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How The Business of Software Conference Changed My Life

Posted by Dharmesh Shah on Mon, Oct 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.

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MIT Startup Bootcamp 2011: Notes and Musings

Posted by Dharmesh Shah on Mon, Sep 26, 2011


This past weekend was the 3rd annual MIT Startup Bootcamp. It's one of favorite startup events in the Boston area (I spoke at the first one in 2009. Video of my talk available). I didn't get to attend in person this year, but watched most of the sessions remotely. Thankfully, my friend Andy Cook (co-founder of Rentabilities) attended and volunteered to capture some notes from the sessions. [Disclosure: I'm an investor in Rentabilities, but Andy would have volunteered anyways, he's a great guy]describe the image

These are not polished or edited, but still should be useful. Enjoy.

I've also taken the liberty to add in some of the tweets I posted while watching the live stream. They're included inline below.

Paul English (Kayak)

Twiter: @englishpaulm

How Kayak recruits - Hire for team first, customers second, and profit third.

Kayak evaluates potential employees on bandwidth, attitude, diversity of experience, and lack of dysfunctional behavior.

Bandwidth – Smart, fast, and can do things quickly. Need to have one minute conversations and GSD.

Attitude – Aggressive, focused on output, producing result. Can ship product and close customers. Have experience and working with teams. Look for people who enthusiastically talk about success with past teams.

Diversity – Look for people who are successful at something. You want someone who has been successful. It doesn’t matter if they have the current skills. Hired a rowing Olympian and a chessmaster. If they could achieve at that level, then they must be good. Chessmaster. You want people who got stuff done. Creates a well rounded team.

Lack of dysfunctional behavior – No something? Rule. If you find people who are very team positive and in your face in a fun way, you’ll end up with a good team. Find someone who is focused on having fun at work and creating a good product.

How investors evaluate startups - 70% team, 20% market, 10% on what you actually do.

Look for people who have been successful, aggressive, ethical, and work hard. Have confidence but humility to ask questions when they don’t know.

A large market that is going through transformation gets investors excited.

What you build doesn’t matter as much because VC and investors assume you know how to operate and compete in the market.

Don’t spend money on marketing at first. It’s much more important to build a product first that is so compelling that the 10 users who use it first will buy it, then that’s a time you’ve proven theirs a spark and your ready to raise money.

Make sure your cofounder is someone who when you’re facing dark days, you need someone who is going to aggressive when you’re done. Play off each other in terms of confidence.

Don’t outsource your tech if you’re a tech based company. Find a CTO who has shipped something. If you’re a tech founder, think about what function you need the most. You can hire a firm to do all the other stuff, but finance is the most important.

You need speed and team to out compete your competitors. If you believe in your idea, if it’s really important to you, then they won’t be able to execute as well as you.

Leah Culver (Convore)

Twitter: @leahculver

Reasons @leahculver sold her startup: Big competitor, market downturn and team was not doing great.  Pretty good reasons.  @dharmesh

Made a solitaire game in college. Like hobby coding and built stuff in her free time.

When working on her first start-up, she was happy and doing what she loved. Was able to create something from scratch that she loved working on, and it is totally worth doing your own thing and trying it.

You only get one life and one opportunity to do the things you want.

Learn to cowboy code. You’re willing to do code that isn’t perfect but works. You need the ability to write things quickly and implement them fast, so it’s great to do it when you’re not afraid to write bad code. Hire people who can get stuff done instead of over-optimizing.

Leah’s Secrets to Success

Show up – Successful rock bands show up to their gigs (her dad’s advice). Actors go to Hollywood so you should go to the Valley. (I disagree with this…). She met Kevin Rose, her first cofounder, at a party.

Be nice to other startups and say congratulations. It’s important to have a strong ecosystem for you to rely on.

Luck is important

Iterate - Most start-up founders don’t stick with the exact idea they had in the beginning. Be prepared to fail then try again.

Andrew Sutherland (Quizlet)

twitter: @asuth

Don’t do market research. If he did, he would have found the crappy products out there and used those. Instead, he built something for himself and what he wanted, and now their site is 10 times bigger than it’s competitors.

Observations by me:

Demo – Make sure your product works before demoing, and make it sure it’s interesting. Andrew made it interesting by being funny and super geeky. He didn’t know if audio would work, but luckily it did. If audio didn’t work, then it wouldn’t have been a good demo.

Quizlet puts a lot of personality into their product. GraveDigger backflip for a 100% on a quiz,

Andrew had been hacking on Quizlet for 3 years, but had never spent all of his energy working on it. Left MIT because Quizlet was growing so big and needed so much attention that he had to make a decision. It was a fork. He could give it away, or go full time. It was worth it to leave school because it’s been intense and fun. When leaving MIT It wasn’t a decision made in a short period of time like two days. It was over the course of 2 weeks.

Copied Wufoo’s fanaticism about feedback by building an internal feedback system. They get almost 100 feedback messages a day from users. Everyone at the company does support. When everyone does support, there’s no one guy who makes decisions and is overly concerned about one feature.

In the beginning, the people building the product were using QuizLet differently than the actual users. That created a dilemma because they can build new features and verify they are working as planned, but that doesn’t mean they are helping students actually learn.

The Quizlet team decided to start a Spanish class in office. Hired a Spanish teach to come in once a week, and gives them homework. It forces them actually use their product. (Eat your own dogfood). They realized a lot of issues when they started using their own product. Right away they fixed 10 or 15 small things that were obvious once they started using as a user would.

Naveen Selvadurai (FourSquare)

twitter: @naveen

Worked at two startups before starting FourSquare. Got to code on real products. Got to get a sense of how they work on team, how to deploy code, etc.

“When you’re in a big company, you’re physically fit. When you’re a startup founder, you’re the opposite. You’re mentally fit, but not physically.” (FourSquare 15)

Random observation by me:

He just had a slide that said “hi.” and started talking. Apparently he was clicking through the slide on the TV, but didn’t know the weren’t changing on the project. No one even noticed until it was pointed out. He spent some time trying to get it to work and stopped talking. IMO – It would have been better if he had just kept talking because his story was so compelling.

Naveen’s rules for sucess

1. Keep good company. Hang out with great people who are smart. Have good friends. Have people you can talk to about stuff you’re trying to figure out. Start-up hubs are powerful because the more you get to talk about ideas, the better you’ll understand it and the better stuff you’ll build. Even the people you hang out with shape your product.

2. Make something people want.

3. Build around an atomic action – Facebook = status update. FourSquare = check-in. Square = swipe. Focusing around the action will narrow how the app will look and keep it simple.

4. Seek mentors early – Have someone you can relate your stories, tell your problems and get feedback.

5. At first, hunch, then data.

6. Balance unknown with knowns – Creating a startup is an emotional rollercoaster of ups and downs. There is no steady pace. Balance your life with steady friends, exercise, diet, etc.

7. Always be recruiting – A huge part of your job as a member of the founding team is to find great people. Encourage your current people to always find more great people. Engineers want to work on great problems and they want to work with really smart people.

In the beginning, FoureSquare only hired friends, and then friends of friends. Hiring trusted people has added benefits, such as the ability to trust people to not steal your ideas or create a competitive company.

Charlie Cheever (Quora)

twitter: @ccheever

It’s important to work with people who you have really high bandwidth communication between each other. You’ll be able to understand how the other person is thinking and be able to resolve it fast. When you don’t have to spend time articulating problems and just know what your cofounder is thinking, you’ll get more done.

It makes sense to invest in technologies and systems when you know what you’re doing. Quora created a framework for coding only when they were ready to build something usable.

Find the wave of change to help propel your startup. You can’t just outwork people or innovate better. You need to find a compelling market and change it.

In response to Naveen - Qualitative data is an important middle ground between hunches and aggregated data.

Any opportunity that is interesting, there’s going to be a bunch of competitors. Google beat all other search engines by making a better product and out executing.

Stand for something – Quora stands for great design and user experience. They want to help anyone who needs to an answer to a question connect with the person in the world who knows it.

Good engineers did not want to work at Quora until they had a good product and traction. Up until that point, it was all people they knew.

Drew Houston (Dropbox)

For the record, @drewhouston from Dropbox has one of the best accomplishment:ego ratios I've ever seen.  Smart and super modest. @dharmesh  

Everything big starts small. Drew though that creating a startup is like climbing Mount Doom, with everything being big, scary, and insurmountable.

The reality is that every founder starts in the same place and at the same point, which is completely clueless. Apple, Google, Yahoo, Oracle, Facebook and many others were started by first time founders in their 20’s. Facebook was just a project that Zuckerbug was hacking on, and he didn’t’ set out to redefine the face of communication.

You need to get out of your comfort zone. In the beginning, everything is about code. But quickly, you’ll have to learn communication skills and how to design a system of people to build something at scale. History says that it usually starts as a hacker who turns into a great entrepreneur and not an MBA who becomes a great engineer. Most founders started out as super awkward, but then were able to build great companies.

“The technology and product is just one piece of a much bigger picture.”

“You get good at understanding startups by joining or starting one. It’s the most efficient way to learn the ropes.”

Dropbox’s journey to where they are now started with them being complete noobies. Dropbox joined YC, got Sequoia interested, and when they wanted to invest, they didn’t even know how to do a wire transfer.

“Along the way of startups, you’re going to keep running into problems that you just have to figure out. The only thing I knew about wire transfers I had learned from James Bond.”

“Make something (a lot of) people want. One of the great things about the internet is it doesn’t cost much more to serve a problem for a million people instead of ten people.”

Starting a company is one of the best ways to change the world.

The only thing @drewhouston knew about wire transfers was what he learned from a James Bond movie (Golden Eye) @dharmesh

Alex Polvi (CloudKick)

“We were not trying to sell the company when we sold it. When you don’t want it is when you get all the attention. “

CloudKick did a pilot with RackSpace, and then one day got a phone call to discuss something strategic.

“If anyone high up at the company says the word strategic, they mean acquisition.”

Period of figuring out the details for the acquisition was about 45 days.

2nd pro tip – “No matter what they offer, stop, count to ten in your head, and then seem as disappointed as you possibly can.”

“Once someone starts sensing an acquisition, everyone else starts sensing it. They got three acquisition offers.”

When you have leverage and talking to a VP of Corporate Development, you can get them to the actual numbers really quick. (pending acquisitions create a sense of urgency)

Motivations to think about being acquired

- Do you like the company you’re working with and can you grow with them

- Timing – What is your IRR for the acquiring company.

- Personal choice for the team.

