Business school will cost you five years. Can you afford to wait?


Okay, I’ve already said my piece on business school.  You all know that I think it makes people suck at startups.  And, yes, I know there are exceptions.  In fact, I believe there are some MBAs perfectly suited for startups.  But, those are guys who were going to be great entrepreneurs no matter what.  In fact, I go so far as to say they become great entrepreneurs in spite of business school.  And now, with the emergence of phenomenal incubators that match business school in terms of network and prestige, it’s becoming overwhelmingly clear that getting an MBA is not the best way to pursue your startup ambitions. And if all that wasn't enough:

 

Business school will cost you five years.  At least. 

 

If you want to learn normal business school stuff and get a normal business school job at a large company.  It may be the right choice for you.  If you are going to business school to 'learn' entrepreneurship and 'build your toolbox.'  You're just lying to yourself.  Even if you could learn that stuff in business school (which you can't), the time itself is not worth it.  While there are a few rare exeptions, most would've-have-been entrepreneurs find out that they lost 5 years of startup life.  Let me explain... 

 

Year #1 is applications plus GMAT.  Yeah algebra!

 The GMAT is just like the SATs; the critical difference is that the pool of people taking the test are more disciplined, more motivated and, frankly, more Type A than the population who takes the SATs.  A smart person that did well on the SATs and is destined for a Top 10 Business School will most likely get around a 600 on the GMAT, on their first try.  To orient you, most of the top schools average a 710.  What happened?

All those Type A people outwork the test.  It’s supposed to be an aptitude test, but everyone knows that that’s full of shit.  You can go from a 600 to a 710 by simply practicing more.  You buy the books, you take the courses, you take a dozen practice tests, and that score will inch up.  But it's a year of life to reach parity with everyone else.

And once you finish the GMAT, you have the application process ahead of you.  Most top schools ask 5 to 7 questions requiring, for the most part, unique essay answers.  So what do most of these Type A applicants do?  They outwork it.  The hours we’re counting up start to become unthinkable. 

 

Years #2 and #3 are business school itself.  Party on!

Two incredibly busy, intense years.  It’s not that the subject matter is hard.  There’s no test at the end that decides whether you have mastered the subject.  Everyone passes.  In fact, most business schools don’t even have grades.  What makes it so intense is that networking is fundamentally a part of the experience

I’ve never partied so much as I did in business school.  I lived in a killer house with four close friends and we threw 200-person parties.  It was awesome!  Hell, at $60,000 a year, it better have been awesome.  I tried to do a startup during business school, and I can tell you it's nearly impossible to find the time. 

 

Years #4 and #5 are spent on loans.  Indentured servitude!


Because business school costs $60,000 per year, you effectively owe time afterwards.  Unless you are independently wealthy or willing to take on tremendous risk, you will not be able to go without a salary post business school.  I did…by taking on tremendous risk.  And, if you’re okay with this much credit card debt, then maybe it’s for you, but I don’t recommend it. 

What most MBAs who have an interest in startups find out is that they can’t afford to go without a salary because they have to pay back their loans, and so they talk themselves into taking two years to “gain some industry experience.”  They have tricked themselves into believing that it’s actually good experience for a startup.

Two more years go by.  They've made a bunch of money, paid back their loans, and now they’re finally ready. 

 

Where in your life will you be in five years? 

 And will the risk/reward pay-out of a startup still make sense then? 

 What will your drag coefficients be? 

 

Time is your most precious resource.  Don’t waste five years of it.

 

 

Find discussion of this post on Hacker News

******************
I'm Jason Freedman.  
I've got a sweet-ass new company: 42Floors.  Check out the screenshots.
Previously, I did FlightCaster.
I welcome connections on Linkedin,  FacebookAngelList and Twitter.

Be yourself. Abnormal people create abnormal returns.

I was just hanging out with a bunch of entrepreneurs.  These are hardcore hacker types.  They may not possibly be the most socially polished people in the world.  They are far more concerned with the latest in node.js than the latest in fashion. 

So, I was surprised when I saw one of my buds walk in with a crisp blue shirt, khaki pants, and black leather shoes.  I almost couldn’t believe it.  It was like he had been zapped with an MBA wand. 

So I asked him, “Dude, what’s going on?”  He said, “Gotta look nice for investors.” 

Hmmmm. Something didn’t feel quite right.  And I couldn’t wrap my head around it in that moment, but with some reflection, I have realized what felt so totally off. 

Back when I was pitching investors for my first company, I was coming straight out of an MBA program. In that program, I had learned how to pitch during Introduction to Entrepreneurship.  In our final presentations, we would all wear formal business suits, present our PowerPoint decks to a panel of guest investors, and get feedback.  

It was so fake.

