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The 100 Day Company

It took me six years to realize that during my first company, I saw only the first 50 days of the business. That is, I only saw half of what the business could have become, maturing to a 100 day organization.

Across a scale, startups begin at day 0. Established businesses, often those that are public (and those that aren’t reinventing themselves), are at day 100.

Day 0

A founder begins with an idea or a problem that needs to be solved. Sketches and scribbles fill notebooks. At this time, the idea isn’t fully realized or tested. It’s just a thought with the potential to become a passion later on.

Day 3

More research goes into the idea. Discussions with close friends begin, checking if the idea has legs. The single founder who started the idea likely finds a close a friend to go deeper into the problem and begins to evaluate the market potential.

Day 10

A team forms to focus on what now becomes a base or minimum viable product. Early stages of sales begin, identifying paying customers in a target vertical.

For example, this is the stage where Diapers.com had a website but founders were running to Costco to purchase diapers in bulk while processing orders manually, with the help of their dads.

Day 25

Employees join the original team. Either sales are growing very well or not growing aggressively as planned. A brand around the idea cements. The organization is fairly flat, with the founder still performing generalist tasks. Early attempts at paid marketing begin and a basic understanding of core unit economics emerges.

Ridejoy, a car-sharing service, never found found exit velocity for a venture-backed business. Sales stalled and the service shut down. Yet, Stripe, a payments API, not only saw sales grow early but began to experience sales exponentially increase across each stage below.

Day 40

A critical inflection point occurs. The founder realizes, at this day, that building an idea and building a business are two different skills. “Am I [insert specific skill, i.e. sales, product, etc.] person or am I CEO and a manager?” the founder asks. The team is much larger and specific functions are created for employees but growth may slow - where too many inputs occur and therefore, the challenge shifts to managing. The core product expands in hopes of generating more sales.

The creation story of Twitter is relevant to highlight in this stage, where the original product mind behind the service, Jack Dorsey, stepped down and a more business oriented leader came in, Dick Costolo. Braintree, a payments infrastructure company, experienced a similar transition where founder, Bryan Johnson, stepped back and recruited an experienced manager, Bill Ready, to lead the business to an $800m acquisition by EBay.

Day 50

Today is the most important day in the company’s life-stage, where the founder must choose a hard right or a hard left for business direction. Should the founder turn right, the company continues to sputter along with associated headaches of re-accelerating growth. However, should the founder turn left, hard realizations come to light: “I’m not cut out to serve as CEO. Should I step down and find a replacement?” The founder accepts reality - the world of black and white - and decides the organization is ready for evolutionary change.

Day 60

With costs under control, the company is no longer flat as resources have been realigned. Clear hierarchy and structure guide the work day with defined processes. Operating groups and mid-level divisional managers are put in place. A new acting CEO focuses on the original product and begins to optimize sales. Growth begins, and more importantly, predictable and recurring revenue emerges.

Day 75

Words like “efficiency” and “accountability” become part of the vernacular in the office(s). Management continues to zero in on key performance indicators (KPIs) and cost drivers to the business. The entire company is a significant multiple greater in headcount from the early days. Instead of revenue and growth problems, the business suffers from communication and culture hurdles. Investments in people management and retention begin.

Day 90

Sales are at an all-time high. Profits are near and more importantly, strength of will set forth by the founder is now displaced by strength of financials. The company continues to build in unison, extracting value per employee as never before seen. Depending on expectations from the private market, that is, if the company took venture capital, now is a good time to consider a liquidation event (i.e. M&A or IPO).

Disruptors, like HotelTonight, a last-minute hotel OTA (online travel agency) or, Airbnb, a rental home marketplace, not only changed an entire and entrenched industry, but continue to grow faster than their peers.

Day 100

Today’s company is no longer an idea but a tangible business, with products, profits and people. The public market welcomes a successful startup transformed into a burgeoning organization.

Thanks to Justin Soffer for reading early drafts of this post with contributions from Mike Dudas.

- Part of the Founder 101 series. Read more.

Entrepreneurs and Employees

Many first time founders began their path towards entrepreneurship while working at a larger company. In fact, the experience of working for a company is typically the catalyst for starting their new business. Perhaps they were frustrated with how slow things moved within the corporate environment or they found the day-to-day becoming increasingly boring.