They had one employee who only owned a quarter of his vested stock. Everyone else owned nothing up to that point. Part of the deal was that they were able to fully accelerate every employee on the team. Was fine with investors, founders, and RackSpace. The founders wanted to make sure the team was treated right.

have no retention mechanisms on the team except regular salary. Everyone on the team is still there because they all wants to be there. 0 attrition from RackSpace so far by the CloudKick team. They were able to pull this off because RackSpace believe heavily in culture.

“Don’t forget where you came from. If you have the opportunity to give back to your family, you should.”

“Best negotiation positions you can be in is a position of truth. If you’re building a product that people want a technology that is real, you’re set. Investors and acquirers will show up.”

Anthony Volodkin (HypeMachine)

twitter: @fascinated

Think of all the things you want to make, and if getting capital will really help you. If you’re a pharmaceutical company, then getting capital will definitely help you. If you’re a consumer company, then getting capital may not help you.

Prototype must be useful to you, but not perfect.

You don’t need anyone’s permission to make stuff.

Chances are when facing a tough decision, you already know what to do. You started your own company and no one knows it like you do. Listen to advice, but find your own way.

If you start with different inputs, you automatically get the same results. Most competing companies do not start with the same inputs, so the results will be dramatically different.

“TechStars? YCominbator? Just fucking make something.”

When thinking about selling your company, you need to think about why you started it, and if selling it will help you accomplish that.

Nathan Blecharcyzyk (airbnb)

twitter: @nathanblec

"The kind of people who ask for advisor shares are typically the kind that have less to offer." @nathanblec @dharmesh

The first 5-6 months of airbnb were pretty much flat.

Plans in 2008 – Forget hotels, extra rooms, save money and experience local culture, focused on overflow housing, no sustained traction.

In 2009 – Ebay for Space, all types of unique properties, vacation rentals are broken, focused on NYC, meet users, understand the levers, do things that don’t scale.

They were able to raise money from Sequoia for the following reason

Problems with Deck in 2008 – Drew analogies of things that were different but similar. Went top down which was suspect, and thinking too small. The site could have been interesting for a niche audience, but not distruptive.

Success with Deck in 2009 –

eBay of space + new name. - eBay = large thinking.

Booking a vacation rental online is nothing like booking a hotel.

Fragmented industry leaves property owner without a marketplace.

$17B vacation rental market + other large industries

Demonstration traction in a graph that made it look badass

$250,000K reservations, 10% commissions (demonstrated traction and stong revenue)

Wanted to be the world’s largest hotel chain without the overhead.

Investor + Advisor Advice

It’s important to only take money from the best investors. You want investors who are value adding.

Mentors and advisors are incredibly important. (it sounded like one of the reasons they’ve been successful is the network they procured from YC).

When evaluating investors - Ask other portfolio companies if these are guys that add value and help you solve your problems. The kinds of people who ask for advisor shares typically have less to offer. Start casual conversations by just engaging people.

Proactively send updates to show advisors that you are doing something to keep them interested.

Took $600K with $3M post money from Sequoia. Wanted the brand name. Also paid a premium to be in YC because the advising was worth it.

For marketplaces - You have to have enough things in inventory to have demand. They have a number of ways to attract sellers who own properties. Then they improve the quality of that inventory.

250 employees – Half is customer support. Engineering = 18 employees. 6 at beginning of the year. He was the only engineer for the first year.

Once an investor invests in you, they have a stake in your business and can make a great mentor @nathanblec by @dharmesh


That's it for Andy's notes and observations.  What insights did you pull from the sessions?  Any reaction to some of the above notes?

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Startup Wisdom From Babson Entrepreneurship Forum

Posted by Dharmesh Shah on Mon, Nov 15, 2010


The following is a guest post from Andy Cook.  Andy is founder and chief geek at Rentabilities, a web startup that makes renting easy. -Dharmesh

On Saturday Babson College hosted a great event to get everyone ready for Global Entrepreneurship Week. Speakers and panels talked about what it takes to be an entrepreneur and shared stories from the startup trenches. Dharmesh Shah kindly helped this cash-strapped starter attend by bankrolling my ticket.

We thought a blog recap would be useful for everyone who didn’t have the opportunity to go. I’m personally a sucker for a good startup story so I focused my day on that, but there were also many other interesting panels and speakers participating. Below are my takeaways from the event.

Ben Fischman (Rue La La) - Entrepreneurship is a Skill. Passion is an Emotion

Being a successful entrepreneur all comes down to passion. Entrepreneurship is not genetic, it’s a learned skill. You can learn everything you need to know to run a business. What is genetic is passion, because it’s an emotion. Passionate people get started doing something they love and do it quickly. They don’t plan and plan and wait and wait. They just jump in and see if it works. They go for the 50% solution and see how people like it to mitigate their risk.

If they fail, it doesn’t matter because passionate people find ideas everywhere. You can’t sit down with a nlank white piece of paper and figure out what business to be in. An entrepreneur is someone who can go work at Starbucks for five days and come up with a unique idea to start a business around. Entrepreneur types find ideas everywhere.

Mei Xu (Chesapeake Bay Candle) - Protect Your Finances to Protect Your Company

Not everything needs to be a brand new concept to have an impact. Candles have been around for millenia, but Chesapeake still managed to find a way to do it differently. Entrepreneurship is about reinventing the solution to a problem and solving a problem you are passionate about. As entrepreneurs, protecting your product is important, but protecting your finances is more important. If you protect your company by making smart financial decisions, you will be protecting your overall well being too.

Marshall Carter (NYSE Group) – When to Shoot for an IPO Exit

Marshall Carter gave a brief presentation on how entrepreneurs can use innovation to climb to the Big Board and then opened it up for questions from the audience. One of the best questions that was asked was, “when should a startup go for an IPO?” Marshall’s answer was brief, but very informative:

As long as you can expand without accessing the public markets for capital, you’re not going to need to hire 30 staff members to adhere to Sarbanes Oxley.

Matt Lauzon (Gemvara) - Give me Data, or Give me Death

Think about two things when starting a company:

#1 – Who’s your customer and are they willing to pay. If no one is willing to pay for what you’re offering, there’s not a viable business opportunity.

#2 – How do you test your business opportunity with the least amount of resources.  Be data driven. Instead of signing on 50 jewelers, we could have signed on five. And if I could do it again, that’s what I would have done.

Being data driven starts with making sure you have all the tools to measure, and then figuring out what it is you want to actually measure. From the beginning you need to decide what is success and what is failure. Customers vote on everything Gemvara does. They vote on merchandise is offered, how it is priced, and everything else the company does. Every decision should be based on data provided by your customers.

Another important thing to do at your company is to give data access to anyone, even your interns.  The employees at Gemvara (known as gemvarians) are allowed to talk to Matt or Dan Marques (the gemvarian in charge of analytics) anytime they want about data. When you empower people, they start to feel more comfortable making decisions and feeling like they can run their own tests.

Johnny Earle (Johnny Cupcakes) - Create a Cult of Customers

The driving force of your business is passion and reinventing yourself. Everything in the world has been done before, which means we all have a good chance of failing, and it’s about how you reinvent it. Doing something you’re passionate about and going with that gut feeling makes work not even feel like work. Johnny Cupcakes’ mission is to deliver an experience to its customers rather than just sell them a t-shirt. Here are some examples of how they do it:

  • Went on a a 31 day cross country tour selling shirts out of a van. This was so they could get to know some of their loyal e-commerce customers in person
  • Include random stuff in online orders like stickers, personalized notes, $20 bills, and even Barbie doll heads
  • When the newest store opened, Johnny hired firebreathers and sword swallowers to entertain his customers
  • Instead of the generic postal packaging, they get custom packaging and tissue paper made up

To this day the company has spent little to no money on advertising. It’s been all world of mouth because they’ve created a cult following of loyal customers. We’re all going to die someday so it’s nice to be happy everyday doing something you love. For Johnny Cupcakes, it’s giving their customers a memorable experience every time.

Matt Graham (BRND MGMT) - Do Yourself a Favor and Find a Mentor

As an entreprenuer, especially a first time one, you should look to people who have more experience than you in whatever it is you are doing. It’s important to know that as a first timer, you just haven’t gone through the types of experiences needed to succeed. What makes a good entrepreneur is the ability to synthesize input from a lot of different sources, and then use your best judgement to make an informed decision.

Most entrepreneurs have an epiphany and can see it all their idea all the way to completion. Be a dreamer and have a vision, but be realistic of how you are going to get there. You have to look at your life and see if you can actually make it happen. As you start break it down and have a better picture of whether it’s reasonable or not, you should ask for advice from people who have done it before to help you succeed faster.

Bob Caspe (Leaf Systems, Sound Vision) - It’s All About the Bottom Line

Business is not about the number of employees or users you have. Business is only about the earnings and your bottom line. Unless you have a rich uncle to fund your business, watch your cash flow carefully. In small businesses especially, it’s wonderful to think about what you’ll be in 10-20 years, but you need to preserve your ability to survive long enough for a good thing to happen to you.

Roger Berkowitz (Legal Sea Foods) - What Business are You in?

While in business school, Roger was asked by his professor what business he was in, to which he responded, “I’m in the restaurant business.” After hearing the answer, the professor decided to assign him (and only him) an environmental impact analysis of his restaurants. One semester and 42 pages later, Roger passed his paper into his professor who didn’t even look at it. Instead, the professor asked Roger what business he was in again, and hesaid “I’m in the fish business.” Roger passed the course.

The point of Roger’s story is that you need to focus on your core business, and only your core business. They’re are really only two metrics in business. You’re either better, or cheaper. For Legals, everything is about quality assurance and consistency. Legal Sea Foods also once tried to open a vineyard in France, and after three disasters decided to close it down and stick to fish again.  If you spread yourself out too thin and are worrying about things that take you away from your focal point, you will hurt yourself.

Joanna Meiseles (Snip-its) - You Don’t Have to Know What You’re Doing

Joanna’s story was hands down the funniest of the day. Before starting Snip-its, the only things she had were a vision, a name, and experience running a hair salon or franchise. Here’s what she did:

  • Got a business plan from a friend for an Italian restaurant in Seattle
  • Changed every instance of the restaurant’s name to Snip-its
  • Changed every instance of pasta to haircuts
  • Looked for $300,000 in investment money because that’s what the restaurant’s plan needed to start

With her business plan in hand, Joanna went to an investment meeting with her mom’s friend in New York, who asked her about EBITA. She had no idea what he was talking, botched the meeting, and ended up crying afterwards. A few weeks later, she got her business plan back in the mail with a check for $10,000 and a note that said “good luck.”
Throughout the history of Snip-its, Joanna basically had no idea what she was doing, but had the chutzpah just to try it out anyways. Her first employees even had to help her buy all the hairdressing supplies for Snip-its because she had never been a hairdresser before. You don’t have to know what you’re doing. You just have to work hard and be willing to take a risk. After opening her fifth store, she decided it was time to franchise because that’s what the restaurant’s business plan said to do. She stole not on the entire plan, but the execution as well as the plan. The saving grace was she learned quickly and leaned on other entrepreneurs for help.

