think: Google Circles inside Facebook). Circle of Friends grew very quickly in 2007-2008 to 10 million users, thanks in part to Facebook's open platform. But there was a problem--user engagement was terrible. Circle of Friends had great virality and tons of users, but not enough people were really using the product.

So Mike went digging.

And what Mike found was incredible. It turns out that moms, by every imaginable metric, were insanely engaged compared to everyone else. Their messages were longer, they invited more people, they attached more photos, and so on. So Mike and his team pivoted from Circle of Friends to Circle of Moms. They essentially abandoned millions of users to focus on a group of users that were actually engaged and getting value from their product. From the outside looking in this might have been surprising or confusing. You might find yourself at a decision point like Mike and worry about what investors will think, or other external influencers. But if you find a key insight in your data that’s incredibly compelling, you owe it to yourself to act on it, even if it looks crazy from the outside. For Mike and Circle of Moms, it was the right decision. The company grew their user base back up to 4 million users and eventually sold to Sugar Inc.

4. Leading versus Lagging metrics

Leading and lagging metrics are both useful, but they serve different purposes. Most startups start by measuring lagging metrics (or "lagging indicators") because they don't have enough data to do anything else. And that's OK. But it's important to recognize that a lagging metric is reporting the past; by the time you know what the number is, whatever you’re tracking has already happened. A great example of this is churn. Churn tells you what percentage of customers (or users) abandon your service over time. But once a customer has churned out they're not likely to come back. Measuring churn is important, and if it's too high, you'll absolutely want to address the issue and try to fix your leaky bucket, but it lags behind reality.

A leading metric on the other hand tries to predict the future. It gives you an indication of what is likely to happen, and as a result you can address a leading metric more quickly to try and change outcomes going forward. For example, customer complaints is often a leading indicator of churn. If customer complaints are going up, you can expect that customers will abandon and churn will also go up. But instead of responding to something that's already happened, you can dive into customer complaints immediately, figure out what's going on, resolve the issues and hopefully minimize the future impact in churn.



Ultimately, you need to decide whether the thing you're tracking helps you make better decisions sooner. Remember: a real metric has to be actionable. Lagging and leading metrics can both be actionable, but leading indicators show you what will happen, reducing your cycle time and making you leaner.

5. Correlated versus Causal metrics

A correlation is a seeming relationship between two metrics that change together, but are often changing as a result of something else. Take ice cream consumption and drowning. If you plotted these over a year, you'd see that they're correlated--they both go up and down at the same time. The more ice cream that's consumed, the more people drown. But no one would suggest that we reduce ice cream consumption as a way of preventing drowning deaths. That's because the numbers are correlated, and not causal. One isn't affecting the other. The factor that affects them both is actually the time of year--when it's summer, people eat more ice cream and they also drown more.



Finding a correlation between two metrics is a good thing. Correlations can help you predict what will happen. But finding the cause of something means you can change it. Usually, causations aren't simple one-to-one relationships--there’s lots of factors at play, but even a degree of causality is valuable.

You prove causality by finding a correlation, then running experiments where you control the other variables and measure the difference. It's hard to do, but causality is really an analytics superpower--it gives you the power to hack the future.

So what metrics are you tracking?

We’ve covered some fundamentals about analytics and picking good metrics. It's not the whole story (to learn more see our presentations and workshops on Lean Analytics), but I'd encourage you to take a look at what you're tracking and see if the numbers you care the most about meet the criteria defined in this post. Are the metrics ratios/rates? Are they actionable? Are you looking at leading or lagging metrics? Have you identified any correlations? Could you experiment your way to discovering causality?

And remember: analytics is about measuring progress towards goals. It's not about endless reports. It's not about numbers that go constantly "up and to the right" to impress the press, investors or anyone else. Good analytics is about speeding up and making better decisions, and developing key insights that become cornerstones of your startup.

Topics: guest execution
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Why I Spent 200 Hours Writing Culture Code Instead of Python Code

By Dharmesh Shah on March 20, 2013

If someone had told me a few months ago that I'd be spending more hours in PowerPoint than PyCharm (an IDE for programming in Python) I'd have laughed at them (not out loud though). Sure, I've been known to create some slides — and I do some occasional public speaking, but I don't usually spend crazy amounts of time on a slide deck. 

Except this time.  I've now clocked well over 200 hours on a single deck (including thinking/discussion time).  It's the HubSpot Culture Code deck (available for your viewing pleasure below, or http://CultureDeck.com).  

Background

I've been reading, thinking and talking a lot about culture lately.  A couple of years ago, I started a simple document for use within my startup, HubSpot, that talked a bit about culture.  The document described the “people patterns” of HubSpot — what kinds of people were likely to do well at the company.  Said differently, if I were to write a grading algorithm to predict the likelihood of success of a given employee, what would the parameters of that function be?  We identified things like being humble and analytical (2 of the 7 things).  That document turned out to be relatively useful — and well worth the time.  We've used it during the interview process, we use it during reviews. 

I continued to get feedback from the HubSpot team that the original culture deck at HubSpot was starting to get a little dated — and it didn't go far enough.  It talked about the kind of people that were a match — but it didn't talk at all about beliefs or behaviors.  Meanwhile, the company is growing like wildfire.  We're 460 people now and adding 25+ people every month. 

So, I thought to myself:  “Self, maybe it's time to update the deck…”  I set out on a quest to talk to a bunch of folks, run some surveys, get some feedback, read a bunch of stuff, etc.  One thing led to another…and another…and another, and here I am. 

If one needs 200 hours and 150+ slides on culture, is something wrong?

Maybe.  But, this is likely more a function of my neuroses than a reflection on HubSpot.  And, all things said and done, I don't really regret having spent the time.  The result, I think, is really good.  People I trust to tell me the truth and that I respect immensely have told me the deck is good.  It's not the same level as the Netflix culture deck, but it's not terrible.

Speaking of the Netflix culture deck, you've read it right?  Right?  If you have time to read only one 100+ slide deck about company culture, you should read the Netflix culture deck (convenient URL: Netflix.CultureDeck.com).  If you have time to read two 100+ slide decks on company culture — read the Netflix deck twice.  It's that good.
brain digital

Why I'm thankful to Jason Fried and 37signals

Jason is a brilliant thinker and a brilliant writer.  He's got some great posts on culture, like “You Don't Create a Culture”.  Which is why I was a little worried when I sent him a preview (private beta) of the deck I was working on to get his reaction.  I was fearful. My thought was “He's going to think I'm an idiot.  Or worse, clueless.”  Turns out, he was gracious. He acknowledged that 37signals and HubSpot are different companies, pursuing different paths.  I could have been brave and dug into this comments a bit more, but I decided not to push my luck because it would have been somewhat crushing.

I also enjoyed “When Culture Turns Into Policy” by Mig Reyes of 37signals.  He's right  But, I feel like I'm in the correct side of truth and justice on this particular front.

The more sobering article was “What Your Culture Really Says” (not by 37signals, but by @shanley — someone I don't know).  Well written and biting in its criticism of what she calls “Silicon Valley Culture”, it was something I read a couple of times and circulated around to a few folks on my team. I recommend it. It's dark, but worth reading.

Why I think it was worth it, and why I'd do it again.

1. Culture is super-duper important, and it's worth spending time on.  Check out my recent post “Culture Code: Creating a Company YOU Love”. I think it makes a pretty good case.

2. Already, the deck is being used internally within HubSpot.  I've gotten both physical high fives and virtual high fives from people on the team.  That makes me happy.

3. Even before posting the HubSpot culture code deck to public beta today, I had already started sending it to people that I was trying to recruit to HubSpot.  Though ideally, I'd get to meet everyone and tell them about our culture code in person, that's just not possible.

4. Going through the exercise was one of the most challenging and revealing things I've ever done since starting the company 6+ years ago.

5. Working on our culture code project caused me to talk to a bunch of people that I didn't otherwise know and would probably not have been able to connect with.  People like Patty McCord (co-author of the Netflix culture deck). 

6. It's been therapeutic.  Now, if HubSpot ends up going down in crashing, burning flames (which is totally not the plan) — at least I'll know that we tried to design and defend our culture. 

7. We're about 4 hours into the public beta release of the HubSpot culture code deck.  It's already gotten 16,000 hits and is going strong.  This is gratifying.  My hope is that a few of those people found the deck useful. (And maybe a few of them will join our merry band of misfits at HubSpot someday).

If you're getting started, spend 20 hours, not 200.

One of the common questions I get from my startup friends is how much time they should be spending on culture — given everything else going on (like you know, building a business).  I'm not sure what the optimal number is — but I can say with confidence that the number is not zero.  I'd suggest 20 hours.  Just enough time to think about it, talk to your team, read some stuff and describe it.  You don't need to put posters up on the wall.  Just something — even if it's a one-pager that captures your current thinking on the kind of company you want to be.

Quick hint:  You want to build a company that you love working for.  The rest will work itself out.

What do you think?  Have you scanned through the deck?  Was it useful?  Lame?  Interesting?  Would love to hear your thoughts.  I think of the deck as being in “public beta”, so I'll be iterating on it and updating it regularly.   

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Getting Crunched, Mashed Or Beaten Is Not A Launch Strategy

By Dharmesh Shah on March 19, 2013

This is a guest post by Alex Turnbull.  Alex is a serial SaaS entrepreneur and the CEO of Groove, a customer support software platform for startups and small businesses.  Alex was previously a co-founder of Bantam Live, acquired by Constant Contact in 2011.

It’s here!

After many, many months of long hours, take-out and cheap beer, launch day is finally here.

Your eyes are sore from not having looked up from your computer in what seems like ages, and every part of your body is screaming at you to get some sleep, but you’re too hopped up on coffee and adrenaline to listen.pot of gold

This is it. This is what we’ve been working our asses off for. To reveal ourselves to the world in all of our disruptive glory. Silicon Valley will kneel before us.

It’s like the slow, painstaking ride to the top of the first drop on a roller coaster; you just know it’s going to be absolutely exhilarating, but first you have to trudge all the way to the peak of a steep climb. Tired of waiting but itching with anticipation, you finally reach the top, and then…

Nothing.

Not a damn thing.

Scoble isn’t billing you as the next Instagram. You’re not showing up on Techmeme with a dozen stories about your launch. And the traffic. That sweet, traction-building traffic that you’ve been awaiting — the traffic that was going to prove that people were interested. That they wanted you. It never comes.

Who’s to blame for all of this?

That’s easy. TechCrunch. Those bastards.

If only they had read your press release, they would’ve seen that your story needs to be told! Your product is unique and compelling, dammit! How could they do this to you? How could they crush your dreams of a successful launch by totally ignoring your pitch?

Of course, you’re a startup. Bouncing back is in your DNA, and you get right back to work. But the experience is discouraging, and I've seen this story play out way too many times with friends and founders I’ve spoken to. And know that I’m speaking from experience: I've absolutely made this mistake before, too.

Here’s the reality: pitching TechCrunch is not a launch strategy.

It seems obvious, but it takes more than one hand for me to count the number of times a founder has told me that they expect their launch traction to come from getting picked up by TC (or Mashable, or VentureBeat, or AllThingsD, or any one of a number of similar outlets).

What every single hopeful founder with a similar plan doesn't realize (or doesn't take seriously enough) is that there are hundreds of other founders doing the exact same thing, and hitting the exact same “Tips” email account with their pitches.

Don’t get me wrong, here. Press is good, startup bloggers tell important stories and press outreach should be a part of your launch strategy. But it’s not enough.

So what’s a startup to do?

Let’s get this out of the way: a lot of folks will tell you that the first thing you should be focused on is building a great product that improves people’s lives. And they’re absolutely right. Nobody wants to hear about a crappy product, and more importantly, nobody wants to share your crappy product with their friends.

But let’s assume you've got something amazing. How do you get the world to notice?

First of all, shift your thinking. F*ck the world. It’s “tell everyone” approaches like this that lead to launch strategies like the one above. You don’t need the world to notice. You need highly qualified potential users to notice, and there’s a huge difference.

At Groove, we spent twelve months in beta, rigorously testing and iterating our HelpDesk and LiveChat apps to get them ready to launch.

But here’s something else we did, that you can do, too: we spent that time rabidly collecting email addresses of potential users. We asked our most engaged beta users to share our website (and lead collection portal) with their networks, we blogged about topics that were interesting to a customer support audience, and we wrote content for external outlets that brought value to readers, and loads of inbound leads to us.

When launch day came, we were ready: press release, pitch list, product video, blog post, email blast, the works. Here’s how it played out:

We pitched our press list.

The good people at TheNextWeb covered our beta launch a year ago, so they were interested in how far we've come. They wrote a great piece about us, and the inbound traffic got us about a few hundred signups. It was awesome.

Like everyone else, we also wanted to get Crunched. Or Mashed. Or Beaten.

Ouch.

But what hurt even more, is that like almost everyone else, we didn't get covered by any of them.

I have no doubt that a barrage of press coverage would've gotten us even more new users, but we knew that the odds were against us, so we planned for it.

Taking our carefully nurtured list of email addresses, we sent out an announcement about our launch, with clear calls to action to sign up and get in on the fun.

The result?

Double the signups, at nearly four times the conversion rate of visitors coming from the TNW piece.

Note that we didn't email this list cold: we had spent months giving away content for free, nurturing the relationships, before asking for anything. I can’t stress the importance of this enough.

We also sent an email out to beta users, announcing the launch and asking them to share Groove with friends who might find it useful. That email netted us another 120 users, at a conversion rate nearly double that of the TNW traffic.

It shouldn't be surprising that the most valuable traffic we got came from qualified leads we had already nurtured. But the problem is that most startups won’t make the effort to build that audience until after launch. I know, because as I've mentioned, I've made that mistake, too.

Look, I know that as an early-stage team, the chances that you have a full-time content person are nonexistent. But the chances that someone on your team has a modicum of writing chops are pretty damn good, and getting them to invest a couple of hours a week in this exercise can pay off in spades when the time comes.

At a loss for what to write about? Every startup should know how their customers think, and knowing what’s interesting to them is a major part of that, and it’s absolutely okay to ask them what they’d like to read about from you. Email them, survey them, chat with them. They'll appreciate it. Trust me.

In the meantime, here are a few ideas:

  • Write about your startup experiences - be honest and transparent (check out Balsamiq-founder Peldi’s blog, where he captures this masterfully)
  • Stir the pot. Share your thoughts on controversial topics with your audience.
  • Offer best practices for your space.
  • You’re probably an expert in whatever it is that you do — share your knowledge.
  • Everyone likes a success story. Or one about failure. Tell yours.
  • Show off case studies and interviews with your customers. This clues your audience in to what others using your product are doing well, and makes the featured customers feel good about themselves (and their relationship with your company).

Summary: Getting Crunched is not a launch strategy, and you shouldn't bet on it to make your startup blow up. Reach out to the press, but diversify your launch plan to reach qualified leads that you've already been nurturing. Invest in content. Profit. The end.

Topics: guest marketing PR
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Culture Code: Creating A Company YOU Love

By Dharmesh Shah on March 9, 2013

This article is available at http://CultureCode.com -- the slides and content will be updated periodically. I'm working on a really big project on the topic of culture.  Follow me on twitter (@dharmesh) to get an update on March 20th when it comes out in public beta.

This article represents the notes and slides related to a talk I'm about to give (in less than 60 minutes) at the #LeanStartup event at #SxSW 2013.


Here are my notes on the talk.  Note:  I'm writing these roughly 90 minutes before I go on stage, so they're a bit rough.  

1.  Posted the historical recurring revenue numbers of HubSpot.  Rationale:  Transparency is one of our core cultural values at HubSpot.  So, every year, we post our financial deck with details   

2. Entrepreneurs don't spend many calories thinking about or working on culture.  There are several common reasons for this:

a) Culture?  We don't need no stinkin' culture!  We're putting a dent in the universe.  That's our f*!#ing culture!

b) Culture?  Relax.  We got this one covered.  We have free beer and a ping poing table.

c) Culture?  You can't really create that.  It has to be built organically. It just comes from the behaviors and example of the founders.

All of those are reasonable positions to take.  They're misguided, but they're reasonable.

a) Most of the startups that did end up putting a dent in the universe didn't really know that they were going to succeed at it.  And, one of the few common characteristics of super-successful companies is that they have a distinct culture.  Google.  Facebook. Zapps. Netflix.  The list goes on and one.  

b) Maybe you can't create a culture -- but you can certainly destroy it through neglect.  The 2nd Law of Thermodynamics applies here.  Left alone, most things degrade to crap.  In the early days, it's OK to rely on the behavior of the founders and early team to set the culture.  That works great.  The problem with this model is that as you start to grow, there's a fair amount lost in translation.

3. Convention over Configuration.  Yes, you could just let people make decisions organically based on their best interpretation of whatever they think the right model/framework is.  But, I generally favor convention over configuration.  Why not just have a convention (i.e. culture) that makes a large body of easy decisions and a small body of hard decisions easier?  The result is more efficient and more consistent decision-making.   

4. product:marketing :: culture : recruiting
product is to marketing as culture is to recruiting.  Yes, you might be able to do amazing marketing -- but it's not going to matter if the product isn't amazing.  It's a tough slog.  Similarly, if you're looking to recruit amazing people (who isn't), you're going to need to a great culture.  The kind of culture that will appeal to the right kinds of people and get them to self-select.
5. The interest on culture debt is really high.
You've heard about technology debt.  That's when you take short-cuts today, because you *need* to get something out the door.  You willingly take these short-cuts, because time is suer-valuable (just like cash is valuable when you take on financial debt).  But, you understand that there will be a time to pay off that debt.  And, the debt carries an interest rate.  Culture debt is when you take a short-cut -- hire someone now because they have the skills you need and you're *hurting* for people -- but they're not a good culture fit.  You let the "culture bar" down.  You might do this for logical reasons.  For the same reason you might incur technology debt or financial debt.  
I'm going to posit that the effective interest rate on the culture debt you take on is often higher than that of technology debt.  That is, when it comes time to pay off the debt -- a lot of damage is done.  There are a couple of reasons for this:  1) When you incur technology debt (like not adding sharding to your database), you generally will start feeling pain at some point, and you'll then decide to pay off that debt.  It's a *known* problem and when you solve it, you'll sort of know you did. That's not the case with cultural debt.  Culture debt is insidious.  It creeps in slowly.  It's hard to measure.  2) Technology debt is often "forgiven".  This happens when a short-cut you took ends up not being a bad thing anyways.  An example might be that you hacked together an MVF (minimum viable feature) for something in the app.  The code is crap.  You're not proud of it.  Then later, you decide to abandon that particular feature.  Guess what, your tech debt on that feature was just forgiven.  That almost never happens in cultural debt.  If you bring on people that aren't a fit, they'll infect other parts of the organization, and will be really hard to get back to where you want to be.
6. Create the culture you want, not the one you think you should have.
There's a lot of content out there regarding "winning" startup cultures.  Some will advocate for an open/transparent culture.  Some for a design-focused culture.  Some for a service and customer-centric culture.  Fact is, any of these will likely work.  The key is to understand what it is that defines your culture (and importantly, what makes it differetn from other companies) -- and to build alignment around that culture.  And, in order for the culture to survive long-term, you need to love it.  You need to believe in it.  If you simply try to tweak the culture based on what you think the right answer is, you'll lose steam and lose conviction.  Game over.
Summary:  You can nudge your culture.  It's worth it.  You're going to have a culture anyways -- might as well build one you want.  
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Classes They (Thankfully) Don't Teach At Startup School

By Dharmesh Shah on February 19, 2013

The following are some hypothetical classes that I'm thankful they don't teach at places like Y Combinator, TechStars and 500 Startups.student airplane

11 Classes They Should't Teach Founders

1. Dress To Impress VCs: The Art of Wearing A Tie

2. Click, Drag, Extrapolate: How to Use Excel For Startup Financial Projections

3. How to Win Friends and Influence People by Writing a Business Plan.

4. My Parking Spot:  A Founder's Guide To Executive Benefits

5. The Care and Feeding Of a Tradeshow Booth Babe(*)

6. How To Design Software Systems For Infinite Scale on Day Zero

7. You Win, They Lose: Brass-Knuckled Tactics To Use Against Your Team

8. Ego Marketing: How To Buy A Superbowl Ad

10. How To Be a Patent Troll For Fun and Profit

11. Selling On Stage: Hocking Your Wares To An Unsuspecting Conference Audience

* For the record, I completely detest the whole idea of a booth babe. Reprehensible.

What are some of the classes you're thankful they don't teach?  Please share in the comments.

Topics: humor
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Avoiding Undue Diligence: My Strange Approach To Angel Investing

By Dharmesh Shah on February 4, 2013

In a few weeks, I'm going to write a $25,000 check to invest in a company that currently does not exist.  There is no company.  There's no team.  And I have no idea what the company will do or hopes to do.  I'm investing almost completely blind.  More on this craziness a little later in this article.

To understand why I would do something so crazy, let me first catch you up a bit on my angel investment history and “strategy” (and I use the word strategy very loosely).  It's not your typical story.money bag

I first started angel investing while I was a graduate student at MIT.  I had recently sold my last company, made some money and went back to graduate school to figure out what I wanted to do next.  I had promised my wife it wouldn't be another startup (startups are hard) so my plan was to do angel investing.  It was a way for me to scratch my entrepreneurial itch by vicariously living through other entrepreneurs.  Lots of fun, and almost no pain.  Seemed like a great idea.  And it was. 

The first entrepreneur I invested in (not counting myself) was Brian Shin — his company was Visible Measures.  He was a classmate of mine in “New Enterprises” at MIT.  Brian was literally one of the smartest people I met during my time at MIT.  And, he could hustle like nobody's business. So, I invested $50,000 despite not really knowing Brian and not really liking the original idea (they have since pivoted).  And, not really knowing what the heck I was doing   It turns out, to be an angel investor there is only one requirement:  You have to have to be accredited (i.e. have the money to be able to afford the risk).  You don't have to go to angel investment school, take any tests or otherwise prove your mette.  You just need cash and be willing to write checks.

I continued making investments all through graduate school and then post-graduation, as I was building my own startup, HubSpot.  I've now made 35+ investments.  You can see most of my AngelList profile. What makes my approach unconventional is that I have a few “rules”:

All of the rules are based on one simple constraint:  I have no time.  I have no time to spend on/with startups because I'm maniacally committed and focused on my own company (HubSpot), which is doing very well.  That's where all available time goes.  If I didn't have these rules in place, I wouldn't be able to angel invest at all.

So here are my rules:

1. No due diligence.  Seriously, almost none.  In over half the deals I've done, I've never met the entrepreneurs or talked to them on the phone.  Generally just exchanged an email or two.  My rationale here is two-fold:  I'm optimizing for my time (my biggest constraint) not magnitude of outcome.  Also, I think at the very early stages, most diligence that typical investors spend time on is “undue”.  There's just not that much that's knowable.  Either you like the people, or you don't.  You like the idea, or you don't (which is irrelevant, because the idea's likely going to change anyways). 

2. No follow-on investments.  This one's controversial.  Many would argue that it's economically stupid for me not to “double down” on the deals that I have a right to maintain my pro-rata investment.  They might be right (but I don't think they are).  The reason I don't do follow-ons is that it requires spending time (which I don't have) and for the deals that I don't invest in, I might create a signaling problem for the entrepreneur.  By unilaterally not doing any follow-on investments, all signaling issues go away.  This has worked brilliantly for me so far.  I take the money that I would have invested in deals I'm already in, and just channel it to new startups.  In the grand scheme of things, I think this works out well for everyone.