I think back to that now because it was probably the last time I have worn a suit in any type of business situation.  Usually my normal pitch attire is my tennis shoes, jeans, and whatever shirt I happen to have already been wearing that day. 

I had almost forgotten that some people hold onto an outdated belief that with investors, you’re supposed to dress to impress.

It’s just wrong. 

Investors are not looking for someone that looks like them.  They may wear suits.  That doesn't mean you should.  Investors are interested in getting to know the real you.  If you’re a little strange, that’s okay.  They like strange.   They like people who do things that normal people aren’t capable of, and they know that that capability often correlates with eccentric people.  The last thing you want to do is wash away your own personality in some doldrums of blue and khaki. 

The other thing that really stuck with me from talking to my entrepreneur bud was that he was trying too hard to be something he's not.  He’s an awesome entrepreneur, passionate about his product, ambitious, and crazy enough to think that he can change the world.  And when investors really get to know him, they will see that he’s a great bet.  But he may not ever get there if they perceive him as inauthentic. 

Most good investors see hundreds of pitches a year.  The good ones are never fooled by the fakers.  They are looking for authenticity.  Don’t rob yourself of one of your greatest assets.  And if you look a little abnormal, that’s okay too. 

Be yourself.  Abnormal people produce abnormal returns.

 

 

Find discussion of this post on Hacker News

 

******************

I'm Jason Freedman.
I've got a sweet-ass new company: 42Floors.
Previously, I did FlightCaster.
I welcome connections on Linkedin, Facebook, AngelList and Twitter.

Paying back your launch debt

We've always prided ourselves in launching really quickly.  When we built FlightCaster, we went from first line of code to launching a sophisticated flight delay prediction system in eight weeks.  It was an incredible effort.  We were doing Y Combinator, and we launched the day before demo day. 

Now at 42Floors, we recently launched after another Herculean effort.  We have been working on 42Floors for much longer than eight weeks; however, we hadn't landed on our current iteration until just before Y Combinator started.  We built this entire initial version in only the last two or three months.  It's far from perfect, but our goal with the launch was to provide the Bay Area the single best place to search for office space anywhere on the internet.  And I believe we've accomplished that. 

It really pays off to launch quickly.  In our pre-launch delusional optimism phase we didn't know what would work and what wouldn't.  Everything looked like a good idea on our own whiteboard.  Launching made everything real.  We wanted to be working with brokers, helping tenants find office space, solving the problems of commercial real estate for real -- as soon as possible.  And now we have debt to pay back.  It's a bitch. 

Fundamentally, it's absolutely still worth it to launch quickly.  But, be ready to pay back that debt.

source

Types of Launch Debt

 

Technical Debt

We're just starting to uncover the technical debt we now owe on 42Floors.  In FlightCaster we had massive technical debt because we had built a system that was really complicated.  We built it so fast that we didn't really have the opportunity to learn about how it should be constructed.  The toughtest type of technical debt is when you realize it's fundamentally built wrong.  At FlightCaster, we started with a pull based system to get flight data.  We had to re-architecture everything to become push based with real time data.  We got through it but it was tough.  We'll find out soon what we unknowingly screwed up with our 42Floors architecture :)

 

Mental Debt

After an exhausting program like Y Combinator, the incredible rush of launching by demo day, and the immediate onslaught of investor meetings—the whole process really takes its toll.  With both FlightCaster and 42Floors, we've been surprised at just how tired we get.  Our minds are like our code base -- in serious need of refactoring.  And yet the company is now launched.  Customer service needs to be immediate.  Features need to get shipped.  There's no time to catch our breaths. 

The reality is though, that mental debt needs to be paid back.  We never really understand just how important a break is until we're fully burnt out.  The goal is to take your break before that happens.

At FlightCaster, we surprised our cofounder Evan with tickets to the Yankees playoff game in New York for him and his dad.  We literally told him, "Your flight leaves in a few hours.  Get out of here, go have fun! Come back whenever you're ready."  

Administrative Debt

If you did your launch right, you should have a ton of administrative debt to pay back.  Pre-launch, the only thing that really matters are things that directly delight users.  So any shortcut that you can take so that you don't waste time, you should.  And a whole host of administrative items come into this category.  Things like properly setting up accounting and payroll and insurance and back accounts . . . all of that stuff doesn't matter at all pre-launch. 

So, now here we are, post-launch, getting ready to show our books to investors and it's time to clean this shit up.  Pay back some administrative debt.  Fundamentally, cutting corners was still absolutely worth it.  Cleaning up administrative debt afterwards may be a pain in the ass, but it's much easier to do when you have the time than at pre-launch when you don't.  And, if your launch went well, and you're able to raise a little bit of money, you can pay for this problem to go away.  At FlightCaster we hired Betty Kayton who came in and just fixed everything.  It was awesome.