Karen Fabbri (Moxie) - Trust your Instincts

If you have a little voice in the back of your head nagging you, something’s wrong and you need to fix it. If you’re having problems with an employee, take care of the problem by addressing it head on instead of ignoring your gut. Don’t fear the “what if’s.” What if I can’t run the business without them? What if he starts a rival store down the street? You need to listen to the little voice in your head and go with your gut, which probably means firing that person.

And if you’re thinking about starting a business in the first place and your gut is telling you to go for it, then go for it. You have to decide what’s the worst that could happen if you start a business and it fails. If you’re comfortable with the worst case scenario, then why not try it out? You need to always trust your instincts and follow your gut.

Brian Halligan (HubSpot) - Get a Great Mattress and Do What you Love

Don’t go work for a big bank or consulting firm, especially if you’re just getting out of college because you won’t be happy. Start a company or work at a startup instead. You spend 90% either working or sleeping, so get a great mattress and do what you love.

If you’re ever going to start a company, do it now while you’re young. Don’t go to some big firm. It’s a brutal way to live your life. Find a great cofounder who compliments your skill set. If you’re a finance guy, don’t start a company with another finance guy. Find someone who can build stuff instead.

Brian Cusack (Google) – You Can Talk the Talk, but Can You Carol the Carol?

Brian helped TJX launch a user generated Christmas Carol campaign around YouTube that was extremely successful for the company. And who was the first person to sing a carol for the campaign? Brian Cusack, of course.

You need to believe in the products you are working on, so much that you’re willing to use them yourself enthusiastically. If you can’t advocate and believe in your own product wholeheartedly, then how do you expect your customers to sing the praises of your company?

If you’re energetic and passionate about your product, you’ll be able to take advantage or your size and move swiftly. Find other people who are doing the same things as you and join them on the web. There’s a lot of opportunity for sharing that doesn’t have to be competitive.

Laura Fitton (oneforty)  - Listen. Learn. Care. Serve

Listen – Tune into social media. Look at the space you want to compete in. Listen for mentions of your company’s name through alert notifications. Follow blogs that are relevant to your industry.

Learn – If you launch an initiative and no one clicks through, don’t decide to just keep going and do the same thing. Learn from your mistakes and iterate. Think critically and strategically.

Care – Care about your customers and what you are doing for them through social media. Don’t be afraid to do it wrong and mess it up at first. Just try it out. Dell and most of the other companies who started using Twitter early on screwed it up. They learned from their mistakes, and now they are killing it online.

Serve – Do the stuff your company says it’s going to do and follow through. Solve your customers problems through social media because it’s easy, cheap, and they’ll love you for it.

You don’t need to run around and find the next big innovative thing to work on.  The interesting thing to watch for as an entrepreneur is what happens when the masses catch up. When it hits truly mainstream, they are huge business opportunities among the laggards.

That’s all folks! Hopefully this summary of the day’s events was useful to aspiring entrepreneurs or anyone currently working on a startup. I’d also like to thank everyone at Babson who helped make the event possible and all the speakers (even the ones I missed) for coming out and sharing their hard earned wisdom.

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Win Free Seat to the Sold-Out 37signals Master Class

Posted by Dharmesh Shah on Mon, Oct 18, 2010


After a long hiatus, the brilliant team at 37signals will be running another master class “How We Work”.  Think of it as startup bootcamp — for a day.  You get to interact in a small group including Jason, DHH and Ryan.  It’s a rare opportunity.  You’ll successfully learn more in one day than I fail to learn in a year.37school

There are two problems though: 

1) The ticket is $1,000 (though totally worth it, might be more than you can afford at the monent). 

2) Even if you had the $1,000, the event is sold-out.

To support what they’re doing, and because I think it’s such an awesome opportunity, I bought the last seat for the event (and for the record, yes, I did pay the $1,000).

I’m going to give it away to one very lucky, deserving individual in exchange for just one thing:  After the event, you write a guest post for OnStartups that shares some of what you learned.  [My goal at OnStartups is very simple — help more startups succeed].

Here’s how I’m going to arbitrarily pick the winner: Visit OnStartups on Facebook.  Find this article and leave a comment.  Ideally, you’ll share some insight that you learned (or pretended that you learned) from 37signals.  Maybe from the blog, or from one of their books, like the super-useful (and free) “Getting Real”.  Let me know in the comment that you're in the running.  Just put #ftw in there.  (Note: All costs other than the cost of the ticket are yours — the event is in Chicago).  Limitations apply, void where prohibited and you are at the mercy of my whim.

Summary:  1) Read the details on the class (and make sure you can go).  2) Leave a comment on the OnStartups Facebook Page.  3) (Maybe) WIN!

On a somewhat related note, I’m on the hunt for an exceptional hackepreneur in the Boston area that codes in PHP (and does so unapologetically) to work on projects with me in HubSpot Labs.  Particularly the new Social Inbox project.  If you’re a candidate for this role, and really truly kick-ass, launch products, then drop me an email: dshah {at} hubspot {daht-kahm}. 

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Startup Insights From Paul English, Co-Founder of Kayak

Posted by Dharmesh Shah on Mon, May 10, 2010

I’m just wrapping up several weeks of attending conferences across both coasts.  Of the ones I have been to recently, the Nantucket Conference has been my favorite.  A great group of people and a small enough gathering that you can actually get to know many/most of them.  My thanks to Scott Kirsner who organizes the conference and was kind enough to invite me to speak this year.

One of the sessions at the conference was an interview with Paul English, founder and CTO of Kayak.  The interview was conducted by Larry Bohn of General Catalyst (Larry also happens to be an investor in my startup, HubSpot and sits on our board of directors).  In case you are one of the few people that hasn’t heard of Kayak yet, it’s the most popular travel search site on the web (and one of the top 1,000 most popular sites on the web).  Kayak is great Boston-area success story.  One quick point on that:  In Dec 2007, with just 39 employees, Kayak raised $230 million (at a much higher than that valuation) to acquire their largest competitor, SideStep.  Paul is on my list of “best entrepreneurs I’ve met”.  Lots to learn from him.

The following are some notes I pulled from the interview.  I encourage you to listen to the entire session (high quality audio, and lasts about 45 minutes).  Just hit "play" on the widget below.  Or, if you’d prefer, you can read the entire transcript at the bottom of this post.


Or, you can download the MP3 directly

1. “I've started four or five companies now, based on how you count. There is one I am trying to forget.”  Most serial entrepreneurs that I know don’t have a 100% “hit rate”.  Just about everyone has had at least one venture that didn’t quite turn out the way they had hoped.  I like that Paul’s able

2. Like me, Paul also started a company with his brother.  I have to remember to chat with him about that over a beer someday.  [Note to self:  Write article titled “Starting Something With A Sibling: Understanding The Tradeoffs”.

3. Like many of my favorite software entrepreneurs, Paul’s a programmer by training.  Interesting side note:  In my recent travels and interactions with entrepreneurs, I’m finding that an increasing number of founders have a design/UI/UX background. 

4. When asked “Why do you start companies”, Paul has one of the best answers I’ve ever heard: I start companies because it gives me an opportunity to create teams. 

5. “Our priorities are always team first, customer second and profit third.”

6. The difference between an A team and an A+ team is the difference between a million in revenue and a billion in revenue.

7. Sometimes people Paul is interviewing say “I’ve heard a lot of great things about you.”.  Paul:  “Trust me, after a few months, you’ll learn that the reason you’re here is not me, but the people around you”

8. Paul English on recruiting (I’m paraphrasing this from a meeting I had with him and some pieces from this interview):  When someone mentions the name of a person that they’ve worked with that they think is exceptional, a little clock starts ticking in my head.  My world goes to black and white, and this clock is in color.   From when the clock starts, I give myself seven days to track them down, back channel, get them in for two series of interviews that are intense and focused, and make an offer and have them accept it. That's seven days from when I hear the person's name.  [`

9. At least one of the co-founders needs to be passionate about recruiting because that absolutely makes all the difference in the world.

10. When Paul started Kayak, one thing that was very important to him was building something that his friends could use.   Before Kaya, when people asked "What do you do?", his response was "I work in an operations research group at data general, and we're studying advanced processes for doing disc drive manufacturing."  Clearly, unlikely to be fascinating to most people.  With Kayak he wanted it to be different.  I have had almost precisely this experience.  For my current startup, I wanted to work on something that when random strangers asked me what I did, I wanted a decent chance that the answer would be relevant to them. 

11. “I had sold two companies. I didn't want to sell a company again. So my venture guys would sometimes say, "You know, explore it." And I'd have the meeting knowing in my mind that there is no way I am going to sell this company.”

12. When Paul was hiring his early team, he refused to hire people from the travel industry.  He didn’t want travel people, he wanted consumer product people. 

13. One of Paul’s investors said, “You’ll name this company Kayak over my dead body.”  Paul: “Thanks for the input.” 

14. The Red Phone:  Paul found the most obnoxious, loud-ringing red phone he could find and plugged it in right in the engineering office.  About 30% of the time, when a Kayak web visitor saw a support phone number on the website, it was the number of that phone. The idea was to build a culture that was centered around the customer. 

15. “I guess this is the first time I'm talking about this. But I'm at the beginning of a new project, which will be my next 10 year project. I'll be at Kayak, of course, pushing it, pushing it, but I'm starting a new project that has an audacious goal of creating free low-bandwidth Internet for the whole continent of Africa.  [This super-cool.]

16. In an uncharacteristic moment, I actually asked Paul a question in the session about how his advice around recruiting as a company grows from 5 to 50 to 500 people.  He had two points:  First, make sure you identify the stars.  He does this by asking people on his team who the brightest people they’ve worked with is.  Then, make sure that they know how much emphasis you put on the team and go after them — aggressively.

17. If you visit Kayak.com and hit the feedback button, you will get a response via email.  Kayak responds, individually, to every email.  That’s impressive.  What is crazy-impressive is that the email response comes from either Paul or someone on the engineering team.  He gets flack for using a $150k/engineer to answer support emails when the rest of the world is outsourcing it for $8/hour or something.  Why does he do this?  Because, when engineers respond to support issues, when the same issues arise time and time again, they are more likely to stop what they are doing and go fix the problem so that they don’t have to answer that same question again.  And, because it sends a message to the entire team that they take these issues very seriously.