3. No advisory board positions or official involvement.    Once again, this goes back to the lack of time.  I don't have time to commit, so I don't commit it.  Occasionally, I'll make an email introduction, or see entrepreneurs in my portfolio for a nice dinner — but other than that, they almost never see me or hear from me.

Overall, my unconventional approach seems to be working OK.  I'd put my angel investment portfolio up against any early-stage investor (angel or VC).  After all is done, I'm going to make a fair amount of money.  If you don't think so, just check out my portfolio.

And, to those that might criticize my unconventional approach and classify me as "part of the problem" (the problem being, the "Series A Crunch"), I have a simple response/position:  There's no such thing as too many companies starting up.  But, there is such a thing as not enough companies shutting down...but that's a different problem.  

Important Note:  If you are seeking angel investment, just about all of my investments these days are through AngelList (Disclosure: I'm not just a member of AngelList, I'm also an investor).  And, I focus exclusively on Internet/software companies.  

 


launch festival

So, back to my crazy $25,000 investment.  A few weeks ago, I heard about the upcoming LAUNCH Festival hosted by Jason Calacanis.  Jason sent an email out announcing that as part of LAUNCH, he was putting together the best hackathon in history.  Jason was going to angel invest $25,000 into the winning team.  When I saw that email, I thouht “that's a pretty good idea, and I've done stupider things”.  So, I volunteered to match Jason's $25k with $25k of my own. Secretly, I'm a major, major believer in hackepreneurs.  If I can buy into someone that manages to get in to the LAUNCH hackathon and then wins -- I think it's a pretty good bet.  

Hope you get a chance to attend LAUNCH.  It promises to be an amazing event.  And, if you're the hackepreneur type, hope you'll participate in the hackathon and take my money.  

Cheers.

 

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The 4 Personality Types Every Startup Needs

By Dharmesh Shah on February 1, 2013

Anyone can have a killer startup idea, but in order to make that idea succeed you’ll need an unbeatable team. Crafting the perfect team is an art -- one we're constantly trying to refine at my startup, Boundless.

We’ve found that a structured process yields the best new hires. This starts with first understanding the skills we need to fill. But we don’t just try to fit anyone with the right experience into a role - we go further and search for the right personality for the position as well. Throughout the entire hiring process, we’re constantly looking for signs of the four most important startup personalities: The Beast, Lara Croft, The Architect, and The Most Interesting Man in the World.xmen small

Our initial process is probably quite similar to many other startups. First, Boundless job candidates need to have a presence online. If we can’t find you online, you don’t exist, which means we’re not going to start the interview process. Next, candidates go through a phone screen to determine basic experience and qualifications. Those that survive the phone call visit with multiple team members on-site, where they’re assessed on skill and personality.

However, the final step is a little different. Before securing a job at Boundless everyone gives a 20 minute presentation on your personal or professional passion. We like to give the entire team a chance to see the candidate, and give the candidate an opportunity to impress the team with anything they want. We’ve seen people present on Tai Chi, cupcakes, coffee, how to build an art collection on a budget - all kinds of interesting, quirky and funny topics. And, of course, by this point in the process we have a strong idea of the type of a person the candidate is.

The Four Critical Startup Personality Types

The Beast, Lara Croft, The Architect, and The Most Interesting Man in the World. When filling a role at your startup, you need to find a candidate that embodies characteristics from each of these personalities if you are going to create a culture that changes the world. I firmly believe that a large part of my company’s success is driven by employees with characteristics strongly matching these personalities.

Here’s how to identify these four startup personalities:

The Beast

The startup Beast, modeled after the X-men character, possesses a “get shit done” mentality. A Beast’s raw animal output ensures they get more done in a day than even the most caffeinated worker bee. These people strive to be the very best in their profession, and doing more than seems humanly possible helps them get there. Look for people with high levels of productivity at their last positions and ridiculous amounts of drive and energy.

Lara Croft

When hiring, look for adventurers with an entrepreneurial spirit. These Lara Croft types create goals and projects for themselves to enhance the company values or goals. People who are self starters, self motivated, who have built things on their own time to scratch their own itch are Croft. Their adventurous minds dream big to help inspire the team.

The Architect

The Architect, inspired by the character from The Matrix, understands the big picture and can still focus on the details. These are the people who have a productivity hack for nearly all aspects of their life. Being productive and organized with the details helps The Architect keep the big picture in mind. You can spot Architects as people who have taken pride in a craft or know the intricate details of their previous position plus can clearly articulate the high-level strategy.

The Most Interesting Man in the World

At any fast-growing startup, you’ll spend a lot of time collaborating and hanging out with your colleagues. To make your office lunches or happy hours more enjoyable for all involved, hire people with character and charm for your team. The Most Interesting Man in the World, seen in the Dos Equis commercials, adds depth to your company culture. And in tough times, the Interesting Man (or woman) is the person you want fighting on your team and who help keep you going during the tough time. Don’t just look for goofballs - find people who have overcome difficult challenges and kept a positive attitude.

By hiring based on these four personalities, Boundless has built a team that not only has the capacity to build the best learning platform possible, but a team that continues to attract other top-notch people to share the journey with us.

We recently had the pleasure of welcoming Healy Jones to Boundless as our new Vice President of Marketing. The Beast in Healy helped our open textbooks initiative get written up in TechCrunch, and his wine tasting team presentation won him a nod in the Most Interesting Man in the World category. He joins Boundless from OfficeDrop where he was VP of Marketing, where he helped grow the user base 120 times in two years.

Whether you’re hiring a new team member as a VP or entry-level, remember that killer personalities help make the journey from idea to strong startup possible.

This is a guest post from Ariel Diaz. Ariel is the CEO and co-founder of Boundless, which creates free textbooks for college students.  

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Entrepreneurs: *DO* Be A Hero

By Dharmesh Shah on January 2, 2013

A few minutes ago, I came across this tweet from my friend and co-founder at HubSpot, Brian Halligan.

halligan tweet

This got me to thinking (which is often a dangerous thing), am I taking enough risks?  Am I being daring enough?  Am I being a hero?  Answer:  Not often enough.

So, here's advice to my future self and all of you:  *DO* be a hero.

1. Be a hero.  Go after that big, powerful incumbent that doesn't delight its customers enough.

2. Be a hero.  Hire that awesome, amazing person -- even though they don't fit any of the roles you're currently looking for.hero woman 2

3. Be a hero.  Make that sacrifice that will negatively impact your profits but completely aligns with your passions.

4. Be a hero.  Make that really, really hard decision that even the smartest people you know can't seem to agree on.

5. Be a hero.  Say no to that accomplished, super-successful person that your team interviewed, loved and convinced to join -- but doesn't fit your culture.

6. Be a hero.  Kill that stupid company policy that nobody can recall the rationale for, but you suspect was because someone (maybe you) had a friend who knew a guy that had read about a startup that didn't have that policy and that company failed.

7. Be a hero.  Launch that super-secret project you've been working on even though it's more likely to fail than succeed.

8. Be a hero.  Admit that you've changed your mind on the decision you so passionately advocated for a few months ago

9. Be a hero.  Confess to your team that sometimes you take the safer path out of fear and rationalize that you're doing it for the good of the company.

Topics: strategy
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Early Evidence Is Often Too Early And Not Really Evidence

By Dharmesh Shah on January 2, 2013

The Lean Startup method strongly advocates experiments -- and for good reason.  It's critically important for a startup to acquire validated learning as quickly as possible.  How quickly can you get through a learning cycle?  How efficiently can you get to the answers to crucial questions?

You might run experiments that will answer some of your most pressing questions: 

1. Will adding this feature cause more people to start paying for the product?

2. If we increase our prices, will our overall revenue increase or decrease?

3. If we make this feature that was previously free part of our premium offering, will users be upset?

Experiments are great -- but one word of warning.  Be mindful of how much data you need and how "clean" your experiment needs to be in order to yield the learning you are seeking.  A mistake we often make is looking at the "early evidence" from a particular experiment -- and then, in the interests of time and/or money (both of which are in short supply), use that early evidence to make an "educated guess" and move on.evidence cartoon

This "educated guess" based on some early evidence is often "good enough".  There are lots of questions for which you don't need perfect answers.  All you need is something reasonably better than random -- or something that validates a strong "instinct" you already had.

But, be careful.  The rigor of your experiment should match the importance of the issue at hand.  If it's a big, important decision that will shape your company for a long time, don't just rely on the "early evidence" and use it to rationalize whatever it is that you wanted to do in the first place.  Take the time to let the experiment run its course.  For big, important, critical issues -- the extra rigor is worth it.

Example:  You want to know whether taking a particular feature *out* of your product is going to have a major impact on your users.  The feature didn't work out as well as you had hoped, and it ended up being very expensive to maintain.  So, you send a survey out to your 5,000 users.  Of the first 500 responses that come back, 80% of the people ranked the feature as "Super-duper important, if you take it out, I'll use another product".  So, you could just take this early evidence, extrapolate and say -- "Hey, if 80% of our users really want this feature, we should just keep it in."  In reality, what might be happening here is that the users that were most passionate about the feature, and thought that you might cut it are the ones that first responded to the survey.  Users that were kind of "meh" (or didn't even know the feature was there) might take a while to respond, if it all.  Basically, the early responses are not representative of your overall user-base.  If you let more of the evidence come in, you might find that the actual number of users that care is much smaller than the "early evidence" showed.

The Danger of the Self-Fulfilling Prophecy

Another thing to be careful of when it comes to "early evidence".  If this early evidence leaks into the organization, you often will trigger a self-fulfilling prophecy and wind up with a potentially misguided decision.  

Example:  You ask your sales team to start selling a new offer (could be a feature/product/promotion).  Understandably, the first few attempts don't work out very well -- the sales team hasn't quite figured out yet how to position the offering.  It will likely take a few weeks.  In the meantime, word starts to spread that this "new thing" isn't selling all that well.  As a result, the team pulls back a bit and reverts to selling the "old thing" (change is hard).  This of course, causes even fewer sales of the new thing -- and it ultimately gets abandoned.  Now, that might have been the right decision.  Perhaps the early evidence was right -- but you don't know for sure.  What if just a couple of weeks of training and tweaking would have fixed the issue.  Perhaps it would have been awesome.

In summary:  Don't confuse early evidence with compelling evidence.  Avoid letting early results of an experiment taint the rest of the experiment.  And, match the rigor of your experiment to the importance of the decision on hand.

Any examples you can think of when early evidence is misleading?  

 

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Doubtliers: Erroneous Lessons From The Exceptional

By Dharmesh Shah on December 26, 2012

There are great lessons to be learned from many exceptional companies like Google, Apple and Amazon. But, can you just copy the best practices from these amazing companies and use them to succeed at your own business? I doubt it. 

There is risk of pulling out the wrong lessons from these outliers. To be exceptional, they have to be the exception -- not the rule. Often, what worked brilliantly for them might be a blunder for you.woman question

If you or one of your colleagues ever make arguments that sound similar to these, take a step back and question your assumptions:

"This worked for Apple and Steve Jobs..."

"But, Google does it this way, and they've done really well..."

"That didn't seem to stop Amazon..."

Here are the types of mistakes we make when looking to learn from leaders:

1. Then vs. Now

When you are looking to learn from great companies, be mindful that you undestand the history of the strategy or tactic you are looking to learn from.

Example: Google makes deep investments in technology and infrastructure. Rather than taking "off the shelf" tools and technologies, Google uses custom-built servers and operating systems. Though this makes great sense for Google, given their scale -- does that level of customization make sense for your startup? What did Google do when they were your size?

2. Loss Leaders are a Luxury

Big, well capitalized companies can often make big bets and investments that most startups simply can't afford. They can often use these "loss leader" strategies because they have a diversified revenue base and can gain an advantage by losing money in one project with the hopes of making it up in another -- often after many years.

Example: When Amazon sells the Kindle, it intentionally does it at razor thin margins (the actual razor, not the blade). The reason Jeff Bezos provides for this strategy is simple: "We want to make money when people use our device...not when they buy it." That works great for Amazon, because in the long run, they will make money. But, unless you're Amazon and can afford to give something away at low or no margin, it might not be the right strategy for you.

3. Great companies don't always make great decisions

When we look at successful companies, we automatically assume that every strategy or tactic they used contributed to that success. That's unlikely. Sometimes companies are successful despite some missteps along the way -- not because of them. If you're making a big decision based on whether or not it worked for someone else, dig into the details. Try and figure out the context of that particular strategy. Talk to the people involved. Did they think it was a great strategy? What were the tradeoffs? What surprised them? If they could do it over again, would they?

Example: When Apple decides for a more closed and proprietary system, do they win in the long-term because of those decisions -- or despite them, because they are so good at everything else? Could other companies succeed with a similar strategy?

It is a weak argument to say you should be doing [x] just because some super-successful company did [x] and it worked for them. They were a different company at a different time -- and in many cases, even the teams that made some of those decisions are likely not certain as to whether they were the right ones.

When you're faced with big, company-changing decisions don't use outliers as a way to rationalize what you want to do. Dig deeper. Do some additional research. Analyze the tradeoffs and make the right decision given your context.

What are your thoughts? Any other common mistakes you've seen people make when trying to learn from the leaders?

Topics: strategy
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Our PR Stinks: Here's What Your Startup Can Learn From It

By Dharmesh Shah on December 20, 2012

We were convinced from the very beginning that strong PR would be the answer to our market entry prayers. This is the story of how our reality turned into something of the opposite effect.

The Familiar Doubt

Many friends, fellow founders and business professionals told us along the way that creating a B2B interactive business platform would be a difficult project. (Hey, we knew that.)

People later told us that the most difficult aspect would be market entry. (Again, no surprise there.) The consensus among those critical of our venture was consistent, and usually along the lines of, “Don’t you want to do something more glamorous than a B2B platform? Maybe something B2C?”describe the image

(Actually, we believe our concept is glamorous and quite frankly, exactly what we believe the B2B market calls for.)

Any way you thought about it, the task at hand was going to be tough. The start was the most challenging, with an idea and an empty platform. But we were not the first facing this issue; surely there would be ways to maneuver our way into our key markets?

We knew some companies who successfully bought profiles or created fake ones, but decided that if we really believed in our concept, we would need real people behind genuine profiles and articles. And that we would need press coverage.

How did we solve the first problem of filling the platform?

We first talked face-to-face with various professionals we knew to get them interested and excited enough to participate on the platform, even though the it was new. It was hard, but we did it. Twice. Once on the German site, and again, when we went international with the English platform.

We were ready to move onto the next stage.

 Growth.

How do you go about growing something like a self-publishing platform for B2B professionals? How do you create public awareness? Would press coverage do the trick? High-profile technology publications, with all of their reach, would be a nice start…wouldn’t they?

Indeed, we tried various forms of press outreach. After making a bad choice with a PR company for the German market, we chose the PR Company for our international venture with care. After months of consideration, research and negotiation, we made a deal with high hopes that we would see the benefits of this lucrative investment. While it would be wrong to say we gained nothing from this several month contract, it would be an exaggeration to say that it was worth the time, energy and money to do it again.

Maybe we chose the wrong firm or worked with people not experienced enough with an international, startup market. Regardless of the reason, we only barely inched along.

Eventually, we were forced to go out on our own to create brand awareness and ignite public interest.

The Big Guys

This time, we aimed for the big guys and landed one on our own. Coverage on GigaOM inspired positive feedback surrounding our concept and functionality. But as it turns out, getting highly coveted coverage is not enough. What happens is this: you get a spike of traffic, a couple of hundred or even thousands of visits for a day, but only a fraction of the traffic persists.

PR can work if you manage to stay continually on the radar of journalists. We did not succeed in getting enough “coverable” news out over and over again and thus faced the problem of limited exposure.

After personal and fired efforts, what did we learn?

Our PR still stank.

Without a celebrity investor or seven-figure financial round each month, we were forced to do what startups do best: build something from nothing, by using what we had.

Looking back, this hardship turned out to be a great thing for our business development. Without being able to rely on press coverage, we were forced to learn and engage in a marketing strategy - to find other ways to generate traffic and convert our target audience.

Essentially, our lukewarm PR made us better entrepreneurs.

How, exactly, did we manage to grow?

As a social publishing and content marketing platform we decided to do exactly what we had been advising our target group to do: run a content-based, social media campaign. The steps were as follows:

1. Research our target group: This involved getting to know the habits and motivations of our target group within each social media and online channel. It also required us to understand the conversations that were talking place about issues relevant to our service and knowing what our industry influencers were saying. Specific to our success, were analyzing Twitter and LinkedIn.

2. Connect with influencers: Connecting with influencers allowed us to learn the language of our industry and lay the foundation for future interaction. When we later began to produce content, we could guest post on these influencers’ blogs/websites and involve them in a series of interviews. In both cases, we found ways to expose ourselves to their followers.

3. Create content of utility: We knew that content had to be informative and engaging. Yet, the content that really made a difference for us was that which offered our platform and social media communities a sense of utility. If our content could be used to better understand the industry or tackle a common problem, it was more likely to be shared and discussed.

4. Publish content: This was when we had the opportunity to do what we had been advising our target group to do the whole time: publish on exploreB2B. Not only did we publish articles on our platform, we guest posted on active and relevant sites and blogs.

5. Distribute content: Publishing content was only one step of the battle. Distributing the totality of our content through our social communities served to create leads to our platform and, in turn, grow these subsidiary networks.

6. Continue to grow online communities: This was one of the largest factors in our spike in traffic and referrals. Once we grew our Twitter accounts and initiated daily interaction in LinkedIn groups, whole communities of like-minded people were exposed to – and became familiar with – our brand name. Growing our Twitter account from miniscule numbers to five-figure followers became a powerful increase in our visibility. Even though we are B2B, this kind of “social branding” played a large role in our growth.

Through a campaign of trial and error, we learned that social media and content marketing success is not immediate – and that it is not the result of one magical post. The persistence of our actions and the combination of the different measures resulted in a social media following, trust in our content, visibility, and stable platform growth.

What were our end results with PR?

1. A spike in traffic during April 2012.

Yes, that’s it. And it was smaller than our current (steady) growth rates.

What were our end results with content marketing?

1. Brand awareness.

2. Connection to key, industry influencers.

3. Large and active social media followings on more than one network.

4. Trust in our useful and engaging content.

5. An increase in weekly visits by a factor of ten.

6. An increase in registrations by a factor of ten.

In the few months we have spent content marketing, we have achieved something that gives much more value to our company than traffic spikes created by media coverage. We have an ongoing dialogue with our users, a network base that constantly returns to our site, and consistently grow our traffic.

Results from our content marketing campaign far outweigh any benefits we gained from being covered in the press.

We have survived by making ourselves the leaders of our own movement, utilizing the platform we created, employing the marketing strategy we recommend and connecting to thought leaders in our field.

clip_image002

Weekly traffic of exploreB2B from March 2012 to November 2012

Though our content marketing results were not instant, we were able to use this time to build trust and establish a reputation in “social business.”

With positive user feedback and a steady increase in their own article production, we now sense real stability in our social media and platform interactions.

At this point in time, our PR still sucks.

But, maybe that is just the point. It is due to the fact that our PR was not successful that we attained something that has proven more valuable in the end: steady, self-achieved, and sustainable growth.

The Fate of Your Brand

My advice for startup growth is to not rely on press to determine your market reputation. Instead, formulate a connection to your target group members by telling your own stories and sharing knowledge that defines your industry leadership. This provides a foundation for your own means of security and growth.

Using methods such as social media and content marketing, figure out where you can reach your target group and pursue them in helpful and entertaining ways. It’s not the tech journalists, bloggers and authors covering your competitors who protect and ensure the bottom line of your company.

In the end, it comes down to the people who trust you and find value in your ideas to decide the fate of your brand.

This was a guest post by Susanna Gebauer.  She is one of the founders of the social publishing and content marketing platform, exploreB2B. You can also find Susanna on Twitter.

Topics: guest marketing PR
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21 Quick Quotes From The New OnStartups Book

By Dharmesh Shah on December 18, 2012

tl;dr Woo hoo!  There is a brand-spankin' new OnStartups book available.  All royalties that I make will be donated to Kiva to help entrepreneurship worldwide.

As many of you regular readers know, the OnStartups blog (what you're reading now) has been a fixture of the startup ecosystem for over 7 years.  Over that time, I think there's been some great content posted -- and I've even written some of it.  But a lot came from brilliant guest authors like Jason Cohen (@asmartbear), Mike Volpe (@mvolpe), Paul DeJoe (@pdejoe), Rob Walling (@robwalling), Leo Wildrich (@leowid), Brian Halligan (@bhalligan), Brian Balfour (@bbalfour)  and many others.    

So, when the nice folks at Hyperink Press volunteered to pull together some of the best articles, organize them and package them up into a convenient, awesome digital package (known as an ebook) I was like "sure, why not?".  onstartups book

In keeping with my "doing it for passion, not for profit", I'm going to take any royalties I make from the book and donate them to Kiva.org 

And here are some of my favorite snippets from the book.  The more avid fans among you might even know which articles these came from.  Thanks in advance for buying the book and all of your support over the years.  Special thanks to some of the great guest authors -- you folks have produced some of the best content on the site.

21 Quick Quotes From The OnStartups Book

1. A startup lives and dies by its customers. Not some marketer's initial conception of who the customer should be and what the customer should want.

2. Coca-Cola needs people to have a warm-fuzzy when staring at a shelfful of sugar water; you just need sales.

3. If it requires a spreadsheet to figure out the sales commission, it’s too hard.

4. Sales people will generally act in mostly rational (but often surprising) ways based on incentives.

5. ALWAYS connect incentives somehow to ultimate customer happiness.

6. If the value of the education you're getting from the startup does not exceed the value of the salary, you’re doing something wrong, or you're at the wrong place.

7. You learn the hard way that if you lose your cool, you lose.

8. The exponential productivity from great people will always amaze you.

9. Sometimes you can tell more about a company by how it treats customers on their way out, than on their way in.

10. VCs invest in the companies that win over their hearts and their minds, usually in that order.

11. It’s a one-time cost to come up with great name for your startup — but the benefit is forever.

12. Having a diversity of distribution channels actually increases your risk that you never find a scalable channel at all.

13. It's not the news-outlets that write about you, it's individual writers that do.

14. That is the life of an entrepreneur: It’s a steady stream of hard work, occasionally punctuated by some really hard decisions.

15. It doesn’t matter how much “real” (objective) value you have baked into your product if your customers don’t perceive that value.

16. It turns out, people do sometimes buy drills (not holes).

17. I don't think business plans are completely useless, just mostly so. And sometimes, they're dangerous.

18. You should be committed to your business, not your business plan.

19. More startups die from idea gluttony than starvation.

20. If you're trying to disrupt the status quo and beat bigger competitors, you're not going to do it by playing their game.

21. When recruiting for a startup, you're looking for the future stars—because you likely can't afford or convince the current stars.

Thanks so much for your support over the years.  It's been awesome having you as a reader of the blog.  Any favorites articles? Any particular topics you're interested in hearing about in the future?

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How I Inadvertently Ran an MIT Student Hacking Contest For $3,001

By Dharmesh Shah on December 6, 2012

It was 6:30pm on a random Tuesday evening in Cambridge. There I was, carefully counting a wad of crisp $100 bills in an unmarked white envelope.   I was parked in my car on Main Street, a block from the MIT campus.  The bills were new enough that they sort of stuck together.  The first time I counted them, I counted only 28 and had a brief moment of panic. There were supposed to be 30.  But, two more recounts, and I was fairly certain that there was $3,000 in the envelope.  This was the closest I think I've come to feeling like I was doing something illicit.  I was just waiting for a police officer to walk up to the car and tap on my window.

