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]
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)
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)
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)
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)
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)
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)
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)
"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?