Full Transcript of Paul English Interview
[applause 0:00:00]
Larry Bohn: [0:05] So let me begin this way. Paul and I have known each other for, I calculated, 23 years.
Paul English: [0:14] That sounds right. 1989.
Larry:[0:16] 1989. And we're sort of neighbors. And we've known each other through many different lives and journeys, the most recent of which is my firm, General Catalyst, is an early investor in Paul's company, KAYAK. [0:33] So we'll let other things come out during the dialogue, but I thought it would be great to get Paul here to talk about what he does, what his passions are, what his philosophy of building companies. I think many of you follow his blog or have heard him quoted about everything from customer service to how to manage development teams, as well as a lot of his interests in terms of helping out in the third world.

[0:59] So I have a bunch of questions that I probably won't get to ask, but we'll start, and then we'll open up to questions later from anyone in the audience. So first thing, why don't you give just a quick personal bio of how you got to where you are today in your professional life?

Paul:[1:16] It's all due to Larry; everything I learned working for Larry. So, I'm a Boston boy. Those of you who are not Bostonians will tell from my speech dysfunction. I have to speak very clearly so I don't sound too - to kind of hide the Boston accent a little bit. [1:36] I am a software engineer by training. I went to school UMass Boston. And I've started four or five companies now, based on how you count. This one I am trying to forget. Actually, it was in Boulder, Colorado and I lost a lot of money.

[1:51] But prior to starting KAYAK, I can tell you a little bit about it. My brother Ed and I had started a company called InterMute to get rid of spyware. We ended up selling that to Trend Micro. I also created a small company in Arlington called Boston Light Software named after the lighthouse. And we built eCommerce software for small businesses. We ended up selling that to Intuit, where I became VP of Technology and was at Intuit for about three and a half years.

[2:18] That was a really, really fun job. I learned a lot about customer service and focus, and also helped lead the creation of the Intuit Innovation Lab - how you do innovation at a big company, and the Intuit Developer Network - how to build open platforms on top of a wide set of applications which might not have been built for a platform.

[2:38] So, programmer by training, and have always had hunger to start new things.

Larry: [2:46] Great. So, you left out your first job with Interleaf.
Paul:[2:51] Interleaf, that's right. Interleaf was a fantastic job. You know, my first job, actually, was working - OK, the first job that was legal was working for Mini-Mart. I was a 16 year old stock boy or something. I remember one time crushing the giant box in the box-pressing machine. And the pharmacist who ran that store came to me and screamed at me a stream of obscenities and said, "You're an idiot! You'll never do anything in life! I can't believe you can't even use a compacting machine." Think about that. But that was my first job. [laughter]

[3:29] When I went to Mass, I didn't apply to college. I wasn't going to go to school. Last minute, I did end up going to school. And I had a series of jobs, everything from working for the Air Force doing data acquisition and control systems, doing some operations research for Data General, doing medical device software for Humanetics and Braintree, and doing video game development for my brother Ed English for one of his companies.

[3:53] But my first real, real job after I actually had a degree was working for this guy. And I must say it was a lot of fun. I have a list that I keep of things I've learned in management over the last 20 years. And probably three of those 15 things in that list are things I learned from Larry, the most important of which, I think, is how to defuse tension, diffuse tense situations.

[4:18] And we had a number of staff meetings - Larry had an extraordinary staff that I felt very lucky to be a member of. It was a really special team. And that helped bond, in me, the need to form good teams. But also, he was very good, when there was fighting between the team or whatever, he had some very good techniques for just making that stuff go away. And it's lessons that I've continued to use to this day.

Larry: [4:41] Well, one of the reasons that I wanted to bring that up is that when you first came to Interleaf, I think you were right out UMass, and within like nine months you took over the development organization, because you were just a tremendous technical talent. [4:56] But then, what's interesting is that team that you started and you really built has followed you through several companies. And so some of what I think you've done in just a spectacular way has been to lead that development team. So I wanted you to talk a little bit about your philosophy. How do you develop high quality teams? Especially, you talk a lot about how you recruit people. You know, what your philosophy is around competence and performance. And I think that would be really useful for people to hear.
Paul:[5:27] Sometimes I give talks at local universities about starting companies. And I remember once one of the students asked me, "Why do you start companies?" And my first thought was, actually, "I want something to do when my kids are in school." But I really look at starting companies as an opportunity to create a team. And for me, at KAYAK, I've always been very clear that our priorities are team first, customer second. And I think for a company that is so explicit about customer second, we have more intense customer focus than any tech company I've seen yet. I mean we can talk a little bit about that, and then profit third. [6:05] And I really feel very strongly to the core that focusing that way is what happens. On the team first, there's recruiting, there's hiring, there's firing, and there's leading. In each of those areas, I try to apply what I've learned from people I thought were good leaders, whether it was at Intuit or Interleaf, or any other company.

[6:28] Part of the recruiting thing, forming a good team, is you do want to start with a nucleus of people who have worked together and have a proven formula. And you want to do anything to get that team together. And also, you want to do anything to get your team as strong as you can.

[6:44] The difference between an A player or an A+ player is the difference between a million in revenue or a billion in revenue. It's really extraordinary how much just putting that little extra effort into recruiting and the dividends that can pay back to you.

[6:58] When we formed KAYAK - and I think Larry was modest when he said that General Catalyst was an investor in KAYAK. I look at General Catalyst as the creator of KAYAK. Larry was the one who introduced me and my co-founder, Steve Hafner. Joel Cutler is our director. And we really started the company within General Catalyst.

[7:16] But when we started that, there were two guys in particular I wanted to join my team, a guy named Paul Schwenk, who is currently Senior Vice President of Engineering for KAYAK, and then a guy named Bill O'Donnell who is...I think the title I've given him is Ultra Vice President of Code.

[7:32] When I wanted Paul and Bill to work with me again, I called them and said, "I'm starting another company. I want you guys to come join us." And I think at the time they were each working - they were still at Intuit. I had left more than a year...

Larry: [7:45] But they had followed you there.
Paul:[7:46] They had followed me to Intuit, yeah. So we worked on and off together for 20 years. But when I tried to pull them out of Intuit, I had taken a year off to help care for my dad and do some other things. I remember one of the questions... [7:59] So these guys are making three and four hundred thousand dollars a year as programmers at Intuit; very, very gifted guys. And they said, "Well, what's the company?" I said, "It's a travel search engine." "Do you have funding?" "Well, sort of. You know, we're about to get funding." "How much will you pay us?" I said, "100K." I'm sure their wives were really excited about this.

[laughter 0:08:19]

Paul: [8:19] And then they said, "Well, where will the company be located?" I said, "I really don't care. You can put it in your backyard." And unfortunately, they said, "Maynard." I was like, "Shit!" [laughter 0:08:29]
Paul: [8:29] I hope I'm not offending anyone here, but... [laughter 0:08:34]
Paul:[8:32] It wasn't my favorite commute. But I really wanted these guys. And my belief is, in recruiting, if you do whatever it takes to get this extraordinary team together, that team will build the next team. I think a lot about energy. At times I've recruited at KAYAK, I've brought people in and I've found people on buses or trains or whatever and I detect talent, I'll aggressively recruit and I'll bring them in, and they'll meet my team. [9:00] Sometimes they'll see they've heard good things about me or they liked an interview with me, and I'll ways just say to them, "Trust me, you'll be here a few months and you will realize the reason you are here is not for me. It's for these other people that will be around you."

[9:10] And I just take it really seriously, the commitment to just do whatever it takes to make that team strong. I have, even at Intuit, one of the things I did was I led recruiting for them. I instituted something that, at least during my time there, was a seven day rule.

[9:24] The first time you hear someone's name - so if Larry had mentioned to me there is a VP of Marketing he used to know and he thinks the guy is in Australia. He's not quite sure, but the guy was unbelievable. As soon as he mentions this guy's name, it's like a clock starts ticking and that goes into color and my world goes black and white. I have seven days to track him down, back channel, get him in for two series of interviews that are intense and focused, and make an offer and have him accept it. That's seven days when I hear the person's name.

[9:51] And I think having that speed, you might think that makes me sloppy. I think it's actually quite the reverse. When you force yourself to do something fast, the only way you can execute fast is if you have process.

[10:03] And a lot of forming great teams, to me, is just, how hungry are you? How aggressive are you? And my advice to other entrepreneurs when you are starting new ventures, if you look yourself in the mirror, you know that, really, it's not like the thing you are most hungry for in the middle of the day, you will read your emails instead of look at that resume. You have to find a co-founder that I would say is 50/50 split with you, that that's what they care about, because it just makes absolutely all the difference in the world.

Larry: [10:29] So, maybe talk a little bit about starting KAYAK, founding KAYAK. And especially, you know, you were not a consumer Internet guy. You weren't at travel guy. And yet, you built, arguably, the best and biggest online travel company in the world, and one that's competing now with Google and others. So how'd you do it? How'd you build a team? What's the culture like? And, you know, what could you share about that?
Paul:[10:57] Sure. It's a fun company. There are some unusual things about it. One of them is my co-founder and I. My co-founder's name is Steve Hafner. He is one of the founders of Orbitz, and he left Orbitz in December of '03, which is when I met him. [11:10] I was introduced to Steve - I was actually working with Bill Kaiser as an EI over at Greylock. But I was over at General Catalyst one day looking at a mobile company for John Simon, I believe. And then on my way out, Larry and Joel Cutler introduced me to this guy Steve Hafner and said he is starting a travel company. He's leaving Orbitz, would I give him some advice?

[11:32] So Steve and I went downstairs to Legal Sea Foods in Harvard Square, had a couple drinks. And I think within 45 minutes we agreed to do it as co-founders. We each were going to throw a bunch of money in. And I think part of that was both of us, my co-founder and I, are risk takers, and both of us, I think, have a very good read on other people.

[11:53] And Steve and I are similar in many ways, but we are also very different in actual technical skill set. But we both detected a level of aggression or commitment in the other one, and we both felt that, "Wow, if you put two co-founders together that are this aggressive..."

[12:11] I might not sound aggressive now, because I just arrived on a redeye from San Francisco, so I am a little bit tired. But, we thought that starting with a team that our job was just to state a plan and say, "We're going to get there. We're going to build the biggest travel company in the world," when we just had six slides of PowerPoint. And then somehow getting people to believe us that we were going to do that, and recruiting people to help execute that plan.

[12:37] So I think it starts with belief.