I was scheduled to hand this cash over to people I had never met.  At 7pm.  In a classroom at MIT's Stata Center (it's the building that Frank Gehry designed that looks like it came out of a Dr. Seuss book)

The $3,001 was payment for what was intended to be an inbound marketing contest.  The funny thing is, I inadvertently ended up running a hacker contest.  But, looking on the bright side, the payment could have gone as high as $50,000 (which would have maybe required a black briefcase and sunglasses).  So in some sense, I got off easy.  "This could have been much, much worse," I told myself.Mit-stata-center

Here's the story of how I ended up handing an envelope full of $100 bills to two complete strangers.

The Founder's Journey Class at MIT

Back when I was a grad student at MIT (this is back in the 2005/2006 timeframe), I took a class called “New Enterprises” with Ken Zolot and Howard Anderson.  It was the class to take if you were a student at MIT and had entrepreneurial leanings.  It's where I wrote the original business plan for HubSpot (the only business plan I've ever written).

Ken Zolot went on to teach a new class called “Founder's Journey” (6.933) .  Students were primarily undergrad computer science majors.  Ken invited me in as a guest speaker, and I've been a regular guest lecturer ever since.

My topic at this guest lecture  has generally been inbound marketing.  To make things fun and interesting, I often hold a small contest/exercise during class (I've done this in other classes I teach as well).  The cash prize was generally between $20 and $100 (usually based on how much cash I had in my pocket at the time, and the nature of the exercise).  It often involved some sort of inbound marketing task:  Write a title for this blog post, figure out some SEO keywords for this company, etc.

 “Hey, why don't we make this more interesting…”

 

A week before I was scheduled to speak to the current Fall term class of “Founder's Journey”, Ken reached out to me and suggested we might want to try a more “in-depth” exercise.  Something the students would have a few days to complete, instead of a few minutes in class.  I thought that was a good idea, and noodled on the idea a bit.  I then sent Ken this fateful email.

Zolot-email

I will summarize the rules for you:  Each student first sets a goal for themselves in terms of how many retweets they're trying to get.  They then try to post a tweet that gets that many (or more) retweets.  Simple enough, right?

Now, the astute among you will immediately recognize a couple of issues with this proposal:

1. I don't specify a maximum payout.

At the time, what I had in my head was: “It's kinda hard to get people to retweet something that much.  I have 160,000+ followers on twitter, and even one of my popular tweets might get 100–200 retweets.”  None of these students is going to have that kind of following, ergo, the likely payout will be $20 –  $50.  And, if someone's really good and gets a couple of hundred retweets, so be it.

2. I'm not explicit about what methods are considered legitimate/fair to acquire the retweets.

My topic was inbound marketing, and part of what I was hoping to  teach/convey is that a) it's hard to get people to retweet.  b) it helps to experiment with different kinds of tweets (humorous, useful, controversial, social good, etc.)

What ended up happening was this “perfect storm” of mistakes in structuring this exercise/contest.

“I thought to myself:  Self, we have a problem…”

So, on Thursday night (t minus 6 days to the class), tweets with the #foundersjourney starting showing up on my radar.  Not surprising.  That's the evening the class is held, so Ken had clearly given the students their assignment and the game was on.

Several of the tweets were amusing, like this one:

Founders-journey-tweet-1

But, when I saw this tweet, I knew I had a potential problem.

Founders-journey-tweet-2

Uh oh.  Exactly 300 retweets (as stated in the tweet) — all of them looking like bots.  That's when I thought to myself, “Self, we have a problem…”  I realized that I had not explicitly stated that one couldn't set up a robot army to do the re-tweeting (that kind of defeats the whole purpose  of the exercise, which was meant to be about inbound marketing).  But, the rules are the rules.  I had set myself up, and was prepared to pay the price.

Now, I just needed to figure out what that price was going to be.  So, I sent an email to Ken to ask the simple question: What were the top 5 retweet bids/projections?  (Remember, per the rules, I wouldn't have to pay out any more than what someone had bid).

"The top bids are: 50,000, 11,000, 10,000, 5,000, and 3,000", he said.  “Holy crap!”, I thought.  This is going to get interesting.

Later, I saw this tweet.

Founders-journey-tweet-3

The tweet didn't have 3,259 retweets at the time — but it was climbing steadily.  The contest ran for 3 days, and as you might expect, I watched intently as the story unfolded.

Once the contest ended, I knew I was likely going to be out a fair amount of money.  I didn't know how much, because I didn't know what Paul's bid was.  But, I had a sneaking suspicion it was going to be relatively close to the 3,259 bid.

So, I figured, what the hell — let me just reach out to this guy and get the skinny.  It's also when I had the idea to write this blog article.  I figured “Hey, maybe we can turn this into somewhat of a happy inbound marketing ending. ”  I later learned that Paul and Tim (a classmate) had agreed to join forces and attack the challenge together.

30, Fresh, Crisp, $100 Bills

So, last night (Tuesday, December 5th), I went in to teach the Founder's Journey class (as scheduled).  I met Paul and Tim for the first time, handed them an envelope with 30, crisp $100 bills, while their classmates looked on with a combination of admiration and envy, and then went about my business of convincing a bunch of undergrad computer science students that marketing was usually necessary, and that inbound marketing was the way to go about it.

Paul tweeted a picture of the cash later that night.  Here's that picture.

Mit-founders-journey-cash

 

Here's a video of them hacking away (don't worry, there's no sound, so it's safe for work -- or classrooms

CAPTCHAs, consoles and cash, Oh my!

I went ahead did an email interview (this is all before I actually met the guys).  Here are the questions I asked, and their responses.  Only minor editing..and I've added some of my thoughts in italics.

1. How did you pick 3,000 as your bid/projection?

Paul: First of all, my bid is 3,001. I wanted to be able to say that I won "over $3000." Secondly, I wanted something worth doing. I realized that I got to set how successful this could be, so I didn't want to limit myself. I thought was about the most I could get away with in 3 days.
Tim: So I picked 460, knowing I could probably get comfortably to that amount without raising any red flags. Once Paul mentioned he picked 3,000, the choice was between solving 2,500 captchas for no benefit… or getting a piece of the action. (Paul, of course, was nice enough to collaborate.)

2. At the time you submitted your bid, had you already thought about some sort of semi-automated approach?

Paul: My first idea was that some service must already exist to turn money into retweets, and I could just buy them for less than a dollar each. I tried  one of them with the ten free retweets, and they took about a day and a half to roll in. Too slow, I would need to make my own solution.
Tim: I was stoked when the contest rules were proposed. I wasn't sure if we were going to automate it at first; but I knew it was feasible, and intentionally asked no questions so that nothing would be off the table.  (This was smart.  No upside to asking a bunch of questions about the rules -Dharmesh)

3. How much software was involved in the process?  What did the software actually do?

Paul: The software did everything except solve the captcha. It scrapes the twitter mobile signup page for the captcha picture, saves that after running edge detection to make it even easier, and displays that on a constantly refreshing page. Type 6 numbers in the console, press enter, repeat. One twitter account after another.
Tim: After our setup, had a script which would access mobile Twitter, generate a random First + Last name from dictionary words ("Rumply Nectarines"), pick the first Twitter-suggested username (@rumply) and then download a captcha. To us, this was just a page which showed a number, we'd type six numbers, [enter], and the next image pops up. The new account credentials are saved, so five hours later, we just had to run "retweet_this.py [tweet id]" once and slowly refresh our browser as the number ticked up. At about 3am we got our networks blocked, and we started tickling out retweets over my phone connection, slowly inching past 2500 and hoping not to get blocked again... (My guess is that if their network continued to get blocked, they would have found a proxy server somewhere to get around it. -Dharmesh)

4. What was the software developed in?  Did you use any third-party libraries for some of the low-level stuff?

Paul: We used Node.js which we've both used for a lot of personal projects. We used a really cool library called scrapi which did all the heavy lifting for us (and which Tim authored :D).
Tim: Just Node.js for scraping, and Imagemagick to resize and highlight the edges of the captcha. (Paul disagreed this made it easier. We had about five hours to micro-optimize the whole process). I think it's amazing what you can accomplish with just an HTTP client and no rate limiting.

5. How do you and Tim know each other?

Paul: We go way back, since we were first-years at Olin. We made a lua-running operating system together, made a product designed for LARPers, and we share a provisional patent for a physical identity device as part of Lifegraph Labs that we are running this year with 4 other students. I wanted someone to help make this a reality, and I couldn't think of anyone more qualified than my friend Tim who is also in #foundersjourney. It  really worked out for both of us.
Tim: We both attend Olin College, and not only is Olin small, but Paul and I have known and worked with each other on a ton of projects over the past four years, a large number of them gags and things we're terribly embarrassed to talk about. Our shining moment may have been an OS we coded from scratch, just to display pictures of ASCII cats.

6. Had you worked on something similar before?

Paul:  I've never had to make 3000+ Twitterbots, but I have scraped twitter for data for AI research projects and I think we've both had our lion's share of Stay Late And Code projects.
Tim: Paul and I have done hacks like this before, but the timing was funny. I'm currently researching easy and flexible ways to consume APIs and websites. This scraper was built on a library I'd been working on for a few months [1]. Hacker News had a heated discussion last month around Marco's article "What Happens When a Twitter Client Hits the Token Limit" (http://news.ycombinator.com/item?id=4795052). Scraping as a panacea for Twitter API restrictions was brought up in the comments, and as a proof-of-concept I thought I would bang out something to parse Twitter's mobile client, just to test how easy it would be to use Twitter without an API. Not long after, this contest was announced. Good timing, I guess! [2]
[1] see https://github.com/tcr/scrapi, and a similar scraper for Hacker News that uses it https://github.com/tcr/node-hackernews
[2] see https://github.com/tcr/scrapi/blob/b9bc481ba04c5bebf65fa77f4ded5d22929c9b21/examples/twitter.js seriously deleted it later that day so I wouldn't be encouraging TOS violations… whoops.

7.  Did you consider something like Mechanical Turk to automate the last step (the CAPTCHA)?

Paul: We sure did. Even better would be adding a fully automated captcha solver that someone else wrote that works most or some of the time. That's a great step 2 for this project, and next time we won't be doing this manually.
Tim: Mechanical Turk's turnaround would be too slow, plus, better not violate Amazon's TOS and Twitter's. There are captcha solvers available online for cheap ($5 for 1000) but by this point we had paid no money and automated most of the work. It felt slightly less dishonest if we did all the grueling work ourselves.

8. You don't know me from Adam, how did you know I was going to make good on the offer?

Paul: I figured that since you proposed the challenge in the first place, you would be a good sport about it. I figured it would be great for your reputation if you paid out, and maybe not so good if you didn't. In the end, we weren't going lose more than a day programming and typing captchas, and the promise of a story this exciting was too good to pass up.
Tim: Can 3,000 Twitter bots get #dharmeshisaliar trending on Twitter? ;) Questioning the payout didn't even come up.  More worrisome was that someone would honestly (or dishonestly) beat us. We did the math; we solved 15 captchas a minute, so that's $900/hr, for five hours, with the risk we might get zero payout. That's a better lottery ticket than I've ever bought. It'll be fun Christmas shopping.
For the record, I was going to make the pay out regardless of what the outcome was.  A deal's a deal.  I'm just glad I didn't have to pay out $50,000.  That would have stung a bit (because I could have angel invested that kind of money in two up-and-coming startups!) –  Dharmesh

Closing thoughts and lessons learned

1. If you ever hold a contest with a bunch of MIT undergrad computer science students, assume that it's ultimately going to become a hacking contest.  Hackers hack.

 

2. Remember that any game that can be gamed will be gamed.  All part of the fun.

3. It's wise to actually state in the contest guidelines what the intent of the exercise is.  This will likely increase the chances that you get what you set out to get.  In this case, the irony was that I care immensely about inbound marketing, and I was worried that the students would walk away with the exact wrong lesson.  But, I think by the time my class was done, they "got it".

4. I'm not going to lose too much sleep over this because although there were twiter bots involved, at least it wasn't spammy.  The solution did not involve picking some popular meme, following a bunch of real people or otherwise annoying folks that were outside the scope of the contest.

5. I paid for this out of my own pocket.  No HubSpot shareholders were harmed.  

6. I'm glad I was able to at least capture the story and tell it.  It's a fun little story, and had a happy ending.  

And, if you want to help make it an even happier ending, help me find a great Python/Django developer.  This is to work with me on some cool HubSpot Labs projects.  But, you need to be really, really good -- like working over email, and have the ability to create things that are not fugly.  If this is you, or someone you know, email me at dshah {at} onstartups {dot-com}.  Thanks!
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Recruiting Developers? Create An Awesome Candidate Experience

By Dharmesh Shah on November 29, 2012

tl;dr:  If you're trying to attract awesome developers, you need to create an awesome candidate experience (CX).  Something that makes them go "WOW!".  It's like UX -- but for the people interviewing to join your team.  

It seems that every startup I know out there is trying to grow their development team.  But given that there are always a hundred things going on, few startups spend the time thinking about their interviewing process (because we're all busy building products and delighting users).wow

Yesterday, I sat in a HubSpot "Tech Talk". The topic was "Technical Interviews".  The idea was to share ideas and best practices across the product team so that we can better find and recruit great developers for the team.   HubSpot has had a bit of an unfair advantage when it comes to technical recruiting.  We're fortunate to have Paul English, founder/CTO as a friend (he's hands down the best recruiter I've ever met).  Paul was kind enough to be "CTO for a day" at HubSpot.  And, because Google Ventures is an investor, we've been able to have a Googler from their recruiting team spend a few hours with us, reviewing our practices and giving us tips for how we can improve them.  

Ideas for Creating An Awesome Candidate Experience (CX)

Here are some ideas for what I think would make a great candidate experience.  Many of these ideas are implemented at HubSpot -- and I'm hoping the others will get adopted too.  We have some work to do ourselves, but we're passionate about building an amazing product team in Boston.

1. Decide to do it.  The first step in creating a great candidate experience (CX) is deciding that it's important.  Just like you'd commit time and energy for creating a great UX for your product, you need to devote some calories to iterating on your CX and working had to make it exceptional.  There are a number of reasons you should do this:

a) Recruiting great people is hard -- and competitive.  All things being equal, on average, if you can make the candidate experience better, you win.  People will often take positions with lesser known companies simply because they had a great interviewing experience.

2. Focus on the entire experience.  Designing a great candidate experience is not just about doing interviews well.  A great CX starts from the moment a person connects with your company (like your website) all the way through the point that they are delivered a decision -- and every step in between.

3. Measure it to improve it.  It's not possible to create a great CX without getting feedback from candidates.  What I'd suggest is a simple NPS (Net Promoter Score) style survey at the end of the candidate interviewing process.  The survey asks exactly two questions:

a) On a scale of 0-10 how likely are you to recommend that a friend or family member interview here?

b) Why did you give us that score?

You don't have to use these specific questions -- the benefit is that NPS is that it is simple, and widely used as a way to measure customer satisfaction (or more accurately, customer delightion).   We use NPS in a variety of ways at HubSpot -- including measuring the happiness of our customers and team members.

Some quick notes on collecting this feedback:  First, It should be collected before a final decision is delivered, so you get unbiased data.  Second, it should be made clear to the candidate that they are doing you a favor.  There's no harm in telling a candidate exactly why you're asking for this feedback.  In almost all cases, the candidate would likely see this as a positive signal.  It shows that you care.

4. Interviews are both a buying and selling process.  One of the mistakes inexperienced interviewers often make is behaving as if their job is only to "be convinced" by the candidate that they'd make a good hire.  As a result, they often have an "edge", aren't particularly friendly, and don't do enough to make the candidate feeel comfortable.   That can be a bit disconcerting for the candidate, and creates a sub-optimal candidate experience.  As an interviewer, your job is two-fold:  One, make a rational judgment as to whether you think this person would be a good hire for the team.  Two, ensure that the candidate wants to work at your company.  It's both a buying and a selling process (not just buying).  As it turns out, great people always have options.  Even if they're not a good fit and you decide not to hire -- you want them to leave with as positive an impression as possible.  They may have friends or family that are better fits.  Quick mental hack:  Pretend like every candidate you don't hire is going to become a future potential user/customer.  

5. Be at least a bit organized.  Yes, you're a startup.  Yes, everyone's already working away furiously and interviews are often an unwelcome irritant.  But, that's our problem -- not the candidate's problem.  Spend some time devising at least a simple process to ensure that meetings are scheduled appropriately, the candidate knows what the process is (and how long they'll need to be there) and always, always, always make sure they're feeling comfortable and welcome.  

6. Make speed a feature.  Just like great UX, a great CX is about speed.  Faster is always better.  I've never met someone that thought:  "Boy, am I glad those folks took 2 weeks to get back to me on an answer...".  

7. Have a "guest" tablet available for candidates.  Make sure it's already on your WiFi network, the home page in the browser is your company website.  The idea is to give the candidates something productive to occupy their time with while they're waiting.  They can even play Angry Birds, if they want.  Nothing's worse than sitting in reception, not knowing what the guest WiFi password is, and having to twiddle one's thumbs before an interview.

8. Don't repeat the same topics.  Be organized enough that if the candidate is going to go through multiple interviews, you don't have them cover the same topics multiple times.  That's annoying and a waste of time.  If one interview focuses on their front-end development skills and how well they really understand jQuery, then perhaps the other interview should be more about work style and thoughts on team collaboration.

9. Have a clear feedback/rating system.   You need to have a clear internal rating system so that interviewers can express their overall take.  If the person is an absolute no-hire, that should be clear.  So, your scale could be:  absolutely no hire, leaning against, neutral, leaning in favor, absolutely hire them.  One important point while we're on this topic:  The rating scale is not about the person -- it's about whether this person should be made an offer at this point in time.  I've sometimes seen people give a "high" rating (because the person was really, really good -- and interviewed really well), but then later heard "but I wouldn't hire them."  The reason for the interviews is to make a hiring decision.  Said differently, the ultimate return value of the function is a boolean hire/no-hire NOT awesome/good/not-so-good person.

10. Learn something.  Make every effort to learn something from every candidate.  Just because you're on this side of the hiring table and just because you may be more experienced does not mean you can't learn something from every candidate.  You can. Try to draw out a particular passion that the candidate has.  Perhaps a recent epic debugging victory.  Or, why their editor is the One True Editor To Rule Them All.  Doesn't matter what the topic.  Find what they're passionate about, and genuinely get them to teach you something about it.  (If they're not passionate about anything, you've got a problem).

11. Teach something.  Whether the candidate gets an offer or not, they should have learned something from you.  They need to walk out smarter than they walked in.  (Note: This does not mean you spend 50% of the interview telling them about the proper Pythonic way to do something). 

12. Be transparent.  Make the conversation open.  Let the candidate ask questions that are on their mind.  It could be about team dynamics, work style/hours, financials (growth, cash, etc.), product strategy, dev philosophy, whatever.  Be honest.  If there are some things you can't answer, be honest about that.  But, try to be as transparent as possible -- it makes for a much better candidate experience.

13. No leading of the witnesses.  If you're having multiple people interview a candidate, you need to make sure that the early interviewer(s) don't unduly influence the later ones.  This is important for a couple of reasons:  One, you want multiple viewpoints, not the same viewpoint multiple times.  Second, from the candidate's perspective, if they feel like they got off on the wrong foot in the first interview, you want them to have a reasonable chance of showing off their awesomeness in the subsequent interviews.  

Warning: Controversial Idea coming up:  One of the top areas of debate regarding technical interviewing is wheter you should "fail fast" (or not).  Let me set this up with an example:  Lets say you invite a candidate in for 4 hours for a series of interviews.  Lets say after the first interview, the interviewer is absolutely sure that this candidate is a "no hire".  What do you do? 

a) Thank them for their time and stop the interview process?  The advantage is that you're not expending further (very precious) developer time, when a decision is already made.  The downside is that this is kind of disheartening and deflating for the candidate.  If they were scheduled for 4 hours and you send them home after the first hour, that just doesn't feel good.

b) Continue the interview process?  The advantage is that it's (arguably) a better candidate experience.  You might even suggest that the later interviewers might like the candidate so much that they convince the first interviewer to change their mind.  

My general leaning is not completely cut-off the interview process.  Having said that, there are a few things I'd try:  

i) One, when inviting candidates in, make it a time range instead of an absolute number of hours.  Example:  Please schedule 3-4 hours for your visit.  That way, you could reasonably end the interviews without going through the full "maximum" time.

 ii) Build a reputation for being super-selective, but fair.  Be honest and open about this in the early conversations.  

iii) Consider offering a $100 Amazon gift card for "early exits".  Be transparent and honest.  "I just don't think we have a good fit here and doesn't make sense to put you through more interviews."  UPDATE: I reconsidered this one.  The more I thought about it, the cheesier it sounded.  

14. Get them to code, but let them pick the language.  Coding exercises are a critical part of the interviewing prcoess.  There is no substitute for getting a candidate to do a quick coding exercise (either on a computer or on a whiteboard).  The intent for this exercise is not to test proficiency with a particular language -- but to see if they can "think in code" -- and how they go about doing it.  My advice is to let the candidate pick whatever language they're comfortable with (amongst the mainstream languages available, like Python, Java, Ruby, PHP, Javascript, etc.).  Any of these mainstream languages are more than powerful enough for a coding exercise, and even if you're not completely proficient in a langauge, you'll still get a sense for how the person goes about thinking about a problem and manifesting a solution in code. 

15. Do a friendly follow-up after the offer.  Generally, you'll have someone extend the offer in some formal or semi-formal form.  In addition to that, have one of the designated interviewers follow-up with a quick email (perhaps with a "cc" to the others they met).  Something like:  "Hey, thanks for vistiing HubSpot.  We'd be thrilled to have you join our merry band.  If you ever want to grab coffee or a bite to eat, just drop me a note.  I should probably tear myself away from the computer every now and then anyways..."

What's Your Take?

Whew!  That was a much longer article than I originally intended.  Now, it's your turn.  What do you think would make a great candidate experience?  Any tips or lessons learned from your own experience you'd be willing to share? Please put them in the comments.

<blatant_self_promotion>

Oh, and by the way, if you're an awesome developer (or know one) in the Boston area, you should know about the Boston Battle for recruiting great talent.  Hint:  There's potentially $10,000 cash in it for you.  Why not take HubSpot's own Candidate Experience for a spin?  I promise you won't regret it.  If you're awesome, you can email me directly (dharmesh @ hubspot dot-com), with a link to some evidence of your awesomeness.

</blatant_self_promotion>

Look forward to reading your comments and feedback.  As added incentive, if you share something that the community finds particularly insightful or useful, will send you a $25 Amazon certificate.  No limit to the number of "winners".  Ready?  GO!

Topics: recruiting
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How To Help Startup Ecosystems: Be An Early Adopter

By Dharmesh Shah on November 27, 2012

The following is a guest post by Sravish Sridhar. Sravish is the Founder and CEO of Kinvey, a Backend as a Service platform that makes it easy for developers to setup and operate backends for mobile, tablet and web apps. He is a believer in mentor-backed entrepreneurship and you can follow Sravish on Twitter - @sravishsridhar.

I just finished reading Brad Feld’s new book, Startup Communities: Building an Entrepreneurial Ecosystem in your City. In it, Brad states that sustainable entrepreneurial communities must have:

  • Active entrepreneurs who will be the leaders to drive the community forward,
  • A long-term view and commitment to build the community,
  • A continual set of activities that engage the entire entrepreneurial stack, and
  • An inherent view of inclusiveness that ensures that anyone is welcome to participate -- not just entrepreneurs.describe the image

On a similar theme, Mark Suster, in a guest post in TechCrunch, adds that a successful startup community must also have a strong pool of tech founders, capital, well-attended events, great local universities, vocal champions, vibrant local press, etc.