Financial Debt

Yes, financial debt does happen, too.  For some reason, I've really never heard this talked about.  But in the course of launching your company, but before they've done an investment round, startups often run out of money.  FlightCaster, we came within $500 of running out of money three times before we finally closed a round.  For 42Floors, we did a better with the help of some awesome Angels and the Start Fund, so it wasn't such a close call. 

But in my first company, OpenVote, we significantly ran out of money.  We had enough money to get us through to launch, but we didn't have enough money to get us through the fund raising process.  And that investment round dragged on for a few extra months.  We were left with nothing in the bank account.  This is really tough debt to deal with. 

There are two issues at stake when you have financial debt to pay back.  The first is, if the company is going to keep going, somebody has to front the money.  In OpenVote, I fronted the money, but it did lead to some pretty awkward conversations with my cofounders.  We got through it okay, but I can tell you it wasn't easy.  The second piece is you have to decide if you want to try to be paid back.  The single most important thing to do is be transparent with your investors.  We told them during the due diligence process that we were running low, which was really the last thing we wanted to tell them at that point.  Fortunately, they were really good guys and they still completed the transaction and permitted us to pay ourselves back with the some of the invested capital. 

That was a really risky time, though, because if that round had fallen through, I was going to be out that extra money.  Worrying about that stuff, while also dealing with all the other debts you have -- I can tell you it's not a good feeling.  If there is any debt within your power to avoid when you're gunning for your launch, it's financial debt.

 

Personal Debt

This one goes out to all my wonderful friends and family.  Most of them I have not seen or really talked to in the last several months.  Since January, I have been on a hardcore maker's schedule and just had to cut off most of my social plans.  I kind of feel like I'm just returning from a long trip and now I'm going around and catching up on all my friends' lives.  Fortunately, they're super supportive.

 

 

 

If you're still pre-launch, take a hard look at everything you're doing and if there's anything that can be delayed until after your launch, go ahead and delay it.  Don't worry.  You'll be able to pay it back then.

 

 

Find discussion of this post on Hacker News

***

 

  
******************
I'm Jason Freedman.
I've got a sweet-ass new company: 42Floors.
Previously, I did FlightCaster.
I welcome connections on Linkedin, Facebook, AngelList and Twitter. 

Hardcore Maker's Schedule

Michael Scott: Do you have any idea how valuable my time is?
Erin:  In your schedule it just says nine 'till noon is creative space. 
Michael Scott: Do you know how creative space works? Just cancel my afternoon.
Erin: You don't have anything in the afternoon.  It just says Free Plate.
Michael Scott:  Push Free Plate 'till tomorrow morning.

 

 

Shit’s gotten real with 42Floors.

Actually, it got pretty real quite a while ago, but I’ve been slow in adapting my work style.  In the early part of 2011, we were trying to figure out exactly what 42Floors was meant to be.  We knew we wanted to solve commercial real estate search.  Actually, no . . . at that point we didn’t even know that.  All we really knew was we hated the entire office space search process and we wanted a better solution. 

 That early phase when we were not yet a company was really just fun.  I worked on getting my broker’s license and meeting with lots of people in the real estate industry.  I learned about how brokers do their jobs and talked to frustrated prospective tenants. 

Having barely rolled off of FlightCaster's acquisition, I was also trying to recharge my own batteries.  I did a stint of “work-cations” where I set up shop in awesome places across the country.  I can tell you now nothing beats working from Maui.  I also gained some perspective by spending time outside the Silicon Valley echo chamber – like my trip to Tupelo, Mississippi. 

 I worked with a fantastic group of volunteers to put together the NFTE Launch program and together we mentored a group of aspiring entrepreneurs.  I spent a lot of time biking and rock-climbing with my then girlfriend (now fiancé).  Clearly that was time well spent. 

 And I talked to hundreds of entrepreneurs about their own startups and tried to be as helpful as I could.  It was a really cool time.  In my five straight years of doing internet startups, it was easily the most enjoyable period I’ve ever been through.

 

 

***

 


But now 42Floors has some serious momentum.  We’ve gone out and attracted a ridiculously awesome set of advisors who have given us not only their guidance, but our initial capital.  Our product is now mostly built.  So, now it’s time to really focus.  We’ve already gone to the mats and are living and working out of our startup house in Redwood City. Now it’s time to really focus.  We’re moving hardcore to what Paul Graham calls the Maker’s Schedule.  


Business people in Silicon Valley (and the whole world, for that matter) have speculative meetings all the time. They're effectively free if you're on the manager's schedule. They're so common that there's distinctive language for proposing them: saying that you want to "grab coffee," for example.  Speculative meetings are terribly costly if you're on the maker's schedule, though.