Larry: [12:38] Yep. So, one of the things I remember that I think was tremendous was when we first talked about you coming into KAYAK, you were thrilled at the idea of building software that your friends could use. Because up to then, I think most of the stuff you built, even though, at Intuit, people were...
Paul: [12:58] Intuit was really eye-opening for me. Before then, when I would tell people - "What do you do?" "I work in an operations research group at data general, and we're studying advanced processes for doing disc drive manufacturing." [laughter 0:13:12]
Paul: [13:13] It didn't go over well.
Larry: [13:15] Right. So I remember you being, like, thrilled, like, "I'm going to build something fabulous that my friends can use, and it's going to be really exciting." And I think that was a big motivation when you were recruiting some of the members of the team.
Paul: [13:24] It was.
Larry: [13:25] Talk a little bit about how the company was founded. Certain journalists in Boston reported that you stole the idea. Talk a little bit about the beginning and then how it developed, the acquisition and things like that. I think that's a great story about a Boston company.
Paul:[13:45] So, we were not the first to do travel as a search engine. If you think about the creation of online travel industry with the formation of companies like Travelocity and Expedia, and then followed by Orbitz, and Priceline, etc, those guys are all merchants, where they show you a limited set of inventory. [14:04] If you look for a hotel in New York tonight, Expedia won't show you every hotel in New York. They only show you the ones that they rep. KAYAK will show you ever hotel because we are a search engine. We weren't the first guys out there to be a pure search engine. Saying, "Gee, this Google thing seems to be working. Can we build one of those but just for travel?" There were FairChase, SideStep; a couple companies before us that did different approaches to what we ended up taking.

[14:30] SideStep was interesting. They had a downloadable toolbar that if you searched Expedia, they would pop up a window in the side showing you other rates if you could search other sites. They were a couple years ahead of us. They were much bigger than us in revenue on our second or third year, but we ended up acquiring them. They tried to acquire us a couple times.

[14:52] I had sold two companies. I didn't want to sell a company again. So my venture guys would sometimes say, "You know, explore it." And I'd have the meeting knowing in my mind that there is no way I am going to sell this company.

[laughter 0:15:01]

[15:01] But each time, we would negotiate and valuations would come up, and there would be always a mis-set expectation about what the other company was worth, because if you do a stock deal, it's more percentage, but then it's this game of what you are each worth.

[15:16] And in each of these meetings over the years when there were bigger companies than us who were interested in what we had built and our team, et cetera, if we had disagreements, I would just say, "That's all right. Let's just talk again in a year." And I just had this belief that our valuation grew quicker than the other party.

[15:33] In the case of SideStep, it did. In December of '07, we had 39 employees and we raised $230 million at a very high valuation to acquire what was our biggest competitor, SideStep, in California. And that was a very good deal for us for getting their customer base. And it's just one important milestone. It's fun to take out your big competitor.

Larry: [15:57] Paul is a very competitive person, and I remember, at the beginning, when SideStep was a couple years ahead, it was a West Coast company funded by good venture people. How did you win? You ended up blowing by SideStep, and you ended up buying them and really taking advantage of them. How did you do it?
Paul: [16:18] And I did love the East Coast acquires West? [applause 0:16:23]
Paul:[16:25] We could spend an hour just on that topic. And I know there's some powerful people in the room here. I hope all you guys are encouraging all your companies to say, "Don't give up. At least don't give up early. Push something bigger." [16:38] I really want to create extraordinary East Coast companies and change the culture here, and there's a lot of work to be done with that. I think if you compare us to SideStep, they were good guys, but, I don't know.

[16:53] Not to be harsh, but the simplest way to say this to compare the two companies, it had nothing to do with strategy. It had to do with the team. We had one project manager. They had seven. And we just recruited a different level of talent than they did.

[17:11] And you go down the line, finance, sales, marketing, whatever, I think people would say, when they would go to a KAYAK meeting, or they go to a SideStep meeting and then they go visit KAYAK, they'd leave. We usually get good feedback when people leave meeting with our team. Everything from people saying things like, I'm vibrating from that meeting, or there's some electricity, or whatever. And I think we out-executed so many people, because we out-hired, is the simplest thing.

[17:37] Second of that, the way our team organizes around customers is different than what I've seen in other tech companies.

Larry Bohn: [17:41] Yeah, talk about that, and talk about - because I really do, I started as you build a much better product. And talk about how you build a great product, and how you got feedback about that product, and how you still do.
Paul:[17:55] Yeah, so travel is something that I love. I've never worked in the travel industry. In fact, when hiring the tech team at KAYAK, when we were mostly the first five years - we're six years old now - the first five years, it's a bit of an oversimplification, but I would say there were only two types who worked at KAYAK. You were either a programmer, or you were a business development manager, and two-thirds of them were programmers. [18:16] We're growing now on the marketing side and the finance side, but, in general, when I hired the tech team, one of my requirements was I refused to hire someone who has ever worked in travel before. And my board didn't like this. We recruited a good board. Part of this, is the aggression we had in recruiting, but we recruited Terry Jones, the original founder of Travelocity, was, became, our Chairman. Greg Slyngstad, the original creator of Microsoft Expedia, became a Director and investor. So this amazing travel portfolio on our board, but I refused to hire travel people.

And what would happen is, at our board meetings, I would present, this is the product plan. The board would sit back, you seem like a really nice guy, you seem really smart, but I can't believe you don't know what a passenger type code is [Larry laughs 0: [18:46] 18:54] . It's not possible to fly a plane, from here to here, without doing this. And they kept saying that I would be proposing stupid things, and they kept begging me to hire someone who had actually worked in travel before. And I would do what - are we allowed to swear here?

Larry: [19:09] Yeah, absolutely. You're among friends.
Paul: [laughs 0:19:11] [19:11] I would do what later became know as a grin fuck, where... [laughter 0:19:14]
Larry: [19:14] Which he does a lot to his investors.
Paul: [19:17] Yeah.
Larry: [19:17] Totally.
Paul: [19:18] The most famous one is when our board told us - we incorporated as Travel Search Company as a placeholder and we told the board we were going to call the company KAYAK - one of the investors said, "You'll name this company KAYAK over my dead body." And I said, thanks for the input.
Larry: [19:33] Right. [laughter 0:19:33]
Paul:[19:34] But we tend to, you know, on the hiring thing, I didn't want travel people. I wanted consumer people. And I wanted people that were committed to the best team ever. I wanted people committed to intense focus on customer. [19:48] We don't have enough time here now, but there's eight key processes that we use at KAYAK right now, for how customers get engaged with engineers. I'm about to add the ninth, which is going to be live web chat over Skype. If you just randomly hit our feedback page, you'll connect live in our engineering team.

[20:04] But another one, that is we've become a little bit known for, is we have this red phone in our office. And I took some time to try to find the most obnoxious phone I could, with a really loud ringer, and it's directly wired into our engineering office.

[20:19] And when you click the help button on KAYAK, you see this phone number, it shows up every now and then. We have two million people a day coming to the website. The phone number shows up, right now, about 30 percent of the time. But I can dial that up and down.

[20:30] And when the phone rings, it rings very loudly. And the engineers used to complain to me that this is so annoying, this phone. I was like, if it's too loud and it interrupts you, it's very simple what to do. Number one, if you actually pick up the receiver, and lift it off the phone, it stops ringing.

[laughter 0:20:47]

Paul:[20:49] The second thing is, if you then hold it, and there's a human on the other end of the line, do whatever it takes to make them happy, like really happy. And when you're done, you can hang up the phone, you can unplug it, walk down to the other end of the hall and plug it in down there. And we had a little bit of a hot potato. [laughter 0:21:07]

[21:06] But if you visit us, my office, we're across from Pepperazzi, on Route two in Concord now, getting a little bit closer to where I live in Arlington, from my original home in Maynard. But if you visit us, you'll see that when the phone rings, I will literally jump over desks to answer it.

[21:22] And I think there are two reasons. One, I love talking to customers. And two, I'm trying to set the tone for the company, that we're a company that executes in real time. And by executing in real time, it means time is defined by customers and what's going on with them right now.

Larry: [21:36] So, KAYAK's a big company now. It's a couple hundred million dollars. It's very profitable. It's very high profile. It's probably the top consumer Internet company in the area and it gets noticed. So there are some big players coming into this space.
Paul: [21:53] Sure.
Larry: [21:55] So talk a little bit about how you compete at that level. How do you build a really significant company? What do you worry about as the company gets bigger? Things like that.
Paul:[22:07] Yeah, I'm excited about change and having people take notice. We're a big company in terms of reach. So last month we had 60 million customer sessions on the site. That's pretty good for a startup. [22:20] And these are people who come to KAYAK with the intention of buying something which is going to cost hundreds of thousands of dollars. So it's good traffic. We're a small company in that we're only 100 people.

[22:30] Expedia's a few times bigger than us in traffic, but they are 100 times bigger than us in employees. So, revenue per employee is a very important thing for me. And I have some secret recipes about how you can create companies with $1,000,000 or $2,000,000 or $3,000,000 revenue per employee. It has to do with the type of people you hire and how you align them.

[22:49] But we have been successful. We're continuing to grow very rapidly. Travel is eight percent of the U.S. GDP, but it's almost half of eCommerce. The reason it scales disproportionally high is that travel is something; it's very easy to buy online. You don't need a FedEx truck to show up. And it's also high-ticket items.

[23:10] Because we've been so profitable with the model we've built and we're growing so fast, we're getting attention. Google is entering more and more into our space. There's all kinds of rumors circulating about them maybe even doing an acquisition of another local Boston travel company. It's a company in Cambridge called ITA Software, which is one of the technologies we actually use in our backend.

[23:31] Now, when people ask me if I am afraid of Google, my first response is - and I'm getting excited right now just thinking about this is, "Bring it on!"

[laughter 0:23:40]

Paul: [23:40] And I know how dangerous that is. I know there's probably some idiot at MapQuest that said, "Bring it on!" And they didn't see what happened to them when Google just vanished them from the earth. [laughter 0:23:53]
Paul:[23:53] And I have a friend who worked on the Google Maps team and she told me what they actually did. It was astonishing, the force that Google brought to that space and the massive innovation. But, in general, I like being competitive. I think it motivates a good team and I think it ultimately leads to good products for customers. [24:12] Will Google be successful in travel? I don't know. Let's take a look at some other things Google's working on right now. So you guys all know Twitter and Facebook. How are you liking that Google Buzz and Wave thing? Is everyone going to use that every day?