Despite embodying all the traits that Brad and Mark have outlined, I’ve repeatedly seen Boston, my current hometown, suffer from the burden of constantly justifying itself to the world as a thriving startup community. I’ve concluded that there is one more essential ingredient Boston needs to be a successful startup community – Boston needs early adopter DNA, especially to try early-stage, Boston-built, startup products.

If we could successfully mutate the startup gene of the Boston startup community to introduce early adopter DNA, we would create a huge advantage for startups that are built here. Their launches will be “buzzier,” their products will get traction faster, and most importantly, the companies will enjoy informed feedback from key members of its own community. Feedback and buzz from early adoption is an invaluable asset for any startup, and we can give them that.

For Boston (or any startup community) to have early adopter DNA, it needs its startup leaders and the extended community that supports the ecosystem to do three things –

1. Be Curious: We need to collectively spend more time seeking out new startups and learning about their products. Follow key Boston startup community leaders on Twitter like Dharmesh ShahMatt LauzonKatie RaeJennifer LumDavid CancelFred DestinRich MinerAntonio RodriguezRob GoDavid SkokJeff Bussgang, etc.  Read Scott Kirsner in the Boston Globe, BostInnoXconomy and the Boston Business Journal.  Learn, learn and learn!

I could go on and on. In Cambridge alone, there are hundreds of startups in a one-mile radius. And Boston has hundreds more. Ask yourself, how many of their products have you used?

2. Be Adventurous: When you read or hear about a new Boston startup, don’t hesitate - sign up and try its product. There are startups in Boston that cater to your every need -
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3. Be TalkativeTrying a startup’s product is only the beginning. To truly become a vibrant entrepreneurial scene, we also need to support fellow startups with word of mouth. Tell your friends about your favorite local products, tweet and share your experience on Facebook. Better yet, blog about it.

Help your following become Curious and Adventurous. And don’t forget to share your product feedback with the startups behind the product. I can assure you that every startup wants to hear about your experience with their product, it’s how we will improve.

If we seek out innovation, are willing to kick the tires of early stage products, and be vocal about our experiences, Boston will become a stronger startup community. The ripples from this early adopter DNA being put into practice will encourage more people from the broader community to do the same, and I assure you, we will all be stronger for it.


Topics: guest
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Sorry, No Calls

By Dharmesh Shah on November 20, 2012

For convenient access to this article, you can get to it by visiting: SorryNoCalls.com.

Dear Friend,

I know you've asked to setup a "quick call" to chat.  Could be just an introductory "get to know you" call, or maybe we were recently introduced by a mutual connection.  Or maybe you just want to "pick my brain".  Or talk about your project/company/conference/.  

Sorry, but I don't take phone calls. I hate them. My aversion borders on the pathological.

You will find this surprising and abnormal (because it is), but in a given year, I'll usually have < 15 non-personal phone calls. I often go weeks or months without a single call (joy! bliss!) When I do have them, I have to emotionally prepare myself. And, just so you know, I have a tough time with personal calls too, much to the disappointment of my parents.

Hence, this article, which you can find at SorryNoCalls.com (domain setup to make it easy to reference. I might even print it on my business cards some day).

Why I Dislike Phone Calls So Much

Here are the reasons why I hate phone calls so much. The images shown below are from an absolutely fantastic comic titled “10 Reasons To Avoid Talking On The Phone” by Matthew Inman of The Oatmeal

1. I don't like synchronous communications.

A phone calls is a synchronous conversation. It breaks up my day and interrupts my flow. That's why I much prefer email, which I can “batch up” and do all at once, at my leisure and on my schedule. Handling things asynchronously also allows me to be more thoughtful about my response and match my degree of response to the importance of the situation. On a phone call, it seems rude to go into a long, detailed diatribe (even though the situation seemingly warrants it), because the other party doesn't have an easy way to “fast forward” (or skip). With email, I can write up my thoughts, get into detail if I want, with the knowledge that if the other person's not as interested as I thought, they can just move on.

2. I hate making small talk. 

 


no calls small talk

Even when it's in person, small talk is difficult. On the phone, it's even harder.

Now, some of you will argue:  "It's OK -- you don't have to make small talk, most people are just fine if you jump right into it."  Yes, it probably IS OK -- for you.  But, I seem psychologically incapable of this level of emotional confidence.

I'm an introvert. Not somewhat of an introvert. A complete introvert. And from what I've heard, it's not uncommon for introverts to not like small talk. I'm not sure exactly why that is for other introverts, but for me it's because it feels fake and I can't figure out what the right level of small talk is to be polite. I constantly feel awkward when I'm engaging in small talk, because I'm constantly trying to figure out in the back of my head, when it's OK to move into the “real” conversation.

3. I have a really hard time saying “no”.

 


no calls cant say no

I have a serious problem.  I'm pathologically non-confrontational.  I have a really, really hard time pushing back and saying "no".  And for reasons I don't fully understand, it's at its worst when I'm on the phone.  Maybe it's because of the expectation of immediate answers and I have a deep fear of those awkward moments of silence on the phone.  I don't know.  Whatever it is, I know I have a problem.

4. I'm pathologically polite, and just can't get the timing right.

 


no calls disjointed

When on a phone call, it feels like I'm always doing this delicate dance between trying to make sure there's not the dreaded period of silence that lasts too long — and the equally dreadful experience of inadvertently interrupting someone. I do this particular dance very poorly, know I do it poorly, and as such am self-conscious about it, and so end up doing it even more poorly. Vicious cycle.

5. I'm absolutely terrible at ending a call. 

 
no calls goodbye 

So, to summarize my "sorry no calls". It's not you — it's me. I know you're probably not trying to sell me something. You're probably really good at having a normal phone conversation (like most people), so you think I'm exaggerating how I feel. Trust me, I'm not.

Please accept my apologies for having this strange eccentricity. 

And, a word of thanks to my friends, family and colleagues.  They've learned to accept this weakness of mine and don't take it to heart.  I'm also thankful for the modest success I've had so far whereby I can design my life and circumstances around my pecularities.  

Tips if you're like me:

1. I find it much less troublesome to schedule a call than just randomly answer the phone. 

2. Setup a separate phone number (using something like Google Voice) which you only give out to folks you've scheduled a call with.  You can program Google Voice to show the dialed number as caller ID (instead of the person calling).

3. To avoid the awkwardness around small-talk, try to outline what the topic of the conversation is going to be.  It makes you feel less guilty for transitioning into the purpose of the call.

4. Use email to get your high-level thoughts communicated first, and then use a phone call to add a personal touch or to have a higher bandwidth conversation.

5. Make it a firm policy to never say yes to something on the call.  Always give yourself some time to think about it.  I will often tell people that I never make an important decision on the phone -- and that they should follow-up and ask me over email.  

6. Change the outgoing message on your voicemail letting people know that the preferred way to reach you is by email.  Thankfully, this stops many telemarketers.

7. Remember that it's your life and you get to decide some things.  If your work or personal life requires phone calls, that's cool.  But, I think over 90% of the calls you'd normally take you are not obligated to take.  We use the phone out of habit and because we think we have to.

So, what about you?  Do you share my aversion for phone calls?  Or, are you a smilin' dialin' phone callin' machine?  What's your take?

Topics: personal
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How To Hire Hackers: A Realistic Guide For Startups

By Dharmesh Shah on November 15, 2012

The following is a guest post by Iris Shoor. She's a co-founder at Takipi, a new startup looking to change the way developers work in the cloud. Previously, she was co-founder at VisualTao, a B2B startup acquired by Autodesk.

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Call them hackers, ‘ninjas’, or ‘rock stars’ if you’d like. Other than being very talented developers, they all share one thing in common -- it’s unbelievably hard to bring them on-board your company. And as if competing with other companies for the same talent was not enough, being a startup just adds more challenges to the equation. Your startup may be the next Google/Facebook/Instagram, but until then - how can you convince the best developers out there to join a company where the CEO’s office is an IKEA desk? Here’s one answer -- recruit like a startup, in a creative and agile way, doing things the way big companies can’t. During the last 5 years I’ve interviewed over 250 candidates and recruited dozens of great engineers. The first interviews took place in our tiny office’s kitchen, and we still managed to convince some of the best candidates to join. There aren’t any magic tricks involved, but here are some tips and methods which helped us get ninjas, rock stars and other highly talented people on-board.

You’re a startup -- have the founders make the first contact.

We lose many potential candidates even before the starting line - we fail to bring them over for a first interview. Some are already talking with too many companies, or decide after a brief visit to your web-site that your startup just isn’t their thing. That’s the point where you can make a difference. Our co-founders (including myself) are in charge of sending the first e-mail to potential candidates. We’ve kept this habit even as we’ve grown. At first, I was worried some candidates may think we have too much free time on our hands (sadly, we don’t). I soon found out that when candidates receive a personal and flattering e-mail (important when it comes to star developers) from a co-founder, it sends a message that this startup is all about its employees. Here are some helpful points for writing the first email:
  • Link to your online profile (personal blog, an interview with you, a YouTube video) when introducing yourself. Once there’s a face behind the email you’re more likely to get a positive response.
  • Add a personal touch. Have other employees who went to the same college? Mention it. Grew up in the same town? Write it down. It might sound irrelevant, but it creates the first hook, enough to have them come over for a meeting.

Interviewing: It’s not just about the role, it’s also about who they will have lunch with.

While we tend to tell candidates everything about the role, the managers and the company, there’s one part that’s usually missing - who will they work with? One of the most common answers I get when asking people why they've chosen one job over the other is knowing other employees there. Let candidates know who'll be sitting next to their (IKEA) desk and sharing their 9GAG jokes.
  • When candidates come for an interview we try to have them meet at least one future co-worker. A candidate asks a good tech question during the interview? Refer him to the engineer working on it instead of answering yourself. Found out the candidate has something in common with one of the employees (skydiving, growing up in Ohio, have a thing for ASCII art)? Introduce them. It’s not something we plan ahead, but given the opportunity, having the candidate stay at the office after the interview chatting with other employees, is considered a success.
  • Don’t interview too early or too late during the day, when the office is empty. If the only time your future star can come in for an interview is 8:00am, make sure some people come early. You want to paint a full picture of what it will be like working at your startup.
[You don’t need a fancy office to make good impression - the small details do the job. Our entrance door has code on it and these are our meeting room custom coasters ]

 

Interviewing: Choose carefully which opportunity to pitch.

There truly are great things about joining a startup - new technological challenges, opportunities for moving up the ladder more quickly, learning about the business side of things, stock options and more. Don’t sell them all at once. Pitching becoming a manager to an engineer who just wants to experiment with new technologies? Bzzzz -- wrong move -- which might send her elsewhere.
  • Look back - When we first started interviewing we used to ask candidates what they’re looking for. Instead of sharing their true motivations, they answered with what they thought was the ‘right’ answer -- “I just want to work on interesting stuff”. After a while we discovered the magic trick; instead of asking what they’re looking for now, we began asking how they've made previous job decisions. When asked about past decisions, people tend to share what really matters to them.
  • Don’t pitch, give examples - You can’t really promise someone that he or she will become a manager in the future, or only work on interesting stuff. Instead, I tell candidates what talented people who've joined the company a year ago are doing now. This could be how an engineer with no previous management experience is already heading a small team, or how a developer straight out of college is doing such a great job we’ve put her in charge of some very key algorithms.

Signing: How to make candidates sign an employment agreement more quickly.

You've reached the homestretch. The candidate you really liked said yes, and now all is left is to sign the employment agreement. This can turn into a very risky period. The current employer is likely to come with a counter offer and so can other companies.
  • Important: Avoid having your future star waste time on legal issues. To help with this we've decided to have the exact same employment agreement for everyone in the company. Other than the terms themselves, everything is the same - from the number of vacation days down to the small letters. It’s a super friendly agreement and we never change it. Once I tell candidates that everyone -- the CEO, the engineers and myself have all signed the exact same contract, and therefore we can’t change it, it usually takes them only a day or two to sign it. There’s much less need to re-read every part.
  • Scott Weiss from A16Z shares a great tip about the pre-signing period with the ‘Welcome basket’.

 

How to hear ‘No” and how to say ‘No’

  • Hearing No - Stay in touch with good candidates who chose a different company over yours. When a candidate I really like accepts a different offer over ours I always get the feeling I was dumped. True, I can’t honestly say I don’t understand how can someone pick a great job at Google over a small and unknown startup, but it still hurts. While the easiest thing to do after hearing a ‘No’ is, well, nothing, I try to make one last effort to stay in the picture. There are two main reasons for it : 1). Startups grow quickly. You might have a good candidate who decided a 10 employee company is not for him/her but a year or two later as your company grows it will become much more attractive. 2). Receiving a negative answer usually means you've reached second place. Sometimes, the first choice doesn't turn out to be the dream job they were hoping for. Some candidates don’t feel comfortable getting back in touch after they gave you a negative answer. By making the first move you’re saying that everything is fine and we’re still interested in you. Yes, it’s very much like dating. How to keep yourself in the picture? I like to send FB friend requests to candidates, and that’s something that you can do only as a startup (it can get pretty awkward when done by someone from a large company). Facebook is a great platform to share how well your startup is doing over the years. I also like sending an email once every 4-6 months, sharing how we’re doing and asking how’s everything going. I found out that most people find it friendly (and somehow flattering) rather than annoying.
  • Saying No - giving a smart negative answer will help you reach other great engineers in the future. I often ask myself how I would have liked to receive a “No”. My answer is that I would like to hear the truth. Instead of using the default answer of “we've decided to continue the process with someone else”, I write the (sometime hard) truth- “You didn't pass the technical test’, ‘you don’t seem like a startup kind of guy’, ‘it seems like you’re more interested in managing and that’s something we can’t offer right now’. I also make sure to write some of the things I liked about the candidate. True, there are some cases you can’t write the real reason, but in most cases you can. I was terrified when I sent the first 100% sincere email, but I soon found out that candidates embrace this, and usually agree with the reason. Now comes the interesting part - instead of feeling rejected, most people rightly feel they interviewed for the wrong role. Once you don’t ‘break-up’ with them, you can ask them to recommend friends or co-workers they think could fit the position. Yep, it sounds crazy, but it’s true. Even if you don’t get a new lead, rest assured you’ll have a past candidate saying good things about your company, and that’s something great in itself.

How about you? Any lessons you've learned while trying to hire great developers for your team? Would love to hear your thoughts in the comments.

Topics: guest recruiting
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How A 17-Year-Old In India Bootstrapped To $7M In Revenue

By Dharmesh Shah on November 8, 2012

The following is a guest post written bySanket Nadhani. He previously headed Marketing and Sales at FusionCharts and just launched an eBook on the complete journey of the company on its tenth birthday.

FusionCharts was founded in 2002 by my brother, Pallav Nadhani, in a quest for more pocket money. The charts people used on the web those days were Excel-type charts that were a pain to use, sat heavy on the servers often sending them crashing and burning, and generated deathly-dull output at the end of it all. FusionCharts came in with sexy, animated and interactive charts that were a breeze to use and installed the copy-paste way. Today, it has 20,000 customers and 450,000 users in 118 countries, powers more than a billion charts per month and clocks $7M in annual revenues. But that's not the interesting part. The interesting part is that this is the handiwork of a 17-year old with no business knowledge whatsoever living in India — a land that was nowhere on the product map a decade ago. In this post, I will share the unconventional problems that came our way and the lessons we learnt. Even though I moved on from FusionCharts a year back, I am still going to refer to it as "we" wherever required because that's how much a part of my identity it is. Also, brevity is good.india flag

Wanting to make money is not a bad reason to start up

Ask any entrepreneur why they started up and the reasons would vary from “The project management tool we had didn't cut it for us to “The world of education had been languishing in the dark ages for too long.” And of course, there's that thing this Steve guy said that people love to repeat — I wanted to make a dent in the universe. But “I wanted to make money” is not something you hear of often. It sounds shallow, and most entrepreneurs shy away from it. FusionCharts started as a quest for more pocket money when as a teenager, Pallav needed more money to go bowling and hang out in cafes. Creating an interactive charting library isn't world-changing. It's not even sexy. But it solved his problem of making more pocket money.

It's not just about the product, it's the complete package

People don't want to know what a product can do, they want to know what a product can do for them. So throwing a feature list in their face, no matter how nicely done, is not going to cut it. They need to have the this is itfeeling as soon as they hit your website. And more so, when you are sitting in India trying to sell to Fortune 500 companies around the world. Right from the early days, FusionCharts has had real-life business demos on its website. Sales dashboards, KPI monitors, network monitoring systems, and all of them with actual business data. Of course, we could have just put out the product with an extensive feature list and expected people to give us all their money. But instead we decided to put in hours conceptualizing the demos, gathering real-life data (dirty dirty job!) and then finally implementing them. But the end result was worth the effort. Project and product managers from large enterprises would come to the website with a picture of the dashboard they need in their head, see that we have a sales dashboard, click on it and go wow. This is exactly what I am looking for. They would then ask their development team to check it out and let them know if it was good to go. So what would otherwise take three phone calls and seven emails took all of five minutes of the manager's time, and no involvement from us at all.

Fighting fraud with freemium

Every time an organization is faced with a big problem, the kind that shifts the ground beneath their feet, they just start throwing resources at it. Big money, top people. But it doesn't have to be that way — big problems often have small inexpensive solutions. FusionCharts was commercially open source from day one. The idea behind making the source code available was that people would feel safe about buying from an unknown company from India. Even if FusionCharts turned out to be a fly-by-night operator or went down in crashing, burning flames for whatever reason, they could keep their charting up-to-date by building on the source code. However, this credibility-establishing factor almost spelt doom for FusionCharts. A company from Eastern Europe picked up the source code, made some small changes to it and started selling it as their own product for a cheaper price. Of course, they had to be sued. But going the legal way needed a lot of time and money, both of which FusionCharts didn't have at that point in time. So when a new version of FusionCharts was launched, the previous version was launched as FusionCharts Free. It was free to use in both personal and commercial projects, no strings attached. What the infringers were selling for slightly cheaper could be had from the original developers itself, for free. No one has tried pulling that trick ever again.

Marketing isn't just about money

The release of FusionCharts Free not only helped fend off the infringers, it also helped get the FusionCharts brand name out in markets that were tough to reach otherwise. Developers who are wary of playing with a trial version, believing it comes with some gimmick, got playing with the product and liked what they saw. Some developers built plugins and wrappers around FusionCharts Free for different platforms including GWT, Drupal and Joomla. Startups, who were low on money started using the free version in their product and when they had paying customers, they came back to get the paid version. In essence, FusionCharts Free has done more marketing for FusionCharts than even the best of traditional marketing campaigns.

If you have a picture of the US President using your product, tell the world about it

In 2009, the US national CIO unveiled the Federal IT Dashboard which was designed to give the public a look at the status of thousands of ongoing IT projects in the government. It also tracked the effectiveness of the government's overall IT spending — 600 billion dollars of them. The dashboard was using FusionCharts in plenty, something even Tim O'Reilly made a mention of in an article he wrote. That was a great story to go tell the world about, but it got even better. One of these nights, while idly browsing the web in the middle of the night, we came across a picture of Barack Obama using the Federal IT Dashboard. While we could have told the world how Barack Obama was using FusionCharts as a part of the Federal IT Dashboard, we decided to be bold and shortened it down to Barack Obama uses FusionCharts. And then we went to the mass media with the story. We were covered in many of the leading publications in the country. In fact till today, every coverage on FusionCharts makes a mention of Obama using FusionCharts in one way or the other. After all, how many companies can claim that White House uses their product with a picture to prove it?

Give people more reasons to remember you than just the product

Business isn't just about your product and offering. A large part of it is how people feel about you. A genuine conversation, a good story, they all add up. Every time we have gone to a tradeshow, we make a list of objectives which includes generating sales leads and getting press coverage. But another of those objectives, and a very important one, is to radiate warmth and happiness to every around. Even to people we spend only a minute with. And it reaps rich rewards when we come back to emails from people saying how much they enjoyed meeting us. There have been times when people have commented on a FusionCharts article somewhere on the web just to say that the team is very friendly. Words like those can brighten up even the toughest of days. And then of course, there's the power of a good story. People love stories, no matter how left-brained they are. So when FusionCharts completed a decade of being in business, we decided to write an eBook on the complete journey of the company, with warts and all. And the feedback we have got within a week of launching the book has been touching, to say the least. People who did business with us half a decade ago are writing in just reminiscing about the good old times. Entrepreneurs and aspiring entrepreneurs are writing in about how inspiring they found the story. Existing users and customers are writing in to say how they feel like a part of FusionCharts now. There's nothing like a good story.

Final words

A startup founded by a 17-year old in a country without a product ecosystem as such can never be smooth-sailing. But what it can be is extremely satisfying, as you tackle problems both usual and unusual. And extremely satisfying it has been. If you like what you read, check out the complete story of FusionCharts in Not Just Another Pie In The Sky.

What are some of the most unusual lessons you have learnt along your startup journey? Would love to hear your thoughts in the comments.

Topics: guest story
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Surprising Insights From HubSpot's $35M Mezzanine Round

By Dharmesh Shah on November 5, 2012

The following is a post from my friend and co-founder/CEO of HubSpot, Brian Halligan.
HubSpot just closed its mezzanine round, so I thought I’d share some surprising things I learned during the process. I’m by no means an expert in this field, so these are just the observations of one entrepreneur.

A Surprising Number Of Potential Investors With Widely Varying Value Propositions

My impression is that times have changed in the growth equity game. It used to be that early stage venture folks just did early stage investing, late stage venture folks just did late stage investing, and public equity investors only invested in publicly traded stocks.  What surprised me is that now, it seems like everybody invests in late stage private companies.describe the image

This is certainly not the “official” way to look at it, but here’s the way I ended up bucketing types of investors in my own head.

  1. Typical Early Stage VC Firms with Growth Equity Funds – These are folks like Sequoia, Accel, General Catalyst, Redpoint, DFJ, etc.,  that have typically started new funds with new teams focused only on investing in late stage companies.  They write checks from $15 million to $100 million as far as I can tell, and I think they’re pretty valuation sensitive as a group. They usually want to take a board seat and can add a lot of value in terms of knowledge, connections, and pedigree -- Sequoia led HubSpot’s last round and has been huge on those fronts. 
  2. Late Stage VC Funds – Think Meritech, Adams Street, August, Norwest, Tenaya, Questmark, SAP, and DAG. These folks only do late stage equity and write checks from $10 million to $40 million as far as I can tell. I think they are less valuation sensitive than the traditionally early stage folks. They are typically a bit more arms length in their level of involvement which often translates into a board observer seat -- they seem to follow-on the top tier early stage folks and rely on them for their advice and connections.
  3. Big Check Late Stage Funds – GA, TCV, NEA, etc. seem to only do late stage equity and write checks north of $40 million. I think they are relatively valuation sensitive, but keep in mind I only have a small sample size here. It seems they’ll want a board seat and to be very involved – and they can add a lot of value.
  4. Private Equity Funds – TA, Summit, etc.  are the types of firms I know the least about, but my sense is that these folks do late stage investing and write “biggish” checks. They seem to be wired to buy out existing investors, put in some working capital, and raise debt. This can be a great approach for a company, but it’s probably hard to work for a firm that already has a lot of venture money in it. My sense is that they want to be involved and are value-add.
  5. Public Funds – The last bucket is folks like Fidelity, T Rowe, Janus, Cross Creek/Wasatch, Altimeter, Tiger, and Morgan Stanley. They invest out of public equity funds, seem to write checks from $10 million on up, and tend to be slightly less valuation sensitive (we’ll talk about why below). They are financial investors and do not want to be overly involved, which means no board seats or observer seats for the most part.