The common “big company” problems and inefficiencies eventually lead to a “big idea” and that’s when a person transforms from employee to founder. Night and weekend projects become more important in mental energy than checking in and clocking out Monday through Friday.

So, the founder leaves the company and ships the idea. She runs with it and builds. Along the way, the first time founder experiences the infamous “troph of sorrow" and continues to focus. Releases of improvement begin and then wiggles of false hope appear. Signs of the promised land come into realization…and then, a larger company comes in to swoop up the team and potentially the product (read: an “acqui-hire”), ideally having an acquisition of liquidity.

image

image source: Andrew Chen (term coined by Paul Graham)

And now, as the story goes, the founder is back at a big company.

Granted, this is one outcome in the journey from employee to founder (and one that’s become increasingly commonplace lately) and it may be the best option at the time. Others include building a startup, having a larger company purchase the business and staying on to grow it as a separate business line - as another example.

But, can entrepreneurs really sustain and reside in a big company atmosphere? It’s a bit of an oxymoron and a question that comes up often with the current M&A trend of “acqui-hiring” in New York and Silicon Valley.

Generally speaking, entrepreneurs typically have a hard time “residing” within a larger company.* In fact, it’s become almost common to see successful founders leave the bigger companies that once acquired them (the about.me story from earlier in the year is a perfect example). 

Simply, the definition of reside (to be situated or be in a permanent place) doesn’t correlate to the first experience (that initial genesis in the story above) when the original employee transformed into a founder. This same person who witnessed the inefficiencies of larger companies and made a decision to leave a stable work life is most likely not the same person who could re-enter such a world and be content as well as thrive.

At a startup, you’re tasked with growth and building something people want. At a big company, you’re tasked with a specific role, to carry out an existing business and support something people already use.

Stop and read that last paragraph. The statements are two, very different ends of the spectrum. On one end, your mission is tackling a wide unknown. It’s an unknown that is the riskiest of prospects, with no certainty of reward and more likely than not, you’ll end up failing. On the other end, lies a path that may have been set by a previous employee before you, with a structure that was more mature and protected from failure than the early stage business you built. 

*Note: There are exceptions to this. A handful of big (even public) companies are filled with amazing entrepreneurs that I can count in private discussions with friends. Bigger companies are becoming smarter about acquiring growth-oriented talent rather than role-oriented, particularly learning from the passion each founder showcases about her business. The logic is that a growth-oriented employee can become a “jack of all trades” through all functions of the organization.

- Part of the Founder 101 series. Read more.

In the grind of a startup, you’ll always need someone yesterday and it’s easy to hire someone that is not quite smart enough or a good enough culture fit because you really need a specific job done. Especially in the early days, never compromise. A single bad hire left unfixed for long can kill a company. It’s better to lose a deal or be late on a product or whatever than to hire someone mediocre. Great people attract other great people; as soon as you get a mediocre person in the building, this entire phenomenon can unwind.

How to hire - Sam Altman

Emerging Patterns in Online Travel: Startup Capital

If you speak to anyone in the travel and hospitality vertical, especially those from the early dot-com days, there are whispers of a renaissance in the marketplace. Building a travel company is cool again, even with the known hardships: acquiring customers is very expensive, incumbents have firm footholds in legacy categories, high switching costs, etc.

Earlier this year, we’ve seen unbelievable advances in how younger companies are growing and attracting capital in the online travel space - Room 77’s Series C funding via the corporate venture arms of Expedia and Concur with seasoned travel executives joining the team (Drew Patterson, ex-Kayak and ex-Jetsetter), Priceline.com’s announcement of their venture business or a dedicated accelerator run out of Indiana. The appetite to create and fund early stage travel companies is even visible on AngelList, with the category attracting over 46,000 followers - one of the largest on the entire network.

If you step back, the interest in online travel makes sense - at least, from a practical perspective. As a consumer, for example, we travel from home to office or office to vacation and then vacation back to home. The cycle persists, but we get smarter about how we do it by using OTAs (online travel agents), metasearch engines, planning apps, social media or deal sites. Basically, the options for you to purchase, consume and experience travel in the last fifteen years is unprecedented. Not only are options nearly limitless for consumers, for solutions builders (the entrepreneurs in the room), your addressable market is stunningly fantastic at triple digit billions (US alone).