[laughter 0:24:26]

Paul: [24:27] Google's not successful in everything they do. I don't mean to dis them. I think it's a phenomenal, transformational company. I think it's one of the most, maybe the most, tech company created to date. But if they come with a direct KAYAK competitor, I swear to God it's going to get me excited more than scared. And we have a lot of cool stuff coming out.
Larry: [24:48] Great. So, maybe shift topics a little bit because you do KAYAK during the day and then, at night, you do a million other things. And the million other things, I think, is fascinating; from philanthropy to technology. Why don't you talk a little bit about the thing you're passionate about outside of KAYAK?
Paul: [25:06] Sure. Yeah. So, work related outside of KAYAK. And the other thing - so Scott, who I feel bad, invited me to this conference here, a few times and I kept turning him down. In general, I don't do industry things. I don't read business books. I don't go to travel conferences. I don't go to industry events, because I love my work. I love my team. I love my customers. But, when I'm outside work, I want to be with my kids or with my girlfriend or reading or traveling or whatever.
Larry: [25:30] Our biking, biking. Yeah.
Paul: [25:32] Or biking with Larry, trying to get ready for Pan-Mass if he doesn't kick my ass like he did last year. [laughter 0:25:37]
Paul:[25:39] But there are some things I do, outside of my nine - 5, that are very important to me in areas relating to global health. So, I've been doing some work with Paul Farmer for about 10 years now. I met him through a mutual friend, a guy named Tom White who is 90 years old this year. [25:55] And I have projects now in six countries that I have different levels of involvement in, starting in Haiti, but then in Rwanda, Burundi. In fact, as soon as I leave this, I gotta get to New York for a board meeting for Village Health Works which is a Burundian based clinic we're building.

[26:13] So I have products in different levels of involvement. So, Haiti, Rwanda, Burundi, Uganda, Malawi, Zambia. I guess those are the big six, and then smaller ones elsewhere.

[26:26] One of the things I'm learning recently, as you build medical clinics in new areas, there's three things you need to do in terms of infrastructure in the following order. One is get clean water. There's a lot of cool innovation happening there in cost reduction and quality improvement. And it's dramatic in terms of how much it transforms a village when clean water gets put it. I cannot overstate how much you can change an economy, education, everything by clean water.

[26:56] The second thing you want is clean power. And a lot of power innovation is actually happening in developing countries because it's their only option, is to find new ways to get power. There's some very interesting research and partnerships being done at MIT in different developing country areas.

[27:14] And the third thing you want is clean Tel-Co. I've seen what happens to a clinic, a remote clinic, when they doctors - more likely, there's not enough doctors and nurses, but the community health workers, when they have access to email or Skype, it changes thing in a big way.

[27:31] And I've realized in each of these projects I'm involved in, in different capacities, the Internet thing kept coming up. And so recently - I guess this is the first time I'm talking about this. But I'm at the beginning of a new project, which will be my next 10 year project. I'll be at KAYAK, of course, pushing it, pushing it, but I'm starting a new project that has an audacious goal of creating free low-bandwidth Internet for the whole continent of Africa.

[28:04] And the reason someone would try to do something that crazy is if you see, firsthand, how education, healthcare, and economic development is transformed when information flows freely, the challenge is how to do it and how to do it that big.

[28:22] And the reason I like to think that big is, you know, we all measure the size of our life, and we each want to get a lot of stuff done. And I want to get a lot done. And so, rather than taking about half a dozen countries and villages, it's like, "Let's think much bigger."

[28:40] And when you think bigger, it forces you to innovate in ways in which you wouldn't have thought about if you were just worried about doing something in Cange in rural Haiti. And so I've started a project now. I have two Sloan students working for me fulltime for the summer. And I have some other collaboration at MIT and elsewhere in different countries in Africa. And if anyone here does African IT and you want to get in touch with me about this project and you want to help, my email address is paul {at} kayak {dotcom} .

Larry: [29:08] Great. We have a couple minutes left. Maybe open up to any questions from people in the audience for Paul. Any topic at all.
Man 1: [29:19] Paul, so the Google [indecipherable 0:29:22] . It would seem to me that Google has failed in areas that are not search related, but actually has done, as you indicated, with mapping [indecipherable 0:29:35] search and they've done quite well. So I'm wondering how your investors are reacting to that information.
Paul:[29:46] Yeah. We've seen Google coming for a long time. KAYAK is six years old. For six years, I've told my team, "Google is six months away." I've been saying that for six years, and I'm still saying it. It might be less than that. [30:04] Google has already started encroaching on our space. The Google Maps product, which is a great product, now has the ability to - they're testing showing some hotel availability and pricing. They have this one box solution, if you type in Boston, Miami, you count the dates and kick off searches from there to KAYAK and other sites. Clearly, that could easily be integrated.

[30:27] It's true that Google, if you look at the 30 verticals where Google exists, I think they lead in maybe two of the 30, two or three, search and Gmail. I love Gmail. It's not the number one email service provider yet, but I do love that.

[30:43] But a lot of it - they do have search products which are not the best right now. I think Amazon is a better search for product than is Froogle or Google Products. But when they come after some travel, you'll see that there are a lot of different things we're going to be doing that are things that Google can't do and won't do as well as KAYAK is going to do.

[31:02] There are some things that we are doing with Facebook that Google can't do and won't do. There are some things we're doing with Apple that Google can't do and won't do. There are some things dealing with travel that we are going to have a different spin on it than the way people at Google think about consumer software.

[31:15] And I'm sure I'm going to get some bruises in this fight, but we're looking forward to it. I think travel is too important for someone to just not have a trusted, "This is my travel app. This is the thing that I trust will get the unbiased, every hotel in the world, every flight, every rent-a-car, cruise." And I think having an independent brand for travel makes sense as long as we can keep innovating, and as long as each month our product gets simpler and faster. And, you know, I'm signed up to do it. We'll see what happens.

Larry: [31:48] And your investors are filing behind you.
Paul: [31:49] Yes. [laughter 0:31:50]
Man 2: [31:53] I have a two part question. One is, we spent three weeks in Africa recently, and the availability of healthcare professionals is dismal in Africa in general. One question is: Do you see a solution around that space? And the second question has to do with your philosophy around managing your board of directors and that comment from your board member. Is he dead? [laughter 0:32:20]
Larry: [32:23] He's not on the board! [laughs 0:32:24]
Paul:[32:27] Yeah, he's a bigger guy than me, too. So on the first one, the healthcare, Paul Farmer says there should be no such thing as healthcare volunteers. There should be healthcare workers. [32:43] And so Partners in Health, starting in Haiti, they created a program called A Company at Tour, which is taking someone who is a former patient, maybe dying of AIDS, and once they get in for treatment, you bring them back and make them strong and healthy so they can now care for the kids and whatnot. In most cases, A Company at Tour hires women, women being better providers, and more responsible, in many cases.

[33:10] And what Paul's team has done is take these former patients and say, "OK. You are in good shape now. You've put on 30 pounds. This is what you looked like before. You can now take care of your kids. You're strong. Here is the deal. You now work for us, but it is under the following conditions. We are going to pay you. So we'll pay you maybe $10 a month," which in undeveloped countries, that's an awesome salary.

[33:40] "Number two is we are going to put you through rigorous training and testing and certification. This is not a volunteer organization. This is something that is intense. When you finish our training program, we're going to put you in charge of four, or five, or six homes, and your job is to do whatever it takes to keep people alive and healthy."

[33:57] And the thing that's amazing about this is you go into an area where it's very, you know, economically depressed, where there's no - these things feed on each other - where's there no economy. There's not good education, there's not good healthcare. When you start building healthy members of population who are then given the tools and the finances, which doesn't cost that much, to then help keep everyone else in good shape, there are a lot of good things that happen.

[34:28] Fertility goes down. There's this myth from the Western World that, "Gee, these people are so screwed because they have too many babies." That's not accurate. There's a lot you can do when these health workers become trained and take care of them even if you don't have doctors there's a lot you can do with a village taking care of itself.

[34:46] And Paul Flower has proven again, and again, in the countries he's been in. So I like that model. There are other models, but I like that one. On the second question, the person who relates to that quote is a good friend of mind, David Fialco. He works with Larry at General Catalyst. Like I said, he's a little bigger than me, so I hope he didn't take me too seriously.

Larry: [35:04] If you took literally everything he said he'd be dead 100 times.
Paul: [35:09] But Fialco and I became very good friends. We started off with a little pretentiousness in the relationship but he's an amazing guy.
Larry: [35:21] Talk a little bit more about your board. I mean, you've got Mike Moritz there. You sometimes complain to me about your board. Be honest.
Paul:[35:28] No. We have a great board. We had a board meeting yesterday in San Fran. So in addition to Terry Jones, the founder of Travelocity, as our chairman, he's a great industry guy. Greg Slyngstad, creative expediter is a director and investor. Incredibly product guy. He was the first program manager for Word for the first Sun releases. Even though he gave Larry and me some pain. [35:49] We looked at Word and said, "That little toy, that's not going to hurt us. We are real desktop publishing." So Greg is the guy who kind of kicked both of our asses. Michael Moritz from Sequoia.

[35:59] Michael is arguably the most well known venture capitalist in the world. He's been on Google's board, Yahoo's board, et cetera, et cetera. I spent the whole day with him yesterday. The thing that most impressed me with Michael is confidence, he's concise, just always about what can you do to raise the stakes.

[36:23] And I have so many great stories of things I've learned from him at my time at KAYAK. We also have Harry Nelis from Excel UK. We we were created within General Catalyst series A, and Mike Coffin and I.

[36:35] Series B was Michael Moritz at Sequoia. Series C was Harry Nelis at Accel. The reason I took money out of Accel UK, the theory was if I took European money it would help me with recruiting in Europe. Hasn't worked out exactly the way I wanted. But Harry's a very good guy. An ex-Goldman guy. Don't hold that against him.

[36:51] And then Michael Moritz at our series D again when we did the acquisition of Side Step. So it's a pretty amazing board.

Larry: [36:57] And Joe.
Paul: [36:59] And of course, Joel Cutler. Who I view actually as the creator of KAYAK is Joel Cutler. Joel's the one that put Steve and I together. Joel has deep roots in travel. And if you don't know him, you want to get to know him. He's completely insane. And I love him to death. He's great.
Larry: [37:18] Any other - back there, Scott.
Scott: [37:21] I was just curious, do you much thinking about for AV testing around how do you actually get transactions to happen? What have you learned about kind of what moves the needle with someone who's s just a KAYAK researcher versus a real devoted KAYAK buyer?
Paul:[37:36] Yes. We have a whole experiments platform. A couple of years ago I hired a guy named Giorgos Zacharia at MIT as our chief scientist. I think Giorgos has five of the 25 MIT degrees I've hired in the last couple of years. [37:53] One of his jobs at KAYAK is to run the whole analytics platform, so that at any moment we are running multiple versions of KAYAK. If you run KAYAK on one computer and the next one, side to side, they can look radically different. Some of our experiments are short-lived. We run them just for a day or half a day. Some of them will go on for more than three months. There's a lot we learn from that machine. It's a machine learning platform as well.

[38:15] And we absolutely are one of these companies that fights about what color blue should that blue be. And how many pixels should the lettering be between this line and that line. And part of it is we have a particular aesthetic which I have to admit, I don't think I've said this before, but our original plan was to be the anti-Expedia.