That’s my sense of things based on insights from HubSpot’s mezzanine round of funding. If I’ve missed some funds, please do include them in the comments section so we can make this article as useful as possible. 

The Surprising Value Of Public Investors Investing In Your Private Company

We went with public funds -- #5 above -- not private funds for three main reasons that made a lot of sense for us, though they might not make sense for your company:

  1. Public investors tend to buy more of your shares after you go public, while private investors will typically look to sell their shares after you go public.  The venture funds incentive system is set up such that they are supposed to sell the shares and distribute the profits to their investors after a reasonable time elapses following the IPO. My sense is that the period of time between when you go public and when they sell varies widely, and the better the firm’s footing the more likely it is they will hold. Having said that, I think it’s pretty rare that the traditional venture folks actually buy more in the public markets.  It’s important to note that this does not matter if your most likely outcome is a trade sale.
  2. Public investors can “recycle” their capital while most venture funds can’t really do that easily. Huh? If Fidelity gets a 70% return on their investment in your company in a year and a half, they are pretty happy -- they can turn around and reinvest that money into other stocks. If Accel gets a 70% return on their investment in a year and a half, they are actually pretty unhappy -- they need to return that 70% to their investors and can’t really reinvest it. In order for venture funds to make their math work, they need to get a 3X return on their investment. So what? Well, this means that the late stage venture folks will likely give you lower valuations and more “structure” (i.e. participation) in their deals to try to reach higher return levels, while the public folks will likely be more flexible. 
  3. We are generally very happy with our board and were not looking for new members or even new observers. 

Now, that’s HubSpot. Every company is different. Let’s just say, as an example, that you are a travel technology company that’s doing well, but you need some help on the board, some VC pedigree and connections to improve your team, domain expertise, and maybe some money to buy out existing investors and their board seats. In that case, you’d be nuts not to go with, for example, General Catalyst or Sequoia. 

The Surprisingly Common Use of “Structure”

In our A through D rounds, the concept of “structure” did not come up. In fact, when one of the potential Series E investors asked me, “Are you open to ‘structure’?” it caught me off guard, because I didn’t know what it was and didn’t want to seem like a complete rookie. So I said, “Let me check with my board and get back with you.”  That turned out to be a good answer, by the way.

Structure is a fancy word for preferential terms set up to increase the return of the new investor, or limit the downside of the new investor. As I mentioned earlier, private investors typically need to get a 3X return on a late stage deal, and they’re nervous that they will invest money into a company and six months later it will sell for 75% more than they invested. For someone who can reinvest that capital, that’s a great outcome; for a VC, it’s not. In order to protect themselves from that risk, they will ask for participating preferred stock that, for instance, will put a floor on their return of 2X. Given the VC’s incentives, it makes perfect sense, but that is a different type of equity that sits on top of everyone else’s equity that needs to be looked at extremely carefully. It comes in a lot of flavors and can work well to bridge a valuation gap, but can be confusing, so I recommend folks dig in and build the model on how it ripples through.

Another type of structure that VCs put in is a block on an IPO or trade sale of less than 2X (or something like that). This block makes perfect sense for the VC given their contract structures with their LPs, and it might make sense for you -- but you need to go into that with eyes wide open.

The Surprising Importance of Your Series A Terms on Your Mezzanine Round

It turns out that the terms from your Series A are most often cut and pasted into your later round deals. When you compromise on terms in the early stages, you will have to pay the price in the later stages. You generally don’t start from scratch and rehash the terms.

Surprisingly Rational Pricing

The initial pricing interest in our early stage rounds varied widely; but in our mezzanine round, the numbers came in much closer to each other. There are hard public numbers to look at with publicly traded companies and recent acquisitions by public companies. The pricing discussions just seemed much more “real” than the earlier stage deals. 

My advice here would be to get your arms around the public companies for your industry, and where those companies were when they were your size. We built a chart that showed every public SaaS company and what their revenues and growth trajectories were from their early days to where they are today. It was a useful tool in our discussions, particularly when we were getting compared to public companies that were growing at 25% and we were growing at 85%.

Surprising Value of Currency Valuation in M&A

Private companies buying private companies with stock is a tricky business. After our Series D, we acquired another privately traded company called Performable with a combination of cash and stock. The trickiest part of deals like this is figuring out what their stock is worth, and what your stock is worth. The nice part about just having finished a relatively late stage, clean round is that at least our side had a real number to negotiate from. If neither side has a recent number, those negotiations are really tough to sort out.

Those are some of the surprising things we learned in our recent mezzanine round. Am I missing any insights that you have on this topic? Feel free to leave a comment and let me know.

Topics: hubspot funding vc
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The Classy Way To Get Media Coverage For Your Startup

By Dharmesh Shah on October 30, 2012


The following is a guest blog post by Nicholas Holmes. Nicholas is the co-founder of MediaGraph, a public relations platform that enables small businesses to manage their own media outreach. He was formerly a journalist and an Accenture management consultant.

In my previous career as a journalist, I received hundreds of story pitches with press releases attached every day. Like so many other well-meaning journos, I'd make a valiant attempt to at least skim the first two lines of every one in a vain attempt to maintain some sort of equilibrium between the read and the unread.press hat

In those two lines, I (and almost all the journalists I know) made a rapid judgement on the newsworthiness of content, never spending enough time thinking about what a story could become, rather than what it was. In short, if your piece of news wasn’t 100 percent right, it would rarely get the time of day.

Savvy PR practitioners know this. The best will be in contact all the time (or at least well before they have a news story to pitch) in an attempt to figure out how to maximize the chances of something being picked up. It’s a wonder there aren’t more of them. Sadly there aren’t and 80 - 90 percent of pitches I received followed the tired format of "Hi X, Company Y is launching a product next week and we thought it would be of interest to publication Z."

So here's an idea to try when getting media coverage for your startup - don't start by pitching the product. Start by pitching nothing.

Clearly showing that you understand that a journalist doesn't just exist to publicize you is one of the fastest routes to his or her heart. It’s literally the difference between drunkenly hitting on someone in a club and taking him/her on multiple dates to the restaurant you can’t afford. Hell, you'd be unlikely to start a sales pitch without knowing your customer, or begin discussions with an investor without finding out exactly what they were interested in -- so why treat the media differently?

The closest relationships journalists build are with people who can provide long-term value to them by offering something that isn't just self-promotion. Conversely, these tend to be the names you see cropping up again and again in the media.

So instead of a product pitch, why not offer something else if you’re trying to use the media to get the word out about your startup? The following list should get you started:

Comment

Having a network of people to offer opinion and analysis is critical for most journalists and it's a great way of getting your name out there, even when you don't have any news. So make sure your media contacts know who you are and what you're qualified to talk about by introducing yourself with a short biography and an offer to help.

Briefing

Most journalism is about distilling complex topics into chunks that people understand, which means journalists need to be knowledgable about a lot, and always stay up-to-date. If you're an expert, or have access to experts, you can offer to spend some time highlighting trends or recent developments in your area to help journalists do their job better.

Access

Perhaps it's a cliche, but one of the best ways to curry favor is to open doors. Does your business have an investor, a board member or a founder who's in demand? Offering an introduction to the right person can help ensure that you're remembered for the right reasons, and it doesn’t have to be just a cynical gesture. Connect two people who will benefit from knowing each other and you’ve done them both a good turn.

Data

Many companies I've come across sit on piles of newsworthy data they've never considered using. It could be information interesting to everybody or just to a niche audience, but take a look at some other examples of companies doing this and see if you might do something similar. Are you collecting data you can aggregate about your users that will be of interest to a consumer publication, such as their top tracks, movies or TV shows? Do you have access to collated information on Twitter that a journalist could use to prove a point? Or does your business measure something nobody else does?

Insights into the business

TechCrunch ran a surprisingly popular series (http://techcrunch.com/tag/tc-cribs/) some years back which took a look around startup offices in the style of MTV Cribs -- a perhaps extreme example of how day-to-day business operations can be interesting. Think about whether your organization does anything particularly noteworthy operationally which could give a journalist some inspiration. Are there unique management styles or internal practices?

Coffee

Too simple? Never! If you can meet conveniently, meeting a journalist face to face is the best way to make sure that you'll be remembered as more than just an email address. It also signals that you’re willing to invest serious time on getting to know this person, which will be appreciated - and who knows where you’ll both end up in the future?
Topics: guest PR
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Startup Psychology: Why Awareness Is Awesome

By Dharmesh Shah on October 24, 2012

The following is a guest post from Dr. Jared Scherz, founder at UFeud, LLC, creators of ufeud.com, uframe, and uscore technologies.

As a well educated psychologist with a successful practice, the decision to launch a startup tech company tested the boundaries of my sense of self confidence and competence, as I was venturing into a field I knew little about. It was embarrassing to have to tell people on a somewhat regular basis that I didn't really know what I was doing. So how do I feel about that?' One day I'm plagued by self doubt and the next I'm feeling more confident because I figured something out. The excitement of a potentially lucrative new venture was tempered by the anxiety of self doubt and fear of the unknown. A destructive cycle of confidence and self doubt can develop as a result, and can wear out even the most resilient of people if not recognized so the pattern can change.mirror illusion

To help me climb out of this spin cycle is being able to identify and own my experience. Knowing what I'm feeling and how it influences my behavior or decision making is key to managing this dichotomy. This (internal) awareness helps reduce the chances of letting these unpleasant feelings translate into actions that require more energy and time to correct. If I know what I'm feeling and why, I can differentiate between what is my stuff and what is an organizational matter.

“I think I deserve more shares”: Let's use conflict with a co-founder as an example. The idea of a partner wanting to renegotiate their terms can be a major pitfall that sinks a startup, according to Noam Wasserman (The Founder's Dilemmas). This dilemma is common because we don't know well enough the contributions of each partner early in the project, and roles often change throughout the process. When a partner believes they are contributing more and their worth has increased, they may naturally want more equity and recognition.

Our initial response may be rigidity. Tensing up and digging in our heels, justifying our defensiveness as our partner's misdirected priorities. How dare they focus on greed as opposed to the company? Aren't they a team player? Why are they willing to sabotage everything we have been working toward? Then we ask ourselves the question, why does this feel like a betrayal? What's being evoked may be a loss of control or a feeling of fear that we are losing our grip on the company. Perhaps we lose trust in our partner, conjuring up all the times we have been let down by somebody in the past.

A startup is like a newly hatched chick, small and vulnerable to prey. Why can't I protect and control this entity I've worked so hard to create? After all, nobody was there at 3:00 am when I came up with the idea. (If they were, they probably could have shamed me out of that celebratory bowl of chocolate ice cream).

Paying attention to our experience will help us in a few different ways. We will have greater empathy towards our partner, allowing them to feel heard. Once your partner feels understood, they aren't going to put on a full court press to back you into a corner. Paying attention to our experience also allows us to separate past issues versus current ones. I'm aware that my partner is just nervous about all the extra work they are doing and they aren't like my ex-girlfriend who slept with my best friend in high school.

Expanding our self awareness helps with everyday interactions — not just the high intensity ones. Take a situation in which your programmers aren't following through on tasks with the alacrity they did when excitement in the project was higher. Aggravation can easily set in and snippiness can follow. We get on their case, which in turn causes resentment on their part and even slower responsiveness. Or, we can utilize our growing awareness and realize that we are being driven by fear.

In this scenario we add on a new level of awareness, which is external. Now instead of looking inward we are scanning our environment to pick up clues on what may be happening with others or even systems. In the example given above, our programmers may be feeling disconnected from the organization. They don't see all the effort going into marketing or how the sales team is getting positive feedback from the clients. All they hear is what isn't working and how they need to work faster. Their initial excitement has diminished and their frustration level is growing, hence their slowing response time. So getting on their case may work temporarily but in the long run it can create more chronic indifference.

Now that we have scanned our environment and determined that they are feeling detached and discouraged. We integrate this new information with our own heightened awareness and devise a more intentional response which serves both sides better.

Awareness is more complex then we realize it to be. It involves scanning both our internal and external environments to determine the impact we are having on others and others are having on us. Most situations that can be handled in a way that promotes cohesiveness on our teams can turn into disasters if we aren't using our awareness. A startup CEO with a high level of awareness will influence their organization in profound ways, most importantly helping the startup to become adaptive.

An adaptive organization as described by Eric Ries (The Lean Startup), is one in which the team uses data to learn and grow. Ries bases his concept on a validated learning approach that allows a company to measure their efforts and then pivot accordingly. What is also important in addition to learning from how our product is responded to, are the processes which exist among our team. Awareness is the key to understanding our own responses, the behaviors of our team, and the way in which different parts of the organization work together to form a whole.

Startups that don't prioritize adaptation are more prone to making mistakes and repeating these mistakes which can easily become maladaptive patterns. Getting excited after days of self-doubt and then making impulsive decisions without enough information is just the type of pattern that can be prevented with greater awareness. Adaptation is the direct result of scanning our environment and making changes based on the information obtained in a timely manner.

There are quite a few obstacles to improving one's awareness. The first is a CEO who is highly intelligent. Sound strange? Intelligent people tend to over-think and analyze. Awareness isn't about figuring things out with your mind; it's about using your body or more specifically your senses. Ask yourself what you feel in your gut, where you are holding tension, or what memories are being evoked.

Another obstacle is our resistance to giving up control. My startup is a product of a great idea, a tremendous amount of hard work and sacrifice, and we aren't about to see it decimated by apathy or greed. Remember that others may not feel the same passion as you do but they can be helped to take greater ownership if they know their feelings are valued. Taking time to scan others experience and verbalize what you imagine them to be feeling will go a long way toward building loyalty.

So take a moment and step back before reacting to people or situations. Ask yourself what is going on inside you to trigger your feelings. Consider what is driving the actions or inactions of others around you. Scan the team to see how people are working together and what the underlying causes are for problems. Base your responses on what emerges through your awareness to prevent impulsive decision making. As the CEO you are responsible for attending to the processes of your startup, not simply executing a wonderful product or service.

What do you think? Have you tried deliberately increasing your awareness — internal or external?  

Topics: guest strategy
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Highlights On The Business of Software (2012)

By Dharmesh Shah on October 8, 2012

The following is a guest post by Matthew Dean. Matthew is a Center of Excellence Leader at CTS Inc., a privately held IT consulting firm servicing enterprise customers with offices in Atlanta, GA ; Birmingham, AL ; Charlotte, NC ; Chattanooga, TN ; and Mobile, AL. You can follow him on Twitter at: @GoghUA

Within the past week, my son turned four, my daughter turned one, and I attended the hands down best conference I have ever attended. It has been a great week and thus, I was inspired to share my experience at the conference, Business of Software, or BoS for short. The conference website is businessofsoftware.org and the hash tag was #BoS2012.

Business of Software logo

This was the second time I have attended the BoS conference and the first time it has been hosted at the Intercontinental Hotel in Boston, MA. My first visit was in 2010, when it was hosted at the Seaport Hotel and World Trade Center in Boston, where I came away inspired in a different way. This first visit really kicked off my interest for reading business oriented books which began with one of the books provided to conference attendees, Youngme Moon's Different: Escaping the Competitive Herd. I quickly plowed through this book on my way to picking up Seth Godin's Linchpin: Are You Indispendable for the plane ride home. Both Youngme and Seth were speakers at the 2010 conference, among many other outstanding speakers such as Eric Ries (The Lean Startup) and Scott Farquhar (Atlassian).

When the time came for the 2011 conference, my wife and I were expecting our second child and the due date aligned with the conference. One of these things I simply could not miss. Fortunately, 2011 marked the first year that the conference was to be streamed live online. I was not able to listen in to the entire conference, but I was able to experience a few of the, once again great, speakers. Primary among them, Clayton Christensen gave an outstanding presentation that made me instantly grab a copy of The Innovators Dilemma . Other great speakers in 2011 included Alex Osterwalder (Business Model Generation) and Alexis Ohanian (Making the World Suck Less).

Early in 2012, when the conference dates were announced, I jumped at the opportunity and registered right away, even before the speakers had been announced. With what I had seen over the past two years, I had full confidence that the 2012 lineup would be top notch. As the year went on, I continued to be impressed with the lineup that was coming together and chief among that list for me was Dan Pink. I had previously read Dan Pink's book Drive and seen his brief Ted presentation on the topic, so I knew he would be one to look forward to. Other names that piqued my interest included Kathy Sierra, Dharmesh Shah, Noam Wasserman, and Bob Dorf. The latter two whose books, The Founders Dilemma and The Startup Owner’s Manual respectively, had been queued on my Amazon wish list for some time. During the conference these two books got dropped off my wish list, not because they failed to impress with their presentations, but because they were both giveaways to conference attendees. Outside of the great speaker lineup, reading my mind with the book selection wasn't the only way the conference impressed me. The excellent food, intriguing workshop, and overall high quality of attendees also greatly enhanced the experience. Overall I was very impressed with the conference and look forward to returning next year.

The remainder of this post will summarize my thoughts in each of the presentations at this year's conference. Unfortunately if you weren’t in attendance, these summaries simply won’t do the presentations justice as there were so many stories and anecdotes to go along with them that provided much context and value as well. Thus, I would highly recommend that you follow the BoS conference blog as videos will eventually make their way onto the site.

Day 1

Kathy Sierra

Building the Minimum Badass User

With a title which was clearly a play on the concept of a minimum viable product, as popularized by Eric Ries, Kathy proposed that in order to address the problem many companies face of great product, didn't sell or GP;DS for short, that we should not be focusing on making an awesome product but instead on making awesome, or badass, users.

Kathy outlined three popular myths when looking to create expert users:

  • Expertise comes from more knowledge
  • Expertise comes from more experience
  • Expertise requires natural talent

On your way to building badass users and debunking these myths, Kathy identified three things that you need: models, edge practice, and forward flow. As the first speaker of the event, she foreshadowed the last when she referenced Dan Pink's as "the best summary of determination theory." She wrapped up by providing the following guidance for each of the three identified needs for building badass users.

  • Models: provide high-quality, high-quantity examples of badass
  • Edge Practice: provide exercises designed to build precise, measurable, fine-grained skills in 1-3 sessions
  • Forward Flow: provide motivation to keep users making forward progress

Jason Cohen (@asmartbear)

How data, statistics, and “the numbers” will make you totally do the wrong thing

Jason’s presentation was interesting warning to consider with the rise A/B testing popularity and the measure everything philosophy. Although, none of this should be news as Jason addressed this on his blog in 2009 and he was even kind enough to create a friendly URL to share the math: bit.ly/abhamster

Jason proposed that instead of blindly testing headlines and other tweaks that you instead identify a theory and focus on testing that theory. Thus, your strategy should not necessarily be to measure everything but instead to pick 1-2 key metrics to optimize, a few thresholds to watch, utilize simple sensitivity analysis, and most importantly, fold real data back into the model.

Joel Spolsky (@spolsky)

The cultural anthropology of Stack Exchange

We all know Joel from his popular blog, Joel on Software, his company, Fog Creek, and as the CEO of Stack Overflow. If you aren’t already familiar with Stack Overflow and other websites in the Stack Exchange network, then you likely would have been lost in Joel’s presentation as he focused on the structure and how the community functions. In short, the communities that thrive around the Stack Exchange model are best described as, in my words not Joel’s, passionate and nerdy. Take a look at some of the more popular, outside of Stack Overflow of course, Stack Exchange based communities: Math, Paleo, Gaming, and the English Language (if you found this from here, please excuse my inadequacies).

Dharmesh Shah (@dharmesh)

Lessons from the trenches

Dharmesh is a BoS regular and always delivers a great presentation. I think this year’s most tweeted quote award goes to Dharmesh for the insight that “before you gamify your product, you should decrapify it.” The reminder of his presentation will filled with so many other great insights that instead of spend the rest of the article writing about those, I will wrap up into a few key highlights:

  • There is no better time, since the early 1990’s, to build a software business
  • You don’t just want customers, you want crazy loyal fans.
  • The technical switching costs of you software should be low but the emotional switching costs should be high.
  • You should pick markets where the barrier to exit is low.
  • You should strive not just to build a great startup, but to build great entrepreneurs.

 

Peter Bauer

Founding principles versus scaling principles

Peter discussed his experiences from founding and scaling Mimecast from 2003 to now and addressed four principle items that he learned along the way: building something with friends, deal constructively with my fears about success, never allow an investor that would change chemistry, and have clear intent and logistics. The first three allowed Peter to provide some insight into his specific experience going from the incubation to growth of Mimecast while the fourth principle provided the actionable items for audience takeaway. Peter argued that “intent creates a power multiplier,” or in other words, if you are intentional about the goals and directions of your business, the power or drive towards those goals will be even more powerful. The most powerful part of Peter’s presentation was, at least for me, the message that all too often it is the accounting (or revenue) measures that shape the intent of a business, thereby causing the business to lose its grip on its vision. Hence, we must ensure the clear intent and logistics to avoid straying down this path.

Noah Kagan (@noahkagan)

Lovegasms

Noah made a last minute change in his presentation topic, originally slated to be Rogue Marketing Strategies, in order to cover something that was more relevant and timely to his passion. Noah shared a chart of AppSumo’s revenue that showed a clear decline beginning around the October 2011 timeframe and was very open about the lack of passion and customer focused that had resulted from his disconnection thus, the topic change. The reason for the loss of passion and the decline was summed up in short as: get rich, get boring and risk adverse. Hence, the AppSumo Framework for decision making was born:

  1. Is this X something we’re Proud of?
  2. Is it simple?
  3. Are we having fun?
  4. Is it profitable?

In addition to this framework, AppSumo developed Project Happiness to track what their customers were saying. At time of writing, this happiness index is hovering slightly about the middle in the “ok” category and well below the “Amazing” category. As part of the project, AppSumo is looking to six steps evaluate the business on and hopefully get their customer happiness score into the “Amazing” category.

  1. Core Values aka The HELL YES/NO
  2. Value
  3. Authenticity
  4. Surprise
  5. Consistent
  6. Personal

Day 2

Peldi (@peldi)

Coding is the easiest part

On the morning of day two, I rode the elevator down with Peldi and another conference attendee, where Peldi shared with us that he was a bit nervous. If you’ve ever seen Peldi present or talked with him, you would certainly find this humorous as you would never guess that he is the nervous type. Despite his stated nervousness, he delivered a great presentation with a focus on six key areas, aside from coding, that are crucial to the success of your business: vision, product (or service), marketing, company, support, and ecosystem. Throughout his review of these areas, Peldi shared insights that he gained from Balsamiq in each of these areas. The following were some of my key takeaways:

  • Embrace your ecosystem.
  • Surround yourself with excellence. Peldi even said that he always wants to be the dumbest person in the room. If this ever happens, I would really like to meet the people in that room.
  • Laws are like features, easy to add, but really hard to remove.
  • Don’t put in place unnecessary policies, the main goal of a policy should be to keep everyone on the same page. If/when a policy is needed, you should explain why it is needed. Balsamiq’s vacation policy is: take some.
  • Pace > Deadlines, everyone works at a different pace and if you can find and embrace that pace, they will be more productive than simply setting a deadline.
  • Remove salary from the equation.

Mikey Trafton (@mikeytrafton)

How to build a world class culture in three easy steps

Mikey is a long time BoS attendee whose first time presenting was a runaway success. If you haven’t heard of Mikey before, he is the Founder and CEO of Blue Fish Development Group and Fire Ant Software, both services companies that sell to “big freaking companies.” Mikey’s presentation was all about the importance of building a great culture to the success of a company, summarized in three steps as follows:

  1. Decide what you care about.
  2. Hire people that care about the same things you do.
  3. Pay attention to the things you care about.

