Sinara Isoyan

Sam Altman concludes the lectures by talking about later stage advice, which is relevant for a startup only after months 12 through 24 of its launch, i.e. after it product-market fit. The first topic he talked about is management, and the establishment of a structure within the company as the startup grows. It’s important for every employee in the company to have one manager and every manager should know who their direct reports are. Also, founders should avoid the idea of being “cool” by completely ignoring structure. Before product-market fit, a founder’s only job was to create a great product, however, as the company grows, the founder’s main job shifts from building a great product to building a great company and that’s where the founder’s main job remains until the end. It’s definitely the biggest shift a founder faces, which is why he has to do it right and not ignore structure. There are certain cases Altman mentions that resulted in failure after founders became managers. They were reluctant to hire senior people, who are undoubtedly valuable assets in growing companies. They had the hero complex and worked 18 hours a day, and weren’t comfortable with delegation. Or if they delegated, they did so in a way as to make employees feel useless, bad, and untrustworthy, which is a major mistake. Another tip for founders to do is to establish early the HOW and the WHY we do things because it will reinforce cultural values early on within the organization. Furthermore, HR can be super helpful in a growing company, because they will do performance feedback and help improve the performance of employees; they will offer compensation bands tied to performance; there will hopefully be a fair distribution of equity, among other benefits. Also, make sure that your employees come from diverse backgrounds in order to have diverse perspectives in your company, but make sure that their vision is not diverse. Make sure that they know the three goals of your company and work towards accomplishing them. Another tip for founders is to never fall for the acquisition conversation unless you are willing to sell your company for little money. These conversations may be demoralizing and disappointing for the founders. Founders should never mismanage their psychology and quit way early because this will lead to the death of the startup.

The 2-minute pitch includes answering all of the questions mentioned above, plus four other factors. Introduce your unique insight, i.e. something that will wow the investors, and then talk about how you are going to monetize your product. If your team has previously founded or done something super successful, mention that. And finally, figure out whether this pitch involves fundraising or not. The best way to know when to fundraise is when you know you are powerful and investors are weak, i.e. when they are the ones who ask to invest in you. Avoid putting investors in a position of power, don’t make it seem as though you can’t go on without their money.

Another core issue for founders to bear in mind is a fair equity allocation. An unfair distribution of stock may result in founders overinflating their work or not being honest with each other about their expectations for the startup’s future. Also, you need to focus on the future rather than the past. Thus, everything that happened before the formation of the company, e.g. coming up with the idea and creating the software, shouldn’t matter once the company is formed. It will be a lot better for the team if the entire team has a fair allocation of stock because everybody is responsible for execution. Also, when raising money, some investors may ask to be included on the board. Be very careful and try to say no if possible, but if you do say yes, make sure it’s a person that will add value to your company.

Hosain Rahman, the CEO of Jawbone, delivers a talk unlike any other that we have watched so far because he is the first one to focus on hardware products and how to design them. The beauty of the product and its engineering, i.e. functionality, is what matters when it comes to designing the perfect piece of hardware, and these two factors contribute towards a better, simplified life. Despite the fact that almost everything in our lives is computerized, everything is smart that has an application built to it, the world is still a chaos. So what Rahman offers is to design and provide the world with organizing principles, because the world is in desperate need for organization. First of all, you need to consider the question of the world’s future and create your product accordingly. The complete platform of a product will require the hardware, the software along with services, and data. The process of creating and designing hardware consists of six stages, including exploration, early validation, concept, planning, development and continued innovation. Exploration is all about your wildest and innovative ideas, it’s the stage of raw creativity where nothing is concrete yet. Early validation is fundamentally led by research and development; it’s like outlining a story and asking yourself why you’re doing it, why your product exists and what problems does it help solve. Concept is all about the excitement of what’s about to happen, it’s the beginning of your journey. The planning stage is crucial because you can’t turn back now; you have to consider the prioritized features of your product, the functionality and whether it meets the minimum viability. Moving on to the development stage means that you launch your product in the best possible design, and you learn and see what users think. And finally, continued innovation gets you from imagination to execution on specific challenges. You shouldn’t focus on merely creating a hardware product but focus on creating a memorable experience for your consumers.