Over the last six months, I’ve begun to notice emerging patterns in online travel and one that’s ideal for founders looking to attract capital.

For those of you reading with an entrepreneurial edge, you understand that one of most difficult (at times, soul-crushing) events in your journey of building a business is looking to attract startup capital. The process for doing so can become all encompassing, and more worrisome, detracting from growing the company. As a first-time entrepreneur, I remember spending two months of 2008 on Sand Hill Road pitching investors with just A3 paper full of sketches, projections and nothing more than a core idea. Needless to say, no money came from that trip and I lost time I wished I could have recouped. Looking back, I realized I did not have a good process to identify the right investors by objective criteria (their location, their investment focus or their investment sizes) or subjective standards (previous lives as founders, similar backgrounds to myself or what they tweet about). It’s why anyone looking to build (or building) an online business in the travel or hospitality market should bookmark the below, as I’ll be updating the following regularly.

Earlier this year, I did research collecting four categories of investors who focus almost exclusively in this market or at least, have a previous interest in it (either by founding a company, advising or investing in earlier travel businesses). The list is organized by name of investor (angel, fund or accelerator), associated notes (i.e. previous role, what company the individual founded or investments), location and how to get in touch.

View as a webpage: http://bit.ly/XVLDdT

Follow a Twitter list of investors (so long as I found their @name): http://bit.ly/XwW5pg

Am I missing anyone? Please write to me or shoot me a tweet.

If you dig a bit deeper into this list, some unique patterns begin to emerge as you look to raise capital.

  • Deep Industry Angel Network: For instance, Sam Shank, Brad Gerstner, Gregg Brockway, Hugh Crean and Erik Blachford are notable angels with a track record of operating big, meaningful travel businesses in a prior (or current) life.
  • Limited Institutional Funds, But Giants of General Catalyst and Thayer Ventures: While the online travel market is very large, only one dedicated fund focuses exclusively on the vertical (Thayer Ventures) compared to one partner, Joel Cutler, at General Catalyst picking up notable deals.
  • More Investing from the Balance Sheet: Corporate development and M&A groups at companies like Travel Channel are funneling investment into younger companies (i.e. Oyster.com) for added value, while Priceline.com and Concur look to operate dedicated investment funds.
  • Few, Travel Category Launchpads: Incubators and accelerators look to be few and far between, with one in Colombia (Torrenga Labs) and another in the middle of the United States (RunUpLabs).

My intent with this post is to help you, the entrepreneur, paint a better and bigger picture of what the travel venture space looks like throughout the United States and beyond. Look to identify the types and stages of companies each investor bets on, research their backgrounds and ultimately, see if someone in your network knows one another for a solid introduction or rely on calculated hustle.

Thanks to Dan KahanGeoff LewisSam ShankDiego Saez-GilDan Gellert and Jason Shames for their help contributing, suggesting or adding to this initial list.

- Part of the Founder 101 series. Read more.

Please, Don’t Be a Strategist

"Get as close to revenue as you can," I mentioned to a friend over dinner recently. I was offering input on types of opportunities that will exist once she graduates from business school in a few months.

Like many of my friends who have an MBA, she wanted to transition into a role where she could actively shape the trajectory of a company. And like my friends with an MBA, she started to get associated with words like strategy, business development and financial management in discussions with potential employers. For context, she is looking for jobs at early stage startups and brand name public organizations in the consumer web.

After seven years operating in this marathon we call the Internet, I’ll tell you that strategy is the last thing you want to be doing once you get your MBA at the onset of a web career. Why? Strategy isn’t a role but a function of what you work on, especially early on in a company’s lifespan. Strategy doesn’t deliver revenue on a daily basis, shipping does.

Some of the best strategists I know are product managers, performance marketers, designers, sales people, etc. At any size company, from seed to public, individuals who capture the most respect and cultivate leadership are those who are builders…like the specific roles above.

I told her that evening, “Get ready to role up your sleeves, analyze and ship. Repeat. Apply strategy in your role…you’re smart enough (with or without this MBA) to execute.” She smiled, took a bite of her sandwich and took the hint.

- Part of the Founder 101 series. Read more.