While these steps may seem obvious, Mikey was able to share many lessons learned in each of these areas that really sold the importance understanding these three steps. When growing Blue Fish, Mikey made the decision that above all else, Blue Fish stood for “client elation,” and in order to achieve client elation, he wrote down these five core values:

  • Client focus, take the clients goals and make them our own.
  • Teamwork, build and elite team rather than a team of elites.
  • Accountability
  • Excellence
  • Communication

Mikey stressed that writing down these core values made it concrete and tangible and really allowed him to hone in on identifying people who were the right cultural fit. However, just finding the right people doesn’t end your effort to build a great culture as you must constantly be paying attention to the three steps because “you will get the behaviors that you tolerate” and you must ensure that you are always focused on what you care about.

Adii Pienaar (@adii)

Going global form the edge of the world

Adii is one of the founders behind Woothemes. Woothemes is headquartered in Cape Town, South Africa, not exactly a city known as a great place to build a startup. Adii’s presentation likely hit home to many entrepreneurs in the room as he used his story to focus on the unimportance of where you are building your startup. My key takeaways from Adii’s presentation were as follows:

  • Invest in branding because it’s free. Your culture and how you portray yourself is the brand.
  • Customer service is cheap marketing.
  • When trying to identify your business model, find something that enables others to make money because that will be recession proof.

Dan Lyons (@realdanlyons)

What would Steve do? The insider’s guide to talking to the media.

Dan Lyons was a senior editor at Forbes is now a writer at Newsweek and is the guy behind “Fake Steve Jobs.” I’ll have to apologize to my readers that I didn’t take very good notes during Dan’s presentation because he was so entertaining I had a hard time keeping up, this was truly one where you had to be there. However, I did manage to jot down the primary takeaway from Dan, which loosely paraphrased is:

If you are basing your business on anything other than mobile, you should stop now.

Gail Goodman (@Gail_Goodman)

When software and people mix

In 2010, Constant Contact was ranked 134th in Deloitte’s Technology Fast 500, however not that long ago, they too were a startup struggling to find their business model. Gail told the story of Constant Contact’s growth over the “long slow ramp of death” from 2002 – 2005 as they were “only eating what they were killing.” There are no silver bullets, she said, but there are many little things. First and foremost, you should start with the view from the customer’s perspective, not by looking at your metrics. Optimizing the sales funnel is anything but low touch Gail argued, it requires a combination of technology and people you have to iterate in “measure – test – repeat” cycle until you get it to work. Finally, Gail wrapped revealing that word of mouth has been the single best channel for Constant Contact and that the best gas pedal they have found for word of mouth is a great customer experience.

Paul Kenny (@PaulKennyOL)

Resistance is futile!

Day two wrapped up with another BoS conference regular, this time everyone’s favorite sales guy. Paul opened up with a list of things that good sales people do really well:

  • Understand “value”
  • Dialogue
  • Share stories
  • Ask for a commitment
  • Manage resistance

The remainder of the presentation focused on the last item on this list, managing resistance. Paul argued that many sales cultures take the path of least resistance and that this is largely detrimental to a sales process because “a sales conversation with no resistance rarely ends in a deal being done.” Most customer resistance (or objections) are either logical (i.e. it won’t work for us) or emotional (i.e. I don’t like it) and typically facilitate two traditional responses attack or give up. In effectively dealing with objections, Paul suggested that there are eight things that are required of a sales person, the first four which can be trained, while the later four cannot be trained and you must there for look to hire for. Those either things are: client awareness, market knowledge, product/service knowledge, sales technique, speed of though, staying on side, persistence, and reframing. Whether you are an expert in these eight areas or you just want to pass this along to your sales guy, Paul offered the following general principles for dealing with objection:

  • Understand and isolate the underlying objection
  • Get on side (empathize)
  • Respond / Reframe
  • Confirm and Close
  • Don’t use “why”, it puts people on their back

Day 3

Noam Wasserman (@noamwass)

Understanding founder dilemmas

Professor Noam Wasserman started out day three by not even taking the stage, instead he constantly wondered the audience delivering a steady stream of insight that was truly engaging. Leading in with a quote from New Venture Labs that “most companies fail,” Noam immediately took the opportunity to deliver some statistics on failure based upon the research for his book, the aforementioned Founder’s Dilemma, where he stated that 35% of failures are based upon product development, functional management, and/or market fit problems while the remainder of failures, 65%, can be attributed to people problems. The research for Founder’s Dilemma encompassed four thousand startups, ten thousand founders, and twenty thousand executives, which by my calculations is at least a few more than you get to interact with in your local startup events.

Keeping with the theme of people problems, Noam identified the stages at which people are injected into the business which can cause dilemmas:

  • When to found / Core founder
  • Building the team / Co-founders
  • New-Venture Hiring / Hires
  • Beyond the Team / Investors, Partners
  • Exit Dilemmas / All of the above

The remainder of his presentation was filled with some great examples from ZipCar to Ockham illustrating various strategies for addressing these issues and their results. While he delivered more than enough details, the presentation will was just the tip of the iceberg for me as it bumped Founder’s Dilemma up to the top of my reading list.

Bob Dorf (@bobdorf)

Customer Development. The science of acceleration for growth Businesses

While Noam started with a quote that “most companies fail,” Bob started by saying that most startups fail to scale. Per Bob, the primary reason they fail is because they assume that their customer’s problem, and the product features needed to address their problems, are known. Bob’s presentation focused on addressing these failures by working through a customer discovery – customer validation – pivot cycle. For those familiar with The Lean Startup principles, Bob’s presentation would be familiar as he advocated that your goal should be to speed the time through this cycle in order to maximize chances of success. Ultimately, you should be working to find passionate “earlyvangelists” (i.e. customers who are desperate for you to solve their problem.)

Dan Pink (@DanielPink)

The surprising truth about moving others

First, I have to admit that Dan Pink was the speaker that I was most excited to see at BoS. I attribute that interest to my reading of his previous book, Drive . If you haven’t read it, I would encourage you to do so right away. If you are not a reader, then take nineteen minutes and watch Dan’s presentation on Ted. Now that I’ve got that out of the way, on to Dan’s presentation.

Dan began by saying that the upcoming book, To Sell Is Human: The Surprising Truth about Moving Others , upon which this presentation was based is only 96% finished. He would be rushing to wrap up the remaining 4% by his Friday deadline. It was great to see an amazing presenter like Dan deliver such a raw presentation on such fresh material. Further, it was exciting to hear how the idea for the book came about. Neil Davidson, one of the organizers of the conference, started a dialog with Dan regarding applying the principles outlined in Drive to sales people. This idea was intriguing enough to Dan that he embarked on a two year investigation of sales to find the answer. He summed up his two years of investigation into one word: disintermediation.

dis·in·ter·me·di·a·tion [ dìssintər meedee áysh'n ]

removal of intermediaries: the elimination of intermediaries such as wholesalers or retailers in business transactions between producers and consumers

On the surface it appears that in a world of Amazon, Expedia, and social networks, sales people are becoming obsolete but the research showed a different answer. The death of the salesman has been misreported, the facts simply do not back it up.

In the past, the salesman always had the most information, there simply wasn’t a way for the consumer to come to the table with the same or more information. In today’s world, we are moving from this world of information asymmetry to a world of information parity. This information parity forces people to take the high road. Hence, Dan proposed three qualities for “how to be” in this new world of information parity. No longer does ABC = Always be closing, the new ABC’s are:

  • Attunement - The ability to take another's perspective / understand where people are coming from. It is largely about perspective taking.
  • Buoyancy - The capacity to deal with "an ocean" of rejection
  • Clarity - The ability to cut through the muck and provide clarity

So in this new world, who makes the best sales person? The old adage that extroverts are the best sales people simply did not hold up to the research. The correlation between extroversion and sales is .07, basically zero. The evidence shows that the best sales people are “amibverts.” Ambiverts are those individual who fall somewhere on the spectrum between introvert and extrovert. Dan presented a graph of “sales revenue by levels of extraversion” where the numbers were virtually identical to that of what the general population distribution of introverts to extroverts. Correlate this revelation with the US Bureau of Labor Statistics showing that there are 15 million Americans in sales and Dan’s own research showing that all workers spend an average of 41% of their efforts on “selling” and not only are we all in sales now, we might just be the best salesmen.

So, since we are all in sales now and we might just be our company’s best sales person, Dan proposed three abilities needed by a successful sales person: pitch, improvise, and serve. What are you doing to improve these areas? I know for one that I will be preordering Dan’s upcoming book. 

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Did you attend the Business of Software conference this year?  Or, watch the livestream?  If so, what did you learn?  

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Startups: The Elevator To Success Is Out Of Order

By Dharmesh Shah on September 27, 2012

"The elevator to success is out of order.  You'll have to use the stairs...one step at a time." ~Joe Girard

As a community, I think entrepreneurs have gotten more knowledeable over the years.  We know the difference between pre-money and post-money valuations.  We've read "The Lean Startup".  We've dug into the details of SaaS economics.  

Despite all of this education, one thing remains relatively unchanged:  The number of entrepreneurs that think that if they just have the right idea and turn into the right product, they will be skyrocketed to success like Facebook, Instagram or Dropbox.  For some reason, this magical leap to success is a persistent delusion.  

The reality is far from this.  Even the super-successful startups that we all know and love did not get that way easily.  Behind every major success story, there is usually a major effort.  It's not enough to be just smart and passionate.  There's real work involved.  And though you may jump and skip a step here or there, for most of the time that you build your startup, you'll be doing it one step at a time.  Take comfort in the knowledge that others are doing the same thing.

 

stairs onstartups 2

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Hatching An International Office: 6 Tips For Startups Going Global

By Diana Urban on September 26, 2012

The following is a guest post by Diana Urban. Diana is the Head of International Marketing at HubSpot, all-in-one marketing software

International expansion can provide a startup with tremendous growth opportunities. It allows your company to grow faster by casting a wider net, and helps diversify your revenue stream. While global expansion can be an exciting time, it’s a significant undertaking and requires some careful planning and making some hard decisions.

Today, HubSpot announced its European Headquarters launch in Dublin, Ireland. As part of the HubSpot International team, I wanted to share some of our learnings with you.globe hatch

Here are six important things to consider when expanding a startup internationally:

1. Follow your customers and prospects

To determine where your biggest global opportunity exists, take a look at your customer base. If 50% of your International customer base is in Europe and only 8% is in Latin America, it makes a lot of sense to choose Europe as your International HQ. Let your domestic team build your Latin American segment up to a point where it’s ready for its own HQ. Make sure you have enough proven revenue in a region before opening up a new branch.

Also take a look at where the majority of your non-domestic prospects, or leads, live. You may notice that you’re generating the most leads in a country other than your largest international customer base. If this is the case, take conversion rates and cultural factors into consideration. Even though you’re generating a lot of leads in a particular country, can its population afford your products’ price point?

Finally, as much as we'd like to "follow the metrics" and make purely data-driven decisions, the choice of location might come down to people.  Does one of the founders have a particular affinity or background in a location?  Do you already have one of your stars anxious and eager to start an office in a particular country?  These "people-based" factors should be considered.  Often, the "optimal" decision from a metrics and revenue perspective is not the "best" decision.

2. Set ambitious international goals

Expanding internationally is a big investment, so it’s important to set ambitious goals to get the highest ROI possible. For example, plan for 30% of your business’ revenue to come from your global HQ within 3-5 years. Defining an international revenue goal for your international office will help you determine things like:

  • How many sales reps do you need to generate $X in revenue?
  • How many marketing leads do you need to generate to make those reps successful?
  • How quickly does your international customer segment need to grow to reach that goal within 3 years?
  • How many customer service reps will you need in order to serve this segment?

Whatever numbers you set to suit the needs of your own business, make sure you set those goals ahead of time so that you can plan accordingly every step of the way. Setting clear goals ahead of time will help keep the team that opens up the international headquarters accountable for its success.

3. Hire locally but be consistent culturally

A major benefit of opening up an office overseas is being able to recruit local talent, who will be experts in your industry in their culture. No matter how much you’ve been educated in the nuances of the culture you’re entering into, nobody will be better prepared than the people who grew up in the region.

If budget allows, try to bring over your new global employees for a couple weeks of training in your primary office. They will likely be teleconferencing frequently with your primary HQ, so having them join for training in-person helps put a face to the name for all future interactions.

Even though you should plan to hire mainly locals to staff your International Headquarters, be sure to maintain your company culture by sending over a group of expats, even if for a limited time range -- six to 12 months can suffice.

Most importantly, ensure that from Day 1, members of your international team feel like they're part of the company.  Give them training.  Give them career opportunities.  Give them access to information and resources.  

4. Network and attend conferences

Although America is becoming very dependent on virtual communication, in-person interaction is highly valued in cultures like Europe and East Asia. Use conferences and networking events to make connections with local industry-leaders in the region you’re opening your new office. Plan to stay a couple extra days after the conference for 1:1 meetings with your new connections. Meet with local press in-person to provide interviews on your global expansion plans.

Networking with the locals will help you spread the word not only about your product, but about the career opportunities now available to the local marketplace. You may need to hire aggressively your first couple years in your new office branch, so networking is imperative to drive high-quality candidates to your business.

5. Don’t underestimate cultural differences

Just as marketing best practices vary culture-to-culture, so do business practices. For example, in the U.S. it is typical for employees to have 10 non-holiday vacation days. However in Europe, it is customary for employees to have at least 20 non-holiday vacation days -- and be required to take all of them. It’s important to take this cultural difference into account when projecting sales quotas and development sprints.

6. Get support from finance, HR, and ops experts

When opening an office abroad, there are a lot of overhead elements to plan for, such as:

  • Negotiating leases and contracts
  • Determining company structure
  • Setting up accounting and tax reporting systems
  • Supporting expat and local employees’ HR needs

Expect that you will need ongoing support from your finance, HR, and operations departments, and plan to hire agencies to help if you don’t have the resources in-house. Again, global expansion is a big investment, and it’s important to get these basic elements right from the get-go.

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The 7 Deadly Sins of Startups

By Dharmesh Shah on September 13, 2012

Not all of these are quite "deadly sins", but the "47 common mistakes of entrepreneurs" didn't quite have the same ring to it.  Enjoy.

The 7 Deadly Sins of Startups

1) Lust: Be not easily lured by the fun, sexy market. [tweet]

describe the image

2) Gluttony: Many ideas makes mayhem. More startups die from idea gluttony than starvation. [tweet]

3) Greed: Pure pursuit of profits is perilous. Pick a problem you're passionate about. [tweet]

4) Sloth: The lazy shall languish in obscurity. Toilers triumph. [tweet]

5) Wrath: Don't get angry with your competitors. Attack the problem instead. [tweet]

6) Envy: Do not copy others out of envy of their strategy. Be yourself. [tweet]

7) Pride: Hubris kills. Humility has a power all its own. [tweet]

Which of these "sins" are you committing?  Any others you'd add to the list?

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Remembering 9/11: Leadership Lessons From Akamai Founder

By Dharmesh Shah on September 11, 2012

The following is a guest post by Annie Bourne. Annie is the VP Business Development and General Counsel of Kinvey, and author of The First Secret of Edwin Hoff.

Thank goodness for printed pages. Pages trap teachings, and sometimes files trap pages. I kept a note that Danny Lewin, co-founder of Akamai Technologies, wrote in March 2001 describing what good leaders do to build successful teams, and why they work. While Danny probably learned these lessons during his tour as a commando in the Israeli special forces, he applied them as co-founder and CTO of Akamai.daniel lewin

As many people in our industry know, Danny was tragically killed on American Airlines Flight #11. Those of us who were lucky enough to work with him try to remember, and share, what we learned from him. I worked with Danny at Akamai from 1999-2001. On this anniversary of September 11, 2001, I'm remembering the three keys to team leadership that Danny explained.

1. To inspire trust: Lead by Example

2. To build trust among teammates: Suffer Together

3. To restore trust when it weakens: Hold People Accountable and Get Rid of Non-Performers

1. To Inspire Trust: Lead by Example

For a team to function well, its leader must make decisions that each team member must consent to follow. It all hinges on trust, and the leader must earn it.

People only trust those whom they respect. To earn the respect of her team, a leader must demonstrate the highest level of ability in at least one of the skills asked of the rest of the team. Not in all of them but in at least one e.g., coding, negotiating, selling, or positioning. Any strong player on a team will only feel safe delegating decision-making to someone whose abilities they respect.

Shared sacrifice also inspires trust. A great leader must identify and then exemplify the behaviors that he needs the team to adopt. If developers often have to stay up to the wee hours to make a deadline, a good leader brings them pizza and mountain dew and then pulls up a chair and switches on a dark machine. If costs are managed closely, the leader will fly in coach and pay for any perks on his own dime. Others will do as he does.

A great leader also knows that each team member relies on her to provide him with the three things he needs to stay focused and execute well:

Set specific and clear goals like a north star. If there is no clear common goal, there is nothing to achieve. Teams grow frustrated at indirection and disperse.

Make firm and final decisions. Solicit input, but once the leader makes a decision, she must hold to it, and enforce it. This also creates a language within the team that teaches each member to make better, crisper decisions themselves.

Always follow up on work that you delegate. Leaders can create new accountability in others, but should never abandon their own responsibility for the ultimate outcome. The best leaders follow up often and in detail.

I remember when Danny gave me the goal of creating new technology partnerships with big companies like IBM, Oracle and BEA. He told me “anyhere you need me, I'll be at that meeting.” He told his secretary to make my meetings his priority. (Judging from her expression, and how many other people were lined up for their 10-minute update with him, I had a feeling he juggled a number of simultaneous priorities). The effect: I carried the ball, but I knew he was on the field too. I still have the notebooks from our daily status meetings, which felt like exciting and motivating team huddles, not micro-management.

2. To Build Trust Among Teammates: Suffer Together.

Having earned the trust of his team, the leader must seed trust among the teammates. People abandon petty rivalries when something threatens them. Great leaders should not try to protect their team from these outside pressures. Instead they should spotlight the common threat and let every member feel it. In business, the threat of real competition, or of feeling how close the line is between of success and failure, is an opportunity to let a team suffer together. Through this they learn to trust each other or perish.

To Restore Trust When it Weakens: Hold People Accountable and Get Rid of Non-Performers.

Great leaders hold people accountable successfully by honoring an unspoken contract between them. The team members make commitments to each other and to the leader. Then the leader measures each of them fairly and by the same standards - by how well they did what they said they would do. The leader pays each member by how well they performed their part of the deal.

But when one member fails to execute, other teammates see it immediately. They lose confidence both in the non-performer and in the leader for failing to uphold the deal. To preserve the trust that the leader has inspired by example and spread with shared suffering, the leader must remove the non-performer from the team. This restores trust between the team and the leader because they see the leader honoring the contract between them. They feel reassured that they, and their remaining teammates, must be performing. Then they trust each other to do their jobs and can concentrate on doing their own. (Of course, removing a non-performer only builds trust when the team member has had a fair chance to achieve his commitments, fair notice when performance is sub-par, and a fair chance to improve.)

Danny knew a lot about leadership, and he brought an unusual combination of skills to Akamai. In his remarkable and tragically short life, he was a commando in the Israeli Special Forces counter-terror group, then a genius mathematics graduate student at MIT, and then a visionary billionaire entrepreneur. He taught us some spectacular lessons about strategy, influence, and leadership. Danny inspired nearly everyone he met to reach farther, and do more. 

Topics: guest strategy
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4 Pieces Of Practical Advice for Women Entrepreneurs

By Dharmesh Shah on September 5, 2012

The following is a guest post by Kate Endress. Kate is the CEO and cofounder of DITTO.com, a new cutting edge ecommerce site selling a curated collection of designer eyewear including prescription sunglasses. Kate is a graduate of Stanford Business School and was previously a private equity investor before becoming an entrepreneur.

Despite the scary statistic that women lead just 8% of venture-backed companies, I believe that there has never been a better time to be a young, female entrepreneur. There are an increasing number of great female role models who serve as inspirations.

Yahoo's decision to hire Marissa Mayer to run the struggling web giant, knowing full well that she was pregnant, is particularly exciting. I had the privilege to hear Mayer talk at a Stanford Women in Management event two years ago and was inspired even then as she talked honestly and openly about everything from her management style to her strategy for achieving the elusive work/life balance.woman ceo

In all of my experiences speaking with women who run companies, the same four pieces of advice arise time and again:

  1. Connections Count: Build Your Network

    Early in my career, I received some great advice from a female colleague who told me to find the women I want to emulate and get to know them by asking them out for a cup of coffee. At first, I was a bit nervous to pick up the phone or write the email, because I knew these were busy women. In the past seven years, however, I have reached out at least once a month to female bosses, leaders and entrepreneurs. Only once to date has the recipient not been able to fit me in. I'm often touched at how openly and warmly they share experiences, both professionally and personally. It is through these meetings that I have honed in on my vision for the kind of female leader, mother and wife I hope to someday become.

    Don't forget when you are networking – with men or women – to present yourself confidently. That starts with a strong handshake and good eye contact. Speak confidently about your business or your idea. You want advice and mentorship, but don't forget that you also have experience to offer and share.

     

  2. Let Others Help: Tap The Resources

    There are a growing number of resources and organizations dedicated to helping women in technology, many started by female pioneers who had to make their way through unchartered territory just one generation ago. At Stanford, I was a member of the Women in Management club where leaders like Mayer came to speak about their ambitions and tactics for achieving their ideal balance in life. Today, I subscribe to Women 2.0 (http://www.women2.com/), a Kauffman-backed organization that offers content, community and conferences for women founders in tech. It's inspiring to keep tabs on other female entrepreneurs, and I've attended several events in San Francisco where I got to connect with other female founders. Springboard Enterprises (http://www.springboardenterprises.org/) is another useful program that matches female entrepreneurs with coaches, industry contacts and investors. I have coffee every month with different female business owners who openly and warmly share experiences and advice. Check Meetup and local universities to find other groups of like-minded women near you. These are ideal places for networking, finding mentorship, sourcing investors and generating peer support groups.

     

  3. Don't Forego Funding: VCs Are Becoming More Balanced

    The venture community seems to be turning over a new leaf with the recent wave of successful startups with strong female customer bases. Women make up 60% of Zynga's customers, 77% of Groupon's customers, 82% of Pinterest's users and 70% of all ecommerce buyers. I am a huge online shopper myself and I was able to leverage that authenticity to attract venture backing for my ecommerce startup last August. If your target market is women, you can leverage your experiences and build a better story of how your company will reach other females. Depending on your company you may also be eligible for government grants that are given to organizations run by women.

     

  4. Learn To Lead: We Need More Movers, Shakers and Mentors

    Speak with conviction when you are speaking to others and avoid trailing off or framing things like a question. You are an expert in your own area and you should speak about it confidently. Know your weaknesses and build a strong team around you that can support you. Sometimes this means hiring other women – but mostly it means hiring the best person for the job. There were a few female engineers who applied for my company and I was definitely rooting for them, but at the end of the day they weren't all the best candidates. To be a strong leader for my company, I needed to select the best person for the job. Put yourself out there as a mentor for younger women, both in your company and externally. You'll be giving back to the next generation of entrepreneurs while also building your own network.

    WE NEED MORE WOMEN ENTREPRENEURS!  Please share any other tips or ideas you have in the comments.  