Emmett Shear, the CEO of Twitch, shares his insight of how to run user interviews in order to expand your market and sell your product. Talking to a whole lot of people and using the feedback they provide you will be the core of the entire decision making you do for a few years. Thus, user interviews are crucial for companies, and they should be treated accordingly. Who you talk to is just as important as what questions you ask and the data you take away from the interviews; a common mistake interviewers do is talk to people who are available so it’s easy to talk to them, when in reality, they should interview people who they need feedback from even if they’re harder to access. There isn’t a particular recipe for finding out who to talk to, you simply have to use your judgment and figure out who you’re building your product or feature for. Another important tip is to not address the issues from the customer feedback immediately, because if the users are still using your product despite facing those issues, then maybe those issues aren’t the biggest problems you have to deal with right away. Furthermore, it will be extremely beneficial if you interview people who aren’t users of your or your competitors’ product because what they have to say will help you figure out what is blocking you from expanding to other markets. And when you solve the customer’s issues, e.g. with a new feature they requested for, let them know. Get back to them and tell them that their problem is fixed because customer support is important and it will show them how much you care about making their experience using your product better.

Ben Horowitz delivered a lecture focused on managing a company from different points of view. He noted the significance behind considering other people’s perceptions when you, as a manager, have to make a really critical decision because a manager’s activity influences company culture. So when it comes to really difficult decisions, make sure that you’re handling the situation as best as you can. For example, when the question of whether you should demote or fire an employee comes up, there are going to be various perceptions. You, as the manager, wouldn’t want to hire someone who did their best even though it wasn’t good enough, so demoting them would be safer as there will be no cultural backlash. The said employee will probably feel embarrassed if he got demoted, but it’s better than getting fired. Everybody else in the team will wonder whether the demoted employee will get to keep the same equity package or not. If his compensation is taken away as a result of demotion, then that would definitely impact the employee’s productivity. There is also the fact that if an employee is demoted, everybody else on the team may look at him differently, i.e. respect may decrease which will prove to be super unhealthy for the dynamic of the team. Also, when a really great employee asks for a raise, do not be super willing to give it to them because then other employees would feel that you’re unfair. Instead, you should conduct a formal performance evaluation process where you measure the performance of all employees and offer raises to those who truly deserve it. Be fair with your employees; do not handcuff them to your company against their will, but reward the ones who want to stay.

After you have all of the prerequisites for starting a startup, you now have to concentrate on your operations. Building a company seems amazing and conceptually clean on paper, and it is amazing, however, reality is different. In truth, despite its amazingness, it is going to be incredibly messy at the beginning because you are going to face lots of problems. That’s not how it works. You and your team will have to hold it together with duct tapes and it is going to take a lot of effort not to let it get out of hand. However, eventually, you will be able to manufacture a performance machine that will hopefully run smoothly and look super polished. In addition, it is important for the manager to be able to distinguish between problems that need to be dealt with right away and problems that just need time to resolve themselves. Some problems disappear with time, but if you face a major problem and don’t address it right away, this may eventually lead to your startup’s death. Another tip is to simplify everything. Simplify your initiatives, your products, your marketing; make everything as concise as possible, because simplicity will decrease any misunderstandings and it will actually be extremely beneficial for your startup.  

Reid Hoffman, who is a venture capitalist and former LinkedIn co-founder, focuses his talk around the qualities that a founder must possess in order to be considered great. Initially, he talks about the perception of a great founder, which is that we perceive them as superheroes that are capable of doing absolutely anything, a superhuman so to speak. Whereas, in reality, a great founder is someone who is very hardworking, and as a result struggles from myriad headaches and is constantly juggling between insanity and genius. There are numerous aspects Hoffman mentions regarding a great founder, and the first thing is actually a great founder should have great co-founders. Of course, there can be startups with only one founder, but when there are two to three founders, they can actually compensate for each other’s weaknesses which will prove incredibly beneficial for the company. Furthermore, where the startup is located plays a major role towards a successful outcome, because you want the local networks to fully support what you’re doing which is why you won’t base a fashion company in Silicon Valley. Hoffman mentions a metaphor which ideally describes entrepreneurship, which was that when jumping off a cliff, a great founder must assemble an airplane on the way down. This metaphor portrays that entrepreneurship is a difficult task, and there is a quasi-mortal exit because you’re actually trying to win in all the ways possible because otherwise you would crash and die. There is no particular skill set that a great founder must possess, but they should be a great communicator, take input from all sources and create networks around them. A great founder must be able to do that while crossings uneven ground through a fog! :)

Right now, every industry is going through a technology orientated disruption, which means that they are going to need technology provided by startups. Thus, it is important for the startups to find out these technological disruptions, and figure out the gap between how things were done before and how they can be done. After you figure this out, you need to deliberately start small and do things that incumbents are not doing because either they can’t make sense of the economics of it or they simply won’t do it. And finally, find those almost crazy customers who are super into the future but haven’t lost their minds just yet, because they can be amazing early adapters of your startup.