[38:35] So Expedia was the big guy in the space. So we said, "OK we are going to go in this crowded space, there's hundreds of venture backed companies, let's pick the biggest guy and lets do what they're not doing." And Expedia had this very - I'll try to be kind - lush look. And so we took this Craigslist approach.

[38:51] Or Tufty, Simplicity. And we have a certain design that lives within a few of us. But we test it like crazy. And we do evolve it. Every Thursday a new release of KAYAK goes out. On the iPhone, Android, and Blackberry, we release new versions of those software probably every three weeks. And interestingly, those are taking a different look than the website. We are actually taking a more beautiful look on mobile than we do on the website. Any other questions?

Larry: [39:24] Dharmesh.
Dharesh: [39:26] I'm really inspired by the seven day maniacal, go after someone that [indecipherable 0:39:29] . Any advice as the organization grows in terms with recruiting entrepreneurial talent, because that five employees is easier to do than a 50 versus 500, how do you get those entrepreneurial types and recruit them? What did you do? What are your tactics?
Paul:[39:43] Yeah. I mean the first thing is identifying them. And how badly do you want those people. So if you ask any KAYAK employee, "How often does Paul ask you who's the smartest person you ever knew? Who's the fastest person?" Whatever. They are annoyed. Because I ask them the same question. I find 20 ways to ask the same question. If people are with me for 20 years, I keep asking the same question. [40:03] I'm hoping they'll ask me one of these times but it they haven't yet. So part of it is a hunger just to find these people. And there's a woman I just hired. Her name is Iolanthe Chronus.

[40:14] I hired her as program manager for all of mobile for KAYAK. She's 23 years old. It's been an incredible responsibility we are putting on her shoulders. And when I first heard about Iolanthe or Lanthe, there was another young programmer that we had, and I asked her who's the sharpest person you've ever met.

[40:30] He said, "Lanthe." No. He actually didn't give me her name. He said, "There's a woman at MIT." I said well who is she? He goes, "I'm not going to tell you her name." I said, "Why won't you tell me her name?" And instantly like the clock already started ticking, and it took me actually a couple days to get her name. He said, "I don't want to tell you her name because I'm hoping that she might start her own company and I might go join her."

[40:55] And this guy Pete, I love him too. So I'm like, OK, now there's two reasons why I need Lanthe. I don't want to lose Pete.

[41:02] Anyway I finally conned him into getting me a meeting with her. And she had already been in the final stages of accepting a job in California. But, I got her to join KAYAK. And part of it was the aggression the whole team put on. Someone actually interviewed her about what it was like to interview at KAYAK. And she said it was breathtaking because she walked in and she felt like, "Wow, this team not only interviewed her but that team had a mission, which was to get her to join the team."

[41:29] She walked away feeling, "Holy shit." This team is highly competent and they are really, really aggressively going after her. So she turned down the West Coast and stayed with us. I think bringing on young leaders and leaders that have worked in different spaces and think differently, that have different ways of doing risks, is always healthy to reinvent themselves. I hope we are always going to be doing that.

Larry: [41:53] Great. Well, I think we are out of time.
Bill: [41:57] One more question?
Larry: [41:58] Time for one more question. Bill.
Bill: [42:00] Well, it's actually something we had discussed before about the [indecipherable 0:42:04] because I think it's such a groovy thing. But you have an insanely small team. And when you have an insanely small team and really insanely by revenue per employee, that can fuel - and most people don't even believe it's possible to do what you do.
Paul:[42:22] Yeah. And people don't believe that we answer every email. We had two million people on the website today. Try, go to KAYAK, hit the feedback button, send an email. You'll get a personal reply from me or one of the engineers. Like, the math doesn't work. How do you do that? I don't have any support people. And people will say why would you pay an engineer a buck fifty instead of paying someone in Tucson $8.00 an hour. [42:41] And the reason I answer every single email that comes in. I personally read every email. And myself and the engineers answer every email. Is that it's a bit of a tautology, if we take support seriously rather than deflecting you to an IVR or to our frequently asked questions that we take everyone personally.

[43:00] What's going to happen is the second or third time we get the same question we are going to say I am so sick of answering that question. I better stop what I am doing and go back and rewrite that UI so I never get that question again. And we are really, really serious about it. So I think that's been one of our secrets is that we answer every call.

Larry: [43:21] Terrific. Thank you for coming. [applause 0:43:24]

A lot to think about and digest.  I encourage you to read/listen to the whole thing if you have time.

Any particular points resonate with you?  Are you inspired to go buy a loud-ringing red phone for your startup? 


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Notes From SXSW 2010 And A Fabulous Startup Dinner

Posted by Dharmesh Shah on Thu, Mar 25, 2010

onstartups sxsw I am writing this on the plane trip back to Boston from SXSW in Austin, Texas.  This was my first time down to the conference that’s been referred to as “Spring Break for Geeks”.  I’ve been meaning to go for the last couple of years, but have always had some conflict.  This year, I was invited as a speaker to talk about my new book, “Inbound Marketing”, so I went.  


Super Awesome Startup Dinner

The highlight of my entire trip was not the conference itself, but a last-minute dinner I organized with some startup founders that also happened to be there.  Here were the folks in attendance:

1. Jason Fried, 37signals

2. Drew Houston, DropBox

3. Mike McDerment, FreshBooks

4. David Greiner , CampaignMonitor

5. Kevin Hale, Wufoo

6. David Heinemeier (DHH), 37signals

7. Adam Smith, Xobni

8. Dharmesh Shah, HubSpot (me)

This was a fantastic group of startup founders all of who have been doing some amazing things with their companies.  We spent 4+ hours at the table eating, drinking and debating some of the finer points (and not so finer points) of running a software startup.

So, what did we talk about?  A bunch of stuff including (but not limited to): hosting (managed services, colo and EC2), the importance/unimportance of a board of directors, user/customer analytics, referral programs, credit card info and the pain of PCI compliance, user incentives, employment agreements, Jason/DHH’s new book (“Rework”) and whether expensive Scotch was really any better than non-expensive Scotch. 

Sessions / Speakers

I attended as many sessions as I could, and live-tweeted many (apologies if you follow me (@dharmesh), and you’re not into that kind of thing).  In most cases, I attended the “featured speaker” session (vs. some of the smaller ones).  Exceptions were when I knew the speaker.  This was for a couple of reasons:  a) I figured it was a “safer” bet in terms of quality of the presentation and b) As a frequent speaker myself, I’m always looking to get better and watching the pros helps a lot.

On average, I’d say the sessions were very good — but not great.  A few of the sessions fell a little flat.  I’ll admit, my expectations were high because I’d figured that SXSW has the pick of the litter when it comes to who gets to speak there.  But, given the sheer volume of sessions at the conference, I can’t really blame them for all of them not hitting it out of the park.

And, Of Course, The Parties!

As an introvert, I find it hard to have a good time in large groups but I decided that if I really wanted to get the full effect of SXSW I had to go to the legendary parties.  So I did, for several nights.  Even at these, I find myself talking “shop” with smaller groups of folks which was fun.  And yes, the parties were big.  

Overall, I liked SXSW -- a lot (and will definitely be going back next year).  It was a great opportunity to meet people I've known online for years and chat with old friends. 

Look forward to SXSW 2011.  Will you be there?

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Startup Marketing: Tactical Tips From The Trenches

Posted by Dharmesh Shah on Tue, Apr 07, 2009

I’m speaking at the Inbound Marketing Summit later this month in San Francisco.  There are some really great speakers lined up (David Meerman Scott, Chris Brogan, Charlene Li, Paul Gillin and others).  If you’re looking to learn more about inbound marketing and how to get found in Google, social media and blogs, this should be a great event.  If you decide to attend, use the code HUB200 for a special $200 discount.  Drop me a note if you’re going to be there, would love to meet-up.inbound marketing magnet

My session’s going to be called “Startup Marketing:  Tips From The Trenches”.  As I get my thoughts together for this, I started making a list of all of the things I’d advise a new startup to do to get things kicked off with a limited budget.  As it turns out, there are a lot of tactical steps that individually don’t do much, but in aggregate start laying the foundation for much bigger things.  So, I thought I’d share some of these things with you.  This list is not intended to be a comprehensive “here are all the things you should do”, but more of a “if I were starting a company today, here’s what I would do in the first 10 days…”  It’s written in a short, punchy style.  I’ll likely revise it in the future as I add more things, but I wanted to get “Version 1.0” out there for you and see what you think.

Tactical Tips for Startup Marketing

1.  Pick a name that works.  Needs to be simple, memorable and unambiguous.  The “.com” domain should be available without playing tricks with the name (like dropping vowels or adding dashes).  Also, just because there’s no website on a domain doesn’t mean it’s “available”.  Available means something you can register immediately, or that has a price that you’re willing to pay attached to it.  Don’t wander down the rabbit hole of finding the perfect name if you have no indication that it’s for sale.  This will waste a bunch of your time.

2.  Put a simple website up.  Doesn’t have to be fancy.  The goal is to put enough content on the site to start the Google sandbox clock.  Don’t worry about the site not saying much (nobody’s going to be looking at it anyways).  Make sure to use a decent content management system (CMS) and not Dreamweaver or (shudder) FrontPage.  Just because you can hand-craft HTML doesn’t mean you should for your startup website.  The structure and features of a CMS are going to be important someday.  Trust me.

3.  Get some links into the new startup website.  If you have a personal website, link to it from there.  If you have friends/associates/family with websites, cash in some favor chips and get them to link to it.  The goal is to get the Google crawler to start indexing your site.  You only need one decent link to get things going.  To check whether your site is being indexed by Google, do a search like site:yoursite.com (not perfect, but good enough).

4.  Setup a twitter account.  Name of the account should match your company/domain name.  Link to your twitter account from your main site and to your main site from your twitter account.  (Note:  If you have a natural skepticism of the value of twitter, you are welcome to this skepticism.  But, go ahead and grab your twitter account anyways.  You can resume your skepticism after you do that).

5.  Add e-mail subscription.  Let people sign-up to get an email when you’re ready to show them the product.  A simple email signup form is sufficient. 

6.  Get a nice logo.  Run a quick contest on CrowdSpring or 99Designs and you’ll wind up with something decent enough.  Make sure you get the vector file (Illustrator or EPS file) as part of the final deliverable.  If you've got design skills yourself, or know somebody really good that can do it, even better.

7.  Setup a Facebook business page (known as a “fan” page) for your startup.  You’re not going to get many fans in the early days.  That’s OK.  Just get something out there.  Add a simple description of your startup, link back to your main website.  The usual stuff.