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Connecting The Dots: Mergers Of Early-Stage Startups

By Dharmesh Shah on August 16, 2012

The following is a guest post by Ken Smith.  Ken is a startup marketing & strategy professional with leadership, consulting, and advisory experience in thirteen high-tech ventures with 10 successful results/exits.  You can find him on LinkedIn at  http://www.linkedin.com/in/kennethhsmith or follow him on twitter: @CareerEntrepnr

The explosion of co-working space has created an parallel explosion of would-be entrepreneurs. This is good for both the nation and innovation economy. But as any seasoned entrepreneur or investor will tell you, if you have a good idea for a business, it’s very likely that 100 other people have the same or very similar idea. And if you have a great idea perhaps 1,000 people are working on the same idea too. Lower cost office space (coworking, innovation center, etc.), cloud hosted everything, WYSIWYG tools and rapid prototyping applications, easy access to global networks of potential users and customers – well, let’s just say it’s a lot easier and cheaper to get a product concept to market today than it has ever been.merger arrow

 

Those same seasoned entrepreneurs and investors will also agree that the key to entrepreneurship is not having the best idea, it’s execution. I have been involved in more than a dozen startups and reviewed plans or advised dozens more. Often times when I see two teams going after a very similar market opportunity I look at the founders and can easily envision a great combined team. One start up has been founded by a marketing professional with ten years experience in a major consumer technology company, another by a tech whiz with a newly minted Masters from MIT, and a third by a born saleswoman who already built a small network of beta testers for her nascent product. But each continue to struggle to reach the critical mass or momentum required to break away from the pack because they are often working alone. Once the CEO hat goes on, it’s hard to take it off, especially willingly. Yet many an entrepreneur would do their fledgling company and their wallet good if they pooled resources with another entrepreneur – money, talent, and especially time – rather than seeing another startup operating in the same space as competitive.

 

Pooling technical resources can deliver a product with a more complete feature-set because of the different perspectives brought to the design and development process by team members with a slightly different but equally valid view point. Pooling capital can mean delivering a more complete product, or if minimal viable product (MVP) is attainable without additional capital then money can be focused on capturing beta testers and/or early users. Pooling talent increases your chances of attracting outside investors and shows with action that all team members are professionals dedicated to making the company successful rather than being CEO of their own startup. And pooling time means that by dividing up critical tasks and responsibilities more gets done faster and with less effort because team members can focus what time they have on doing what they do best.

If all of the potential merger partners are very early stage, especially if no company has any market traction or revenue, the best approach to a merger is a simple equitable split – 50/50, 25x4, etc. If one person gets greedy, arguing their contribution holds greater value than the rest, then you don’t want them for a partner now or at any stage - championships are rarely won by a single player. If one company has revenue and the other potential partners do not, then some small concession should be made for the entity bringing in the most important resource to continued success.

At the end of the day, the best early mergers are teams of professionals who have all seen the same market opportunity and have dedicated this segment of their careers to it. As you sit at your desk in a co-working space or innovation center and engage with other clever people at the coffee shop, consider the notion of joining forces, talk about it openly – you may find a willing partner, a kindred spirit, and greater success than working alone.

 

Topics: guest strategy
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How Much Should A Startup Founder/CEO Pay Herself?

By Dharmesh Shah on August 14, 2012

The following is a guest post by Chris Sheehan. Chris is a seed stage VC and angel investor at CommonAngels. You can follow him on Twitter at @c_sheehan and his blog Early Stage Adventures.

Back in 2008, Peter Thiel did an interview at TechCrunch50 in which he said one of the most important things he looks at before investing is how much the CEO is getting paid.

The lower the CEO salary, the more likely it is to succeed.

The CEO's salary sets a cap for everyone else. If it is set at a high level, you end up burning a whole lot more money. It [a low salary] aligns interest with the equity holders. But [beyond that], it goes to whether the mission of the company is to build something new or just collect paychecks.

In practice we have found that if you only ask one question, ask that.

What's the average salary for CEOs from funded startups? Thiel was hesitant to answer, but eventually said $100-125k.

An interesting perspective. I'm not sure that it's a leading predictor of success, but it certainly is a very important aspect at the seed stage because cash is so precious. The more a CEO pays herself, the less runway available to hit milestones.woman checkbook 2

CEO founders sometimes ask me for guidance on what is “market” for salaries in a seed stage startup. Some observations:

  1. Stating the obvious, salary needs can vary widely. A founder with no mortgage, kids, etc will have different cash needs than a founder that has a minimum cash hurdle to clear (in the absence of being very wealthy)
  2. The amount raised in a seed round has an obvious impact. I know a couple of cases where if bigger seed rounds had been raised, the founders would probably have bumped up their salaries a little
  3. The percent equity owned by the CEO post the seed financing varies as a function of not just the size and terms of the seed round, but quite significantly, by the number of founders and how equity is divided up between them. While not a direct driver of cash salary, the amount of equity owned can have a psychological impact on salary expectations.
  4. Another influencing factor is how long the company has bootstrapped prior to the seed round and how much were the founders getting paid during this time. I know of a couple of companies I am invested in where the founders didn't pay themselves anything for quite a while as they were building the foundations of their product
  5. If the company raises a Series A round, its typically to see seed stage salaries adjusted upward.
  6. As companies mature, its typical that a compensation committee is formed by non-management board members. In fact, the VCs will insist on this. The role of the compensation committee can vary, from making recommendations to the board on executive salaries, bonuses (and option grants) to having authority to set executive salaries

So what is the range of CEO salaries in the seed stage?

Based on what I see in the market, I'd say the range for founder CEO salaries after a seed round is between $60k and $150k, with the average/median in the range of $90k - $110k. This is based on an average seed round of around $900k with the expectation that the round will provide runway for 12 to 18 months. Salaries at the upper end of the range ($150k) are correlated with larger seed rounds of around $1.5 million.

While there is no correct answer to the question, here is my main take-away: it's so critical to be capital-conscious at the seed stage. Within what will feel like an incredibly short, stressful period of time, the startup needs to build product, figure out the market, and get some initial traction. Every month of cash burn is valuable.

By the way, to see some survey data on what other people think the founder/CEO salary should be, check out the OnStartups poll on founder salary.  

Topics: guest funding
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Startups: Stop Trying To Hire Ninja-Rockstar Engineers

By Dharmesh Shah on August 6, 2012

This is a guest post by Avi Flombaum. Avi is the Dean of The Flatiron School, an intensive program to learn Ruby on Rails in New York. He was formerly the co-founder and CTO at Designer Pages. You can follow him at @aviflombaum or @flatironschool.

Hiring technical talent is often cited as one of the most difficult parts of scaling a startup. Great companies are built by great teams so naturally, when it comes to technical talent, companies are competing harder than ever to entice the best of the best. The rationale you'll typically hear is along the lines of "a great developer is 10x as productive as a mediocre one." That might be true, but it is an impractical startup hiring strategy.

While companies fight tooth and nail over engineers with MIT or Stanford degrees with years of experience, as CTO of designer pages, my best hires were consistently entry-level developers that I developed on the job. Some companies, like Zendesk and GeneralThings have already realized this and are working with schools like Dev Bootcamp in San Francisco, The Flatiron School in New York (of which I'm a co-founder) and Code Academy in Chicago to hire their newly minted web development graduates. Aside from the fact that they're significantly easier to attract, there are tremendous benefits to the company.ninja dev small

1. Cost- Starting salaries for senior developers have skyrocketed in the past few years. The average starting salary for a senior Ruby developer has climbed to $94,000 ($107,000 in Silicon Valley). Compare that with the average salary for a junior Ruby developer, $70,000, ($80,000 in Silicone Valley). At that rate, you can give a junior developer a 10% raise every year for 3 years at the end of which you'd have an experienced senior employee who's been with you that long and is still costing less than a new senior hire.
2. Attitude- Anyone that gets courted the way a senior engineer does today is at risk of developing a sense of entitlement (to put it lightly). When I hired 'rockstars' at Designer Pages, the requests became increasingly ludicrous. Senior engineers had four-day weeks, required conference budgets, and refused to adhere to the language and technology standards the company had established. They always knew best and felt that we were lucky to have them. Junior devs on the other hand, are hungry. They want to prove themselves and are eager to learn. And assuming you're fostering the right culture, are excited to be part of your team.
3. Turnover- High turnover is the easiest way to kill a product. In The Mythical Man-Month, Frederick Brooks discusses problems inherent in a system designed by a succession of leaders, each with his own style and ideas: "I will contend that conceptual integrity is the most important consideration in system design. It is better to have a system omit certain anomalous features and improvements, but to reflect one set of design ideas, than to have one that contains many good but independent and uncoordinated ideas."
Great companies need great engineers who want to solve complex problems. But the majority of work being done on a typical web application does not require a team full of PhD's with 10 years experience, making it no surprise that senior engineers quickly get bored and seek out other opportunities. By hiring junior developers and ensuring they're getting the continual training and development that they need, you can ensure that they stay engaged and derive as much personal and professional value out of your company as your company derives from them.
4. Culture- A prerequisite for being a great programmer is a love of learning. Unfortunately, many senior engineers come with a lot of baggage; they want to work on specific problems, in specific languages, and have little patience for the inexperienced n00b. By hiring junior engineers, and giving them the training and development they need to flourish, not only can you align everyone's technical styles under a cohesive vision, you can more easily create a culture wherein it is expected for the senior employees to mentor and coach new hires, just as they were coached when they first started.
To be clear, this isn't true in every case. I happen to know plenty of incredibly humble, loyal, and generous (though not cheap), senior engineers. And if you're trying to build a better search engine, or solve the world's most complex data problems, you probably do need to recruit from the top 1%. Most companies though just need great leaders who can help their teams think through the difficult questions, and team members who are wiling to work together to implement creative solutions. The bottom line is that for most products, seeking out rockstar senior engineers is like hiring Picasso to paint your apartment.
So what's the best way to put this plan into action? Here are some things I found to be effective when developing junior engineers at Designer Pages:
1 - Deploy on Day One- Making engineers deploy code on their first day is the single best way to get them feeling great about their ability to acclimate and impact change in your organization. Companies like Etsy actually have a hard-and-fast rule that all engineers should deploy to production on day one.
2 - Assign Mentors- Lots of companies say they mentor their employees. I've found that unless this is systematized, senior employees get too busy to dedicate the necessary amount of time. Make sure every new hire has a mentor to pair with basically all-day for at least the first two weeks.
3 - Foster Productivity Early- The best way to sharpen a programmers skills is to write code. Junior engineers shouldn't be trying to learn legacy systems when they first arrive- let them work in as fresh a codebase as possible so they can get cranking right away.
4 - Invest in Training- Nothing will give you a better ROI on your time than making sure your employees are well trained. Create a learning plan for each hire for the first 3-6 months, complete with recommended reading, that applies to the projects they are working on.
5 - Be patient. :)
At the end of the day, when you hire junior developers, you are investing in people. You are creating a culture of growth, promotion, and learning that will pay for itself multiple times over. And it will also help you recruit the Ninja-Rockstars when you actually need them ;).
What do you think?  What's been your experience in terms of bringing on junior members to the team vs. the almost mythical ninja-rockstar engineers?
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6 Tips To Rapidly Raise Funding on Angel List

By Dharmesh Shah on August 1, 2012

The following is a guest post by Rick Perreault. Rick is co-founder & CEO of Unbounce, a Vancouver-based company that develops a web based platform which makes it easy for non-technical marketers to build & test landing pages without having to rely on I.T. or web developers. Rick tweets @rickperreault about marketing, entrepreneurship and backyard vegetable gardening (during the summer months).

I recently had the opportunity to use Angel List (http://angel.co/) as part of raising a Series A for Unbounce and wanted to share a few things that I learned along the way.


angel list icon
First off, Angel List is a pretty awesome service that makes it easy for introductions to happen between entrepreneur and investor, kinda like a mini Facebook for investors and entrepreneurs. However, there were some things I wish I would have done differently or had known before I got started. I made some mistakes. In some cases, I was not as prepared as I could have been and learnt alot on the fly. So today I want to take the opportunity to share the top 6 things I did that helped me raise capital with Angel List.


Tip #1 Use video to tell your story

In hindsight, probably the most effective thing I did was include a link on our profile and in all my email correspondence to a video of me giving our pitch I had the opportunity to pitch at the last GROW Conference here in Vancouver and lucky for us, they recorded it. I included it on our Angel List profile and almost everyone that contacted me commented that they watched it and especially liked the Q&A. Here is the link to the video: http://www.youtube.com/watch?v=1WcpFqKA7So

You don’t need to spend any money doing this either. Record yourself giving your pitch and providing answers to all the typical questions that you get from outsiders and post it on YouTube. Your passion, conviction and knowledge of the problem you are solving will come across in ways that a deck can never achieve and by presenting your own Q&A, you’ll skip all the typical questions and have a much more constructive meeting when you get on a call with an investor.

Tip #2 Get commitments for endorsements early

You probably have advisors and/or commitments from investors already or at the very least, someone of influence that likes what you are doing. Let them know that you are going to raise investment via Angel List and ask them in advance if they would endorse your company. Once your profile goes live, your first email(s) should be to them asking them to comment & share your profile.

There are a lot of companies posting on Angel List and having people of influence endorse your business will help you stand out and give visitors to your profile page a reason to take a good look at your startup.

Reality Check: If you can’t get at least one person of influence to endorse your business, you are not ready for Angel List.

Tip #3 Prepare your email responses in advance

In our first 24 hours on Angel List, we received a lot of followers and request for introductions. Both are opportunities to pitch your company as both enable you to contact the investor but unless you are prepared in advance, it can be overwhelming — I was not prepared on our first day.

Typically, those who follow you may simply be curious while those who request an introduction are interested so use your available meeting times on those who are asking for an introduction. Additionally, there are those who fit your criteria as an ideal investor better than others and reality is, you may get more interest than you can handle so remember to focus on those who fit your criteria as an ideal investor first.

Prepare your initial communication in advance and save them in a text file. Here are the three responses that I used.

a) For those who followed us:

Hello [Name]

Trust you are well and thank you very much for your interest in Unbounce. I’ve attached our current deck and I’m including here a link to a short video about our company [link to video]. Let me know if you have any questions about Unbounce and please feel free to share this information with others.

Best Regards,

b) For those who requested an introduction:

Hello [Name]

Trust you are well and thank you very much for your interest in Unbounce. I would love the opportunity to introduce you to our business. Would you be available [day] at [time] for a quick call? In the meantime, I’ve attached our current deck and here is a link to a short video about our company [link to video] for you to review. I look forward to talking soon.

Best Regards,

c) I had a third response for those who I really wanted to speak with:

Hello [Name]

Trust you are well and thank you very much for your interest in Unbounce. Having read your profile, I would love the opportunity to introduce you to our business. I’m hoping to have a short list of investors by [short time period] and currently have [investor] and [investor] confirmed. Would you be available [day] at [time] for a quick call? I’m also free for the next hour if you have a few minutes to give me a call on my mobile [your number]. In the meantime, I’ve attached our current deck and here is a link to a short video about our company [link to video] for you to review. I look forward to talking soon.
Best Regards,

I tweaked this a little for each individual however, having these on hand saved me from having to write 100+ emails from scratch.

Tip #4 Prepare an investor data sheet

You’ll need an effective way to keep track of all your investor contacts and conversations - your leads. You’d be surprised how easy it is to not remember who’ve you’ve spoken to or how the conversation went. Seriously, after your first dozen calls, your memory will fail you so get into the habit of writing stuff down.

As contacts are made, you will need to keep on top of your leads so prepare a spreadsheet in advance (recommend Google Docs). I organized mine by name, email, contact #, VC firm [If applicable], Links to Angel List & Crunch base profiles, a field for notes and finally, amount they typically invest. The beauty of Angel List is that you can learn a lot about the investors that contact you and based on their profiles, almost predict if they will be a good candidate or not. For this reason I also included a rating for each potential investor on my spreadsheet.

Sub-tip: speaking about bad memory and calls, it’s hard to take good notes when you are pitching so I found it helpful to have someone else on the call with me when possible to act as a second set of ears & take notes.

Tip #5 Rate your investor contacts (just like you would your prom date potentials)

Related to my investor data sheet, I also created (truthfully, by evolution than by design) an investor rating system. Nothing too complicated but effective. Why? Because we were not interested in all investors equally and investors were equally not all interested in Unbounce to the same degree. I gave a sets of points, one for our interest in them and another for their interest in us with low interest being 1 point, 2 points being the middle, and high interest 3 points. For example, a high profile investor with a history of investing in our space and interested in what we are doing might be something like, our interest high + their interest medium for a total of 5 points. Another example might be an investor with no previous investments nor experience in our market and for various reasons is lukewarm on the investment opportunity, our interest low + their interest low or med for a total of 2 or 3 points. By each name I had two numbers and over time these would either go up to down or replaced with a yes or no. Think of it another way, this is really no different than the process you went through in trying to choose the perfect date for your high school prom.

All this is important because you have limited time and it will help prioritize your actions and focus who you want to spend your time on. So when a #6 wants to have a call at 3PM to discuss the opportunity and a #2 wants a 3PM conference call to introduce me to one of their friends that will help #2 validate whether or not this is an opportunity, you will quickly know who to bump to a later date. Again, think of it like the prom, if you spend all your time asking people who are the wrong fit, you run the risk of not having any date for the prom.

Tip #6 Share the responsibility of raising capital with someone on your team

Finally, raising capital is a lot of work and you will not sleep well until you close the deal. However, to get it done fast and as painless as possible, you will need support from your team and you all need to discuss in advance what role each of you would play in this big step for your company. In our case, Unbounce COO Jason Murphy was the other half of this initiative and CCed on everything. We broke down responsibilities like this:

My role was to pitch and get a yes from the investors we wanted on board and was responsible for maintaining our Angel List profile, our deck, leading all the meetings and initial contacts. Jason on the other hand came in after the first meeting to provide all follow up material (CAP table, financials, corporate) and coordinated all interactions between respective legal teams. This division of responsibilities allowed us to move fast but more importantly, allowed us to support one another when either of us were feeling overwhelmed – it will happen.

That’s it — glad you made it this far & please let me know what you think. While this list is just a handful of things that helped me, feel free to add any additional tips in the comments below and maybe we can turn this into the ‘comprehensive’ list of tips to use Angel List. Thanks for reading.

What do you think?  Have you tried raising a fund through Angel List?  Any tips you've picked up along the way?  Any questions on the process?

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Shorter Flights at Lower Heights: The Right Way To Angel Invest

By Dharmesh Shah on July 11, 2012

This is a guest post by Dave Balter.  Dave is the CEO of BzzAgent, founder of Smarterer, an active angel investor and a holder of proms. You can follow Dave on twitter @davebalter

Everywhere you turn these days, you find an angel investor. Aside from those who have always invested small amounts of cash in startups, more and more venture capitalists are making personal side deals, active entrepreneurs are investing in other entrepreneurs, seed funds are cropping up everywhere, and Angel List has emerged for the everyman.

But most Angels will fail to get back the capital they've invested (let alone make money), and it's not because they don't pick good companies or back great entrepreneurs — it's because they're completely mistaken about an Angel's role in the investing cycle.

I know this because my in my early days as an Angel investor I fell prey to behaviors that would practically guarantee that I'd lose money. And now that I've gotten to know the Angel community, it turns out I wasn't alone. The problem: most Angels attempt to act like sophisticated venture capitalists:angel investor onstartups

a) They seek 10x (or more!) homerun acquisitions and;

b) do follow-on investments (pro-rata or more) often through multiple rounds and;

c) invest in game-changing ideas that are incredibly risky;

d) wait for companies to eventually get sold to see a return.

A more effective model for Angel investing is long overdue. If Angels want to win — they want to lower their risk, create better returns, and help entrepreneurs more they'll do the following: fly lower heights (avoid trying to fund the next 5 Facebooks) and take shorter flights (avoid riding each investment out all the way to the end).

An Angel investor should:

a) aim for a 2-4x return;

b) get out of deals in 1-3 years, selling their shares to VCs at the Series A or B Venture Rounds (and not feel bad about it);

c) Remember that they're playing with their own money versus risking someone else's via a fund they've raised. Angel investing isn't about charity work; if they want to spend money to help others, they should just donate to good causes instead.

Ultimately, it's about following the rules of the investing ecosystem: Angels get things started, venture capitalists create mature, sustainable businesses, and investment bankers sell them. And if we all play by our roles, we're all going to win.

Here's what playing by the rules will do:

  • Reduce Risk. Losing money is rarely because the company goes out of business in the first few years. Rather, it's because the company matures and becomes more difficult to sustain through ups and downs. Getting out early will allow an Angel to get more out, more often.
  • Allow More Companies to Get Funded. The majority of Angels have the ability to invest in just a handful of deals, let's say 10 maximum. Their money is limited, and they don't want to overextend. Assuming some follow-ons, most just can't do much more than that. If an Angel exits from one or two in the short term, that 2-4x return will allow them to help start more companies, more often.
  • Avoid Dilution to Nothing. One of the major issues in Angel investing is that a successful company often goes through many rounds of funding at higher and higher valuations. Often at that stage, VCs don't provide early Angels the ability to invest, and even more often Angels can't invest due to the financial commitment. The result: an Angel is left diluted to a meaningless percentage.
  • Keep In-The-Know. In the successful company scenario, the outcome is even bleaker. The major investors no longer provide early investors with Information Rights (the right to receive financial or strategic facts about the company). So that leaves most Angels with a variety of deals that they're entirely clueless about.
  • Provide VCs with More Ownership. When a company begins to succeed, institutional investors want as much ownership as they can get. Without lowering valuation, this conflicts with founders who also wish to keep as much ownership as they can. One solution: Angels are expected to sell shares to the VCs as part of the round. The VCs get more ownership, an Angel makes money and the entrepreneur doesn't get diluted. Everyone wins.
  • Reduces VCs and Acquirers from Having to Deal with — well, Angels. This is an important one. VCs want clean capitalization tables (less people involved = less headaches) and acquirers don't want to have to deal with shareholder lawsuits or other risks of having a whole bunch of (relatively) unsophisticated investors involved. The less Angels involved later, the better.

Again, this is really just about Angel investors agreeing to be what they really are: small-time investors who want to use their own money to help companies grow. It's a great thing, and it shouldn't be confused with investors who are seeking to deliver returns for the Limited Partners in the funds they've raised.

For this to work, the whole ecosystem needs to behave accordingly. Entrepreneurs need to be supportive of an Angel who sells their shares; venture capitalists need to be willing to purchase shares from Angels during the A or B rounds; and Angels need to know their role.

To the Angels: Aim shorter. Aim lower. And for that, you'll get better returns and support more companies.

Which is the point after all, isn't it?

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The Startup Spouse: On Risks, Trade-Offs And Never Sleeping On The Floor

By Dharmesh Shah on July 9, 2012

The following is a guest post by Lisa Rosen, the startup spouse.  You can follow her on twitter @entreprenrswife.

"He who sleeps on the floor will not fall off the bed." ~Robert Gronock

"I quit my job today," announced my husband, Seth Rosen, as he casually dropped his briefcase and strolled through the front door of our apartment. As if it was no big deal. As if quitting one's job is a routine occurrence. To be fair, Seth had talked about leaving his day job to work full time with his best friend, Mike Salguero, on CustomMade.com, a website they had recently purchased. And, to be fair, Seth had asked me repeatedly how I felt about the move. I had assured him that, in no uncertain terms, he had my unequivocal support -- mostly because I didn't think he would actually do it. Yet, here I was, staring at my newly-minted entrepreneur, unsure of whether I should throw up my arms to hug him or strangle him. After all, lots of people talk about starting a company because they think they have a million dollar idea, but very few pull the proverbial trigger. There is a reason for that. Leaving a seemingly safe and reliable salary for the uncertainty and potential perils of a startup company is risky. More startups fail than succeed, especially if a business requires venture capital. A quick search on Wikipedia told me that there are around two million new businesses started in the United States every year, of which less than 800 receive venture financing or 0.04%. CustomMade was already doomed. To make matters worse, it was the summer of 2009 and the US economy was in a deep recession. Was he nuts?

sleep floor

Contrary to popular belief, Seth and Mike argued that the height of the Great Recession was an opportune time to start a company. In 2009, talented people were being laid off and investors were looking for better deals. Companies like Disney, Hewlett-Packard, and Microsoft provided ample precedent that great companies were born during hard economic times. Seth also convinced me that the timing was perfect for a young, well-educated couple with no children and decades of future earning potential to make the leap. Still, trading a plump six-figure salary (and health insurance, as my mother would rightly later point out) for an emaciated startup seemed irrational and incredibly risky to, well, everybody else.