When recruiting, be very transparent. The example of Apple is they gave out the gory details when hiring; they said, “you won’t see your family in three years, but when you’re done your kids’ kids will know what you built.” Also, referencing people is really important, and these references are also a major source of new recruits.

Finally, a crucial aspect to note is that building a company culture has a tendency to slow down progress for the said company. Building a culture is an investment; it’s all about building a company that will endure and that the founders won’t outlive. And if you want to win, you have to know your values.

A successful example they mentioned is the case of Airbnb, where all of the founders are great, meaning the team is great. A lesson to learn from them in order to have an amazing success story is to find somebody who is as good as you, preferably even better. Phenomenal cofounders equal success.

Walker Williams, the founder of Teespring, said that as a startup you should do things that don’t scale for as long as you possibly can, things that are unsustainable and that won’t take you to the millionth user. An advice he gives is to never offer your product for free because it is an unsustainable strategy and users will not value your product as much. Williams talks about turning users into champions, i.e. users who love your product so much that they constantly talk about and advocate your product to potential users. And to create champions, you need to talk to them! Customer support, customer feedback, customer service, the importance of these cannot be stressed enough. Startup founders need to proactively reach out to users, both current and churned customers, and listen to them. Social media is also very helpful to find out what users truly feel about your product. Finally, startup founders need to only worry about the next order of magnitude. Don’t go too far into the future, deal with the current state of your startup and keep on growing.

Kevin Hale’s lecture on building products that users love was incredibly informative and quite unlike all of the other lectures we saw before. He emphasized the utter importance of building a personality for the product and the site, of taking into account the emotional state of consumers when building products, and of the discipline of market leaders. We, as startup founders, should be absolutely fanatical about creating concrete relationships with the users of our product because, at the end of the day, their actions determine the success of our startup. John Gottman, who’s a marriage researcher, is able to tell whether a couple will break up or stay together after watching a short video of the said couple in a fight. Hale thought this was magnificent because Gottman is able to comprehend the way relationships work. And this can be applied to the startup founders and the consumers. This marriage analogy tells us two things; treat the new users as though you’re in the dating stage – so you have to impress them because first impressions are memorable and this is what they’re going to tell to other people through word-of-mouth, whereas the old users are the ones you’re married to. You have to enchant and amaze users, through product functionality and a next-level enchanting quality, because that is how people will love your product. Furthermore, customer support is one of the most crucial aspects of a startup because you need to always be in close contact with your users in order to know what they like and dislike and to enhance your product according to their feedback. Thus, you need to give the best possible customer support and you need to create better software. Finally, Hale mentions three ways to achieve market dominance and these are: best price, best product and best overall solution. Once you’ve got the first two down, you need to work on the best overall solution, which means that you have to be customer intimate. This aspect doesn’t cost the startup anything, but it does require a lot of humility and dedication.

The lecture led by Alex Schultz, who’s in charge of growth marketing at the Facebook team, focuses on market growth, mainly internet marketing. As Sam Altman had mentioned in the first lecture, a great product is essential for a successful business that will grow, and so if you don’t have a great product, don’t bother with the execution. And if you do have all the four essential areas covered, and you’ve already attracted some customers, the retention of customers is the most fundamental aspect behind growth. Schultz also mentions that startups shouldn’t have growth teams because the entire company should be the growth team with the CEO being the head of growth. He brings this example of the importance for a company to have a north star, a goal for growth, and he says that only one person should lead towards that north star. If there is more than one person responsible for having a goal for growth, the entire situation will be uncontrollable. In addition, registration of customers on your website using your product doesn’t really matter unless those customers become long-term active users; keywords including long-term and active. There is also this “magic moment” Schultz talks about, which is what matters most and what will increase the company’s retention. For Facebook, Twitter and any other social media, the magic moment is when you log in and see your friends’ pictures and posts. The lecture ends with a quite marvelous quote by General Patton, “a good plan, violently executed today, is better than a perfect plan tomorrow.”

Click here for the full lecture.

Click here for the full lecture.