8.  Create a clean Facebook URL.  Facebook doesn’t allow simple/vanity URLs (unless you're big and established).  So, to make things easier on yourself (and your users), setup a sub-domain and redirect it to your Facebook page.  For example, here’s what I did:  facebook.hubspot.com (notice that when you visit this link, it takes you automatically to the ugly Facebook URL).  Setting up this sub-domain is free and usually pretty easy (it’s done through whoever your registrar is for your domain).

9.  Kick off a blog.  You can use one of the free hosting tools (like WordPress.com), but don’t use their domain name.  Put your blog on blog.yourcompany.com — or if you’re proficient and can install WP locally, make it yourcompany.com/blog.  Do NOT make it yourcompany.wordpress.com.  The reason is that you want to control all the SEO authority for your blog and channel it towards your main website.  And, chances are, WordPress.com doesn’t need your help on the SEO front.

10.  Write a blog article that describes how you got to this point.  What problem you’re hoping to solve.  Why you picked this problem.  It should feel a little uncomfortable revealing what you’re revealing.  If you have tendencies towards being in “Stealth Mode”, read “Stealth Mode, Schmealth Mode”.  With inbound marketing, you’re going to need to get used to revealing things that might be uncomfortable.  Get over it.

11.  Setup Google Alerts for at least the following:  Your company name, link:yourdomain.com and “industry term”.  Try to find a good balance for your industry term so you don’t get flooded with alerts that you simply will start ignoring.  This may take some iteration and refining.  (Oh, and use the “As It Happens” option in Google Alerts so you’re not waiting around for new alerts to show up).

12.  Find three closest competitors.  Pretend like someone is paying you $10,000 for locating each competitor.  Really try hard.  Barely managed to find three?  Take a lot of effort?  Great.  Now find 3 more.  Of these 6, pick the two that you think are the most marketing savvy.  They should have a Website Grade > 90, a blog with some readers, a website that you can envision people using, a twitter account that they actually post to, etc.  These are the competitors that you’re going to start “tracking”.  Add their names and websites to your Google Alerts.

13.  Update your LinkedIn profile (you do have a LinkedIn profile, right)?  Mention your new startup, and add a link to your startup website to one of the three slots for this purpose.  Make sure you specify the anchor text.  Don’t go with the default of “My Website”.  The anchor text should be your startup name and maybe a couple of words of what it does.  You can look at my profile to get a sense: http://www.linkedin.com/in/dharmesh (note: I don't accept LinkedIn invites from people I don't know.  If you're looking to get to know me, follow me on twitter @dharmesh).

14.  Get business cards printed.  Don’t go overboard, but don’t use a “free” option (because it’s not really free, it’s just subsidized).  I don’t believe much in business cards, but you need them to simply avoid the 30 seconds of discussion as to why you don’t have a card when people ask you for one at conferences and meetings and such.  They’re worth the price to avoid that uncomfortableness.

15.  Use the Twitter Grader search feature to find high-impact twitter users in your industry.  Start following them.  You want to start forging relationships.  Start building your twitter network.  Resist the temptation to mass-follow a bunch of random people or play other games just to get your follower count up.  That’s not going to matter.  Get some high quality relationships going.  If you’re really serious, start using an app like TweetDeck so you can more easily monitor the needed conversations.

16.  Create a StumbleUpon account.  Specify your areas of interest (part of registration).  Spend 10 minutes a day (no more!) stumbling and voting things up/down.  Start befriending those that are submitting sites that are relevant and interesting for your startup.  Don’t submit your own stuff — just start contributing.

17.  Subscribe to the LinkedIn Answers category that best fits your area of interest.  Answer one question a day that you feel like you’ve got some expertise in.  Don’t self-promote.  You’re seeking to build credibility and trust — not sell anything.

18.  Find the bloggers that are writing about your topic area.  Subscribe to their feed, and read their stuff regularly.  Leave valuable comments and participate in the conversation.  (Do not spam them or write “fluff” comments.  If you don’t have something useful to add to the conversation, don’t comment).

19.  Start building some contacts on Facebook.  Organize your users into groups (one for your business and another for friends/family).  This will come in handy later.  Don’t spam people and ask them to visit your website.  At this point, your website is still probably not worth visiting. 

20.  Grade your website on Website Grader.  Fix the basic things.  You should be able to get a 50+ just by doing the simple things it suggests.  [Disclaimer:  I wrote Website Grader].

21.  Get Some Analytics:  Install some web analytics software and start watching your traffic.  Where is it coming from?  How is it growing?  What keywords are people using to find you?  What content are they looking at?  It's ok to get a bit maniacal and obssessed about it at first.  Many of us do that (and some of us never get over it).  

If you liked this article, you'll probably love the Inbound Marketing book that I co-authored.  It includes similar practical advice for getting found in Google, social media and blogs.

If you’re interested in startups, you can follow me on twitter @dharmesh.

What have I missed?  What ideas do you have on tactical things for startup marketing?  What do you do?

Update: Oh, and by the way, if you liked this article, you will love my recently released book, Inbound Marketing: Getting Found Using Google, Social Media and Blogs. The book is a practical guide to marketing on the web and has been an Amazon Top 100 book since the day of it's release.     

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Why You Should Attend Business of Software 2008 In Boston

Posted by Dharmesh Shah on Sun, Jul 20, 2008


If you read this blog, there's a pretty good chance you're somehow involved in the business of software.  By that, I mean you are trying to (gasp!) make money in the software business.  If that's the case, I can't think of any better place to be this September than the Business of Software Conference being held in Boston on September 3-4. 

Some Reasons Why You Should Be At Business Of Software 2008

1.  Joel Spolsky will be there.  Well, he's not just going to be there, he's one of the organizers along with Neil Davidson, the CEO of Red Gate Software. 

2.  Seth Godin will be there.  Seth is a brilliant marketer.  Doesn't get more brilliant.  And, if you're in the business of software, you really, really need to understand marketing.  If you're not reading Seth's blog, you should be.

3.  Jessica Livingston will be there.  Jessica is the author of "Founders At Work", which was an exceptionally fun and insightful read.  Parts of it gave me goose-bumps (yes, I'm that strange).  If you're both a software person and a startup person, you need to read her book. 

4.  Jason Fried of 37signals fame will be there.  Jason's on my list of "most pragmatic entrepreneurs ever".  He was kind enough to let me interview him for my graduate paper at MIT back when I was a student.  All around swell guy.  Oh, and you haven't already, you should absolutely read "Getting Real".  Now it's even free.

5.  Richard Stallman will be there.  Yes, that Richard Stallman.  This should be one interesting discussion.

6.  Eric Sink will be there.  Eric is (in my mind), the software guy's software guy.  Immensely articulate and thoughtful.  Eric's aptly named "Eric Sink On The Business Of Software" is one of the books on my startup reading list.

7.  Mike Milinkovich will be there.  He's the executive director of the Eclipse foundation. 

8.  Steve Johnson of Pragmatic Marketing will be there.  Steve was a big hit at last year's conference.  If you want to understand why, just watch the video from last year.

9.  Tom Jennings and Paul Kenny will be there.  Tom's a venture capitalist and Paul's all about sales.  I'm guessing a few of you are looking for capital or looking for customers.

10.  People like you will be there.  People that are in the business of software.

Note, the above is not a complete list of speakers. 

Oh, and by the way, I've been selected so speak at this year's conference as well -- but please don't hold that against them.

All in all, Business of Software 2008 promises to be a great event.  Something I'd travel to come see, if I didn't live in Boston -- which I do. 

By the way, if you're going to go, you can save $300 by registering before July 22nd. 

Hope to see you there.

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WebInno18 Boston: Data Analysis of Startup Meetup Registrants

Posted by Kirsten Waerstad on Sun, Jul 13, 2008


The popular Boston Web Innovators Group held in Cambridge, MA is coming up this Tuesday, July 15th 2008.  Like the events before it, WebInno18 promises to be another great event.  I plan to attend and might even experiment with Twitter Blogging it on my @OnStartups twitter profile.  If you're going to be there, send me a tweet and let me know.  Will look out for you.

For one of the prior WebInno meetups, I did a quick analysis of those attending (using the RSS data of registrants as the input) and had come up with some Web Innovator Cambridge statistics.  I had the PHP script to do the quick analysis developed by one of the OnStartups readers.

Thought I'd do another one this time around and identify how the make-up of the group has (or has not) changed).

Here's the top keywords that show up in the profiles of the people signed up so far.  There are about 870 registrants for Web Inno 18 so far (compared to 792 for Web Inno 17).  The event definitely seems to be growing.

Token Web Inno 18 Web Inno 17
Manager 54 38
CEO 53 43
President 41 35
Founder 41 39
Senior 40 18
LLC 29 10
Marketing 25 17
Director 24 37
VP 24 20
Engineer/Engineering 23 15
Co-Founder 22 14
Director 22 18
Development/Developer 20 11
CTO 19 13
Consultant 17 13
Principal 15 20
Ventures 12 18
Architect 7 9
Harvard 7 9
MIT 7 5
Designer 7 7

Hope to see you at WebInno 18.  If you have any doubts that the Boston area has a vibrant Internet startup community, this should dispel those doubts. Hat tip to David Beisel who has done a fantastic job building this up.  I can remember the early, early days of WebInno when all of us would fit around a bar in Kendall Square.  We've come a long way.  Thanks David!

Hope to see you on Tuesday at the Royal Sonesta hotel.  I might try to put together an informal dinner for a few folks before (or after) the event as I've done every time since I started going to these things.  Send me a tweet at @onstartups if you're interested.  I usually limit it to about 6 people and keep it to just tech-entrepreneur types that I haven't had the chance to chat with in a while.

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Speaking At The Mass. Tech Leadership Council on Web 2.0

Posted by admin_onstartups.com admin_onstartups.com on Sun, Sep 17, 2006

I am scheduled to speak at a Mass. Technology Leadership Council event this week.  The topic of the event is “Web 2.0 – How Will It Impact Your Business?”.

If you plan on attending the event, please leave a comment and let me know.  Feel free to grab me after the event and say hello.  (I’m finding more and more people in the Boston/Cambridge area that are OnStartups readers).

Registration fee is $80

Tech Trends Forum: Web 2.0 - How Will It Impact Your Business?
8:00 - 11:00 a.m.

Foley Hoag Emerging Enterprise Center
Bay Colony Corporate Center
1000 Winter St, Ste 4000
Waltham, MA

Web 2.0 encompasses a whole collection of tools, architectures, interactive styles and cultural characteristics. Are you wondering:

- What is different about Web 2.0?
- How will Web 2.0 impact my business?
- What tools and technologies enable the new Web 2.0 capabilities?
- Are you using or enabling mashups?
- What old problems can be addressed differently and more effectively in the Web 2.0 world?
- What new business opportunities does Web 2.0 offer?

Details of the event can be found here:


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