"How could you let him jeopardize your financial security?" was the universal cry from friends, family and colleagues. Others probed deeper:

"When will Seth start to earn a salary?"

"How will you pay your rent?"

"Will you have to put off having a baby?"

"What does CustomMade do again?"

"What if you lose everything?"

"Wait, what do you mean you can't afford to come to my wedding?"

I was standing in front of a firing squad, dodging the bullets as best I could. Over time it became exhausting and my confidence in Seth and CustomMade began to erode.

One afternoon I called Seth at work and told him to be home for dinner, that I was going to cook. He agreed to leave work early only after I told him that chicken parmigiana was on the menu. This was code -- my notoriously limited culinary repertoire consists of any protein that can be breaded and pan fried, and microwave popcorn. If home-style chicken parmigiana is on the dinner menu, then something is up in the Rosen house.

The minute Seth stepped through the door my anxiety erupted. "Why are we starting a company now?" I asked. "It seems like too big of a risk."

"Well, it depends on how you define risk," Seth said without skipping a beat. He sat down at the kitchen table and poured himself a glass of wine. "How do you define risk?" His knowing look should have tipped me off that this question required more analysis than my first impression. But the answer seemed obvious. Without thinking I responded that "risk" is the chance that something bad will happen.

Seth shook his head. "Risk is not just about avoiding bad outcomes. It is the chance of an unexpected outcome good or bad."

"Risk is about evaluating trade-offs," he continued. "And evaluating trade-offs requires the consideration of opportunity costs: if I do this, then I can't do that. I could stay at my finance job, continue earning a salary, and insulate myself against the risk of CustomMade's failure. But what about the opportunity cost of my time?"

The implication was clear. If he continued as an investment banker, then he could not build CustomMade, attempt to change the way people consume retail goods, and reach for a successful exit. Every day he spent doing the "secure" job was a day he couldn't spend building a company.

"Although it seems counterintuitive at first, staying at my day job offers very limited upside financially and professionally. I think that's actually the riskier path."

I paused and slowly digested his words. He was right. From the beginning I had been viewing CustomMade through a much different lens. And so had many other people in our lives.

This is why the Robert Gronock quote above is so relevant for entrepreneurs and their families. Your interpretation reveals how you define risk. In the years before I married Seth, my life was predictable. As a child, my parents taught me to sit up straight, brush and floss my teeth twice a day, and to always color inside the lines. After high school I followed the safe path from college to law school to the conventional confines of a big Boston law firm that provided me with a reliable paycheck. In those days, after reading Gronock's quote, I would have thought, "Wicked smart!" and promptly traded my injury-prone four-poster bed for a mattress on the floor.

But a funny thing happened after I married an entrepreneur. Seth taught me to think differently about the world. The Gronock quote is not sage advice to avoid a bad outcome; it's about a trade-off. By sleeping on the floor you are eliminating a good outcome (a blissful night of sleep) in order to mitigate the chance of a bad outcome (falling off the bed and suffering an injury). Thinking about entrepreneurship in terms of trade-offs and opportunity costs is a better way to think about the associated risks.

Based on my discussions with Seth, this analytical framework is the same whether the decision is to start the company or a day-to-day operational matter. In either case, you need to consider your priorities, which are shaped, at least in part, by the opinions of your inner circle. Of course, multiple third-party opinions often complicate matters. This is especially true if you have a spouse like me that Monday morning quarterbacks your decisions. Let me give you an example.

Seth's company, CustomMade.com, runs an online marketplace for custom goods and services. They connect their network of makers with consumers who are looking for a durable good (like furniture, jewelry or clothing) to be made custom. In the beginning, I was adamant that the company should do capacity building like how-to-run-a-business workshops and other educational programs for their makers, who range from solo practitioners to large, multi-employee businesses. My thought was that adding extra programs would knit the CustomMade community together. It felt good to make the suggestion, like I was adding value to our company.

"Sure," Seth said. "It's a fine idea." I was thrilled.

But he never acted on it. Not even after I nagged him for the fifth time.

"Listen, it's a good idea. But I have a small team here, and everyone needs to be focused on building the product to make our engines run. If I focus my people on maker workshops, then that takes them away from our core priorities and I risk slowing down product development. See the trade-off?"

Oh, right. He was referring to the opportunity costs of his employees' time. I immediately shut up about capacity building, and since then I've tried to keep my backseat driver tendencies to a minimum. When I do provide feedback (solicited and otherwise), I try to frame it in terms of trade-offs. I've even applied the framework to our relationship, but with mixed results. Admittedly, it's hard to stop and consider trade-offs and opportunity costs when you are inherently impulsive, as I am. Unlike me, however, Seth always takes his time to carefully weigh all options before making a decision.

But perhaps I should take comfort from that fact. At least I know we'll never be sleeping on the floor.

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The Power of Focus And The Peril Of Myopia

By Dharmesh Shah on June 19, 2012

Greed is good. ~Gordon Gecko

Focus is good. ~Steve Jobs

I'm a big fan of focus. I'm such a big fan of it, I try to apply it to as many things as possible. [just kidding]

It's really, really hard to argue against focus. Who doesn't like focus? Who would contest focus? Focus is like motherhood and Apple (the company). I honestly have no issue with focus. I see the value in it every time I do it. My problem is that I also see value sometimes when I don't focus. The decision to focus is not hard. The hard part is deciding what to focus on and what level of focus I'm thinking about.

onstartups telescope

Let me elaborate by using Apple. Steve Jobs has said a lot about focus. Rumor has it the most important lesson Jobs passed along to Tim Cook (the new CEO of Apple) was “focus is key”.

Way back when, Jobs returned to the company he founded, he observed that the team was working on too many different things with a troubling lack of clarity. So, he simplified. He drew what was later revealed (at Macworld 1998) to be the simple 4 quadrant product matrix that is shown below. Two types of users: consumers and professionals. Two types of use cases: portable and desktop. This effectively reduced things down to just 4 products. It was a great demonstration of focus (and also the power of clarity of vision). 

describe the image

The iPod: Brilliant — But Was It About Focus?

Now, after this big, bold move towards focus, Jobs made two huge decisions that would change the course of the company dramatically.

The first was the iPod. Apple was primarily a computer company. Their customers were people that wanted/needed computers. They sold a fair number of them. They were really good at making them. Some could argue that they were far ahead of the competition (and those people would be right). At the time, one would think: Hey, the focused thing to do is to figure out a way to exploit their strength at building computers and figure out how to take over the world. It's not that there weren't enough people to sell computers to — it's that not enough of those people were buying computers from Apple.

But, instead of focusing on their core, Apple decided to build an MP3 (music) player — the iPod. Sure, there's a computer chip in there somewhere. And sure, there's some operating software involved. And sure, they had the opportunity to make it aesthetically pleasing and highly functional, thereby playing to their strengths. But, it was a music player — arguably, relatively far from their core and not a very “focused” strategy. And, Apple didn't stop at just building the device. Oh no. Not only did Apple decide to build a music player, they also decided to build a music service (iTunes). And, not just build the service, but then go out and strike deals with the content companies to get music into the service. Notice now how far we have strayed from Apple's core “focus”. What's important to recognize is that if Apple hadn't done all three of those things simultaneously (the iPod device, the iTunes service and the content partnerships), the iPod would likely not have succeeded. And, if the iPod hadn't succeeded, Apple might not have succeeded to the degree that it did.

After that, there was the iPhone — with some similarities to the iPod — but another radical shift into a different industry with different dynamics (they had to go strike a deal with a phone carrier). Once again, you could argue it either way: You could say that this was a relatively “focused” play, given the success of the iPod. And, instead of building their own mobile phone carrier, they partnered with an existing one. Or, you could say they “drifted” into the smart phone market. What you can't argue though is the brilliant success of the products. Below is a fascinating chart that shows the percentage revenue by product line for both Microsoft and Apple. Notice that for Microsoft, things are pretty consistent over the years. But for Apple, the story is completely different. Apple now makes billions of dollars on new products (iPhone, iPad). I don't know about focus, but how do you like them Apples?

apple vs microsoft revenue small

A Fine Line Between Focus and Myopia

So, here's my point: Talking about focus is useless unless you consider the level of abstraction you're talking about. If you squint just right, any activity you're looking at seems de-focused. In the iPod example above, I could argue that Apple showed considerable restraint and focus by not going out and building a Hollywood production studio and creating content. Or, I could argue the flip-side and say they lost focus from their core.

I agree that focus is about saying no. But that's not all of it. By saying no repeatedly, what you're buying yourself is the ability to say yes to something much, much better. You're not freeing up resources just to hoard them away. You're freeing them up so you can apply them better — either by saying “yes” to something new or doubling-down on bets you've already made. So, the benefit of saying no to a bunch of wrong things is only realized when you find a way to say yes to the right thing. Important note: I'm primarily talking here about high-level company strategy. If we were talking about focus as it applies to product management, saying “no” to new features has intrinsic value by just keeping things simple.

Now, lets talk a bit about myopia (which is when things that are far away look out of focus). Often, focus is centered around now — not visionary things going out into the future. But, being too focused on what's working right now and not being mindful about where the market is headed and what customers will want/need tomorrow can be fatal. This is the classic Innovator's Dilemma (one of my favorite business books of all time). So, there's a fine line between focus and myopia. Finding the right balance between focusing on what's working now and looking towards the future is tricky — and critically important.

Finding the balance between focus and long-term vision gets harder as the organization grows. In the early days of a startup, the right answer is almost always maniacal focus. Resources are limited, and the product is likely innovative already. But, as you grow, you have more resources and the pool of possible options grows considerably. This is compounded by the fact that your existing product may be falling behind and innovation becomes necessary. This is when the team starts having animated debates about whether you should focus on the core business and making your existing customers happier with your existing offering — or whether you should defocus on the core — and spend some calories looking towards the future. The answer is almost never, um, clear — and it's almost never binary. It's somewhere in between.

Tips On Balancing Focus and Forward-Thinking

Here are some simple (but not easy) tips on deciding when to focus:

1. When in doubt, focus. Your default position should be to focus more, not less. The benefits of focus are non-linear — sometimes exponential. Even a modest improvement in focus can often reap massive rewards.

2. Often, you're either building a new product for existing customers — or taking your existing product into a new market. Between the two, it's usually safer to keep the focus on your existing customers or market — and build new things for them. Branching into new markets is much harder.

3. If you're considering building new products for a new market, think long and hard. This is frought with peril. Either focus on your current market, or on your current product.

4. Try to come up with a simple way so that some of your energy/resources are always spent looking forward (instead of remaining focused). If you don't make this deliberate effort, the “we should be more focused” argument will almost always win, and its not always going to be the right answer. Build a culture of innovation that can function alongside a culture of execution.

More examples of Focus vs. The Future

Beyond Apple, here are a few other examples worth considering:

Amazon: Started out selling books online.  Did a relatively focused expansion into selling almost everything online.  Then, BAM! got into the cloud computing market with Amazon Web Services (AWS)

37signals:  Jason and DHH at 37signals rightfully get a lot of credit for articulating the benefits of staying focused and keeping things simple.  Yet, they didn't stop at Basecamp (project management).  They expanded into Highrise (CRM) and Campfire (group chat).  

HubSpot (my company):  When HubSpot started, we set out to build a suite of marketing applications (including content management, SEO tools, social media, blogging, marketing analytics).  Later, we added email marketing, lead nurturing and other marketing automation features.  Now, HubSpot has the industry's first comprehensive marketing platform -- including a broad suite of applications, an app marketplace and a services marketplace -- all under one roof.  That's a lot of stuff.  And, uderstandably, we debate the topic of focus all the time.focus onstartups

Summary and closing arguments

Focus is an exceptionally powerful concept. But, to use it as a platitude (“we need to be more focused”) misses the larger point. There is no doubt you should be focused. More startups die from idea gluttony than starvation. But, deciding how much to focus — and on what, is a nuanced decision. History is replete with examples of companies that were too focused, to the point of myopia — and didn't see the future coming.

What do you think? How do you balance focus and forward-thinking?

Topics: strategy feature
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What It's Like To Be The CEO: Revelations and Reflections

By Dharmesh Shah on June 5, 2012

The following is a guest post from Paul DeJoe, founder at, Ecquire, which provides contact management software and EIR at Fairbridge Venture Partners. This article is adapted from an answer on Quora that Paul left responding to the question “What does it feel like to be the CEO of a startup?” I reached out to Paul for permission to share his thoughts with the OnStartups.com readership. At the end of the article is an epilogue with additional notes. It's worth reading too -Dharmesh
On May 20th, either right before midnight or right after midnight, I can't remember, I posted my rendition of what it feels like to be a startup CEO to a question on Quora. 1124 votes later and one last glance at a notification of an up vote from, Jia Liu, a social game maker from Zynga, I'm going to close the Quora tab and at the recommendation of Dharmesh, write what this last few days have been like, some of the cool things I've heard and some of the great people I've met as well as what I've realized.
With that said, here's the original post that sparked such a fantastic response.

What It Feels Like To Be The CEO Of A Startup

Very tough to sleep most nights of the week. Weekends don't mean anything to you anymore. Closing a round of financing is not a relief. It means more people are depending on you to turn their investment into 20 times what they gave you.

It's very difficult to "turn it off". But at the same time, television, movies and vacations become so boring to you when your company's future might be sitting in your inbox or in the results of a new A/B test you decided to run.

You feel guilty when you're doing something you like doing outside of the company. Only through years of wrestling with this internal fight do you recognize how the word "balance" is an art that is just as important as any other skill set you could ever hope to have. You begin to see how valuable creativity is and that you must think differently not only to win, but to see the biggest opportunities. You recognize you get your best ideas when you're not staring at a screen. You see immediate returns on healthy distractions.

You start to respect the Duck. Paddle like hell under the water and be smooth and calm on top where everyone can see you. You learn the hard way that if you lose your cool you lose.

You always ask yourself if I am changing the World in a good way? Are people's lives better for having known me?

You are creative and when you have an idea it has no filter before it becomes a reality. This feeling is why you can't do anything else.

You start to see that the word "entrepreneur" is a personality. It's difficult to talk to your friends that are not risking the same things you are because they are content with not pushing themselves or putting it all out there in the public with the likelihood of failure staring at them everyday. You start to turn a lot of your conversations with relatives into how they might exploit opportunities for profit. Those close to you will view your focus as something completely different because they don't understand. You don't blame them. They can't understand if they haven't done it themselves. It's why you will gravitate towards other entrepreneurs. You will find reward in helping other entrepreneurs. This is my email address: paul[at]ecquire.com Let me know if I can help you with anything.

Your job is to create a vision, a culture, to get the right people on the bus and to inspire. When you look around at a team that believes in the vision as much as you do and trusts you will do the right thing all the time, it's a feeling that can't be explained. The exponential productivity from great people will always amaze you. It's why finding the right team is the most difficult thing you will do but the most important. This learning will affect your life significantly. You will not settle for things anymore because you will see what is possible when you hold out for the best and push to find people that are the best. You don't have a problem anymore being honest with people about not cutting it.

onstarltups aviator 2
You start to see that you're a leader and you have to lead or you can't be involved with it at all. You turn down acquisition offers because you need to run the show and you feel like your team is the best in the World and you can do anything with hard work. Quitting is not an option.

You have to be willing to sleep in your car and laugh about it. You have to be able to laugh at many things because when you think of the worse things in the World that could happen to your company, they will happen. Imagine working for something for two years and then have to throw it out completely because you see in one day that it's wrong. You realize that if your team is having fun and can always laugh that you won't die, and in fact, the opposite will happen: you will learn to love the journey and look forward to what you do everyday even at the lowest times. You'll learn not to get too low when things are bad and not to get too high when things are good and you'll even give that advice. But you'll never take it because being in the middle all the time isn't exciting and an even keel is never worth missing out on something worth celebrating. You'll become addicted to finding the hardest challenges because there's a direct relationship between how difficult something is and the euphoria of a feeling when you do the impossible.

You realize that it's much more fun when you didn't have money and that money might be the worse thing you could have as a personal goal. If you're lucky enough to genuinely feel this way, it is a surreal feeling that is the closest thing to peace because you realize it's the challenges and the work that you love. Your currencies are freedom, autonomy, responsibility and recognition. Those happen to be the same currencies of the people you want around you.

You feel like a parent to your customers in that they will never realize how much you love them and it is they who validate you are not crazy. You want to hug every one of them. They mean the World to you.

You learn the most about yourself more than any other vocation as an entrepreneur. You learn what you do when you get punched in the face many many times. You learn what you do when no one is looking and when no one would find out. You learn that you are bad at many things, lucky if you're good at a handful of things and the only thing you can ever be great at is being yourself which is why you can never compromise it. You learn how power and recognition can be addicting and see how it could corrupt so many.

You become incredibly grateful for the times that things were going as bad as they possibly could. Most people won't get to see this in any other calling. When things are really bad, there are people that come running to help and don't think twice about it. Tal Raviv, Gary Smith, Joe Reyes, Toan Dang, Vincent Cheung, Eric Elinow, Abe Marciano are some of them. I will forever be in their debt and I could never repay them nor would they want or expect to be repaid.

You begin to realize that in life, the luckiest people in the World only get one shot at being a part of something great. Knowing this helps you make sense of your commitment.

Of all the things said though, it's exciting. Every day is different and so exciting. Even when it's bad it's exciting. Knowing that your decisions will not only affect you but many others is a weight that I would rather have any day than the weight of not controlling my future. That's why I could not do anything else.

Epilogue


In the post, I had shared my email with everyone to see with the hopes of encouraging anyone that needed any help to reach out to me directly. I was fortunate enough that so many people took me up on this offer. The exchanges we had ranged from skype calls, testing some new products, sharing ideas and even joining an advisory board. Most of the emails I got though were just people that thanked me for the post, shared their contact information, and said things like David did:
"…likewise, if there's any way I can be of help or service, let me know."
For those of you that have reached out to me and shared some of your life with me, thank you beyond words. It has been flattering, fulfilling and, and humbling. For those that have voted up the answer and said some of the kindest, coolest and most amazing comments anyone could ever hear. I thank you. And my startup parents thank you. Suddenly the 80,000lb student loan Gorilla with no income to feed him seemed to take the week off and was replaced with elation when reading some amazing comments. It meant a lot. Thank you again.
What might be a surprise to hear though is that it felt very uncomfortable to me to say "thank you" and I was doing it a lot. Seemingly overnight, there was a collective up vote from over 1,000 people that shared similar feelings and situations. I started to get the feeling that this wasn't me that wrote this and became uncomfortable taking credit. This post gained attention because it was the collective post by everyone who contributed with a comment or a vote and if I hadn't been lucky enough to come across this question, someone else would have wrote this. It might have been better or not but it would have at least been appreciated in the same way had another entrepreneur wrote it.
I don't recall seeing too many notifications of a down vote and that made me realize a few things:
This post became an online meet up for a group of people that are committed to changing the World. And rightfully, as well as fittingly so, it's very difficult and a sometimes a seemingly unsurmountable undertaking. But what was encouraging was not one person in the entire comments (go ahead and look) or in the emails that I received, said that they were overwhelmed or going to quit. They all found this inspirational and motivating and just the little encouragement needed that led to a found appreciation for what they do and and a reminder that they're not the only crazy ones.
The most common response I received however sounded like: "Thank you for this. I forwarded your answer to my friends and family to help them understand." One person even said that their Mom thanked me for the post (Thanks, Renee for sharing). Unfortunately, and sometimes rightfully so, entrepreneurs are commonly misunderstood by people outside of our networks and by people we love. It's mostly our fault. Although we are not understood most of the time, we take for granted that while we're often misunderstood, we are always accepted and supported. What we don't say thank you enough for, and what we often take for granted, is the very thing that let's us be who we are and chase our dreams. The people around us that love us unconditionally without regard for how bad we might fail is the equivalent of a superhero's cape. Without this, and without someone we can share the ups and downs with, great things do not happen. They can't. The things that are worth while to pursue and dedicate a life to involve something way bigger than individuals and have to be completely selfless or they are not big enough and not worth celebrating if the goal does not have the well being of others in mind. A collective thank you on behalf of this group of people that are crazy enough to change the World goes out to you. Thank you. If you are reading this because it has been forwarded to you, please know that you are appreciated and it's difficult for, often times quirky introverts to articulate. You don't have to change anything, we don't say it enough but it's with you in mind that we find motivation. You possess the most scarce resource of all: Undying and unnerving support. Thank you for it.
Lastly, undoubtedly the greatest thing that came from this post was an amazing calm that came over me that was during the most fulfilling, rewarding, interesting and fun week of this tumultuous journey to build a company. It came at the intersection of being able to interact with all of these individuals and being able to see all at one time, the collective resolve, ambition and just how dynamic these people are. The content of who these people actually are, how many of them there are and that they actually exist under our noses, let my imagination of what was possible wander in a positive direction for the first time in a while. It was powerful enough to spin the negative outlook I thought we were inevitably leaving for future generations. What I have just said, you would have not heard me say one week ago. It also made me realize something for which I will forever be grateful to all of those that contributed to this post. I realized what I am supposed to do to be fulfilled and happy in life:
Inspire.
I can tell you first hand, from over 1,000 data points and messages, that there is no better feeling than when you inspire or when you can help. When you genuinely help, it's a good feeling that is impossible to suppress. It's impossible to suppress for a reason: It feels good in the most selfless way possible. Entrepreneurs will make their own mistakes along the way, millions in fact. They have to to learn and improve. Don't discourage them from trying. There's no reason to. It's a useless thing to do and it might be enough to delay the doctor that cures cancer or the visionary that brings sustainable water to Africa when a simple word of encouragement was the only push they needed.
Inspire. Help and do so with other people and future generations in mind. Wouldn't it be the coolest thing in the World if we were the generation that consistently got punched in the face, didn't complain, didn't slow down, picked up our lunch pales and went out everyday to create sustainable opportunities for a generation that we haven't met yet? If that sounds crazy, ambitious, and delusional it's because it is and that's the way we have to have it or it's not worth our time. As crazy as it sounds, I can assure you that it will only require one thing for all of us to do for it to become real. It requires that we all inspire. 
What do you think?
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Freemium Pricing for SaaS: Optimizing Paid Conversion Upgrades

By Dharmesh Shah on May 22, 2012

The following is a guest post by Rishi Shah, Co-Founder of Digioh and 500 Startups Mentor. Join his newsletter and get his eBook "10 Paying Customers in 10 Days" for free.

I've been building a new product and I'm almost ready to launch it. However, I'm having a really hard time figuring out the right pricing structure so I'm going to analyze my favorite Freemium SaaS businesses.

Here is what I know I want:

  1. A free plan. Since we are just starting out I really want people to use the product for free (no credit card required). I'm okay with killing off the free plan if it isn't working economically (existing free users would be grandfathered in).
  2. It is a hosted product so it will be recurring revenue. There will be a monthly fee for the paid packages (with an option to pay yearly upfront for a discount).
  3. Based on many many studies the paid packages will end with a "9". So the packages will be priced with that in mind (i.e. $11.99, $24.99, etc.)
  4. I want to leverage our free plan to get more referrals. For example the free members can earn more features or storage by referring a friend or posting a