Over the past couple years I have been fortunate enough to get the chance to work with some incredible entrepreneurs. These interactions, along with my own entrepreneurial experiences, have given me a lot of material on which to reflect when it comes to what makes for a great entrepreneur.
Showing 11 posts tagged founder101
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 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.
One of the most amazing posts I’ve read around employee motivation and engagement. It’s targeted toward software engineers but can apply toward any individual in a company.
In addition to being bored, remember, most staff leave their managers and not the business.
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
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.
"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.
"Whatever you do, you can’t have multiple CEOs at a startup."
I met with a college friend yesterday for dinner on my visit to Palo Alto, CA and mentioned this to him. He was previously in investment banking, went to Stanford Business School and also got a degree in Electrical Engineering. He’s now working on his first company, which sounds very promising, and has all the characteristics of becoming a great CEO - strong vision, passion and ability to critically analyze the world in front of him. (Side note: Stanford has a great class on this thought process, aptly named “Critical Analytical Thinking”).
Today, he’s having a conversation with his three other co-founders about formalizing roles and responsibilities. I asked him who’s the CEO. He wasn’t sure but he was leaning toward nominating himself.
This response, one of uncertainty and questioning the reactions his co-founders may have of his decisions, always sends red flags my way. I learned it from experience at Scoop St. Justin and I were co-CEOs because we didn’t know any better and we thought the title was important to share when it was two of us in an Upper East Side apartment. It was the right idea in our head, but in practice, management between two decision makers for a fast-growing business in a crowded market slowed us down as the team grew - and it wasn’t necessary.
The fact of the matter is, and something first-time entrepreneurs must realize, a title of CEO doesn’t mean anything (you can become the CJO, the Chief Janitorial Officer to take out the trash) but only one of you can hold the title.
Your team needs to follow the lead from someone.
Your co-founders need to structure and overall business or operational guidance from one.
Most importantly, you need singular choices that factor into collaborative decision making. And you need to be swift. And you need to be a linebacker, ready to block and tackle for the entire group to get things done.
Startups, as I was telling my friend over dinner, don’t generally die because of competition. They generally fail because there’s so much poor mismanagement internally that things break between your team (who are building the product or selling) and you’re left with a domain name.
So please, founders, make the call for CEO early on and stick with your decision and get back to work building!