 

 

My Maker’s Schedule Battle Plan


Talk to users and write code

Paul Graham always describes such important concepts succinctly.  When I wrote my post, Don’t. Waste. Time., it was following some advice that he had just given that the only tasks worth doing before launching are talking to users and writing code.  So that’s what we’re doing at 42Floors.  That’s our overwhelming priority.  Anything that does not fit into those two is going to have to be de-prioritized.


No speculative meetings

In the glory days of mid-2011, I would take a meeting with just about anyone.  They kind of broke up the day nicely.  But now that we’re so focused, a planned meeting on the schedule really disrupts our ability to execute.  So, I’m sorry.  It’s really, really difficult for me to schedule a meeting right now.  Talking to you is important, but right now we've decided that writing code and talking to users is the more important.  I really am sorry, but I’ll try to catch up with you all again once we get this thing launched.  Thank you so much for understanding.


No planned social engagements

Again. Sorry.  I just can’t do it right now.  Don’t take it personally – I don’t want to blow you off – but I’m focused.  I promise I will catch up with you once it’s launched. 


No investor meetings

Our AngelList profile is off the hook right now: hundreds of followers, introductions flowing in.  It’s a really, really cool thing.  But I just can’t do it right now.  Hopefully, if you’re interested in investing in us, you’ll be even more interested when we make further progress.  Please still do reach out and I promise I’ll be back in touch when we’re ready to talk financing. 

 

Things That Won't Change on a Maker’s Schedule 

 

Exercise

Actually, I’m exercising now more than ever. During FlightCaster, I took such poor care of myself during our launch that when the stressful times hit, I felt crappy mentally and physically.  So this time, we’re über focused on health and I try to work-out four to five times a week.  Totally worth it.

 

Time with the fiancé

After taking care of myself, the next most important priority in my life is spending time with my fiancé.  We continue our weekly date night where I don’t check my email or spend (too much) time thinking about 42Floors.  Of course, she’s in the commercial real estate industry so we do end up talking about 42Floors...  She is incredibly supportive right now and has given me the time and freedom to do this, but it’s not like that is time when our relationship stops. 

 

Blogging

Actually to be clear, it easily could’ve been given up and almost was.  I decided to hold on to it.  I also found that it’s a really good mental activity for me because it allows me to think creatively about something other than 42Floors. And like being in a good work-out routine, it’s actually returning good mental energy to me.

 

Sleep

I don’t ever mess with my sleep schedule.  It’s simply not worth it for me to pull late nights.  As many of you know, I have horrible insomnia, and I’ve done an incredible job of almost a hundred percent managing it.  This time, more than any other, is when I want to be maintaining stable sleep habits.

 

Calls with aspiring entrepreneurs

I won’t schedule any meetings with anyone who wants to chat (sorry), but I still do talk to entrepreneurs.  My system right now for speculative meetings is to just ask for a number, and then I try to reach out by phone whenever the timing is right. 

 I started this a few months ago, and it has actually worked out really well.  With only a few tries, I almost always am able to reach someone at decent time. So, if you want to talk startups and it can wait a few months, that would be the best; but if not, go ahead and reach out.  But, please be patient while I get back to you. 

 

 


So, a note on efficacy:  this system is totally working.  Our productivity as a team right now is massively higher than any other point in the year. Not like 10 percent or 20 percent more productive—like 3x to 4x more productive. 

 So thank you all again for your patience and understanding.  I truly appreciate it.   I hope that you love what we have created.  See you soon!

 

Find discussion of this post on Hacker News

***

And please come check out my new startup, 42Floors!

We're fixing commercial real estate. Forever.

Sign-up to learn more at 42floors.com, and like us on Facebook, and follow us on AngelList, and follow us on Twitter.

humbledMBA acquired by 42Floors!


We're thrilled to announce today that humbledMBA has been acquired by 42Floors.  To all of our users out there, we want to thank you so much for being a part of this incredible success.  We've been working on this dream of ours passionately for the past two years.  And we're excited about how much we have accomplished.  With your help, we've put the "humbled" into MBAs everywhere, and it's been our pleasure serving you.

When 42Floors approached us about a possible acquisition, we weren't at first interested.   But as we got to know the team there, we realized that their values were 100% in line with our own.  It was almost like looking into a mirror.  And we realized that with their resources, we were going to be able to spread humility to MBAs everywhere on a much larger scale. 

humbledMBA has always been about sharing startup lessons learned the hard way.  In that way, it's pretty unique in that there are no other entrepreneurs currently blogging.  We feel like we've created a new category here.  This whole concept of a lessons learned via web log—or "blog" as we call it—I think it's powerful.  But in order to be truly disruptive, we need to be speaking from inside a startup.  As a part of 42Floors, we have been promised total editorial freedom.  We'll be able to blog about anything and everything that happens in 42Floors even when it goes against the interest of the company.  We have this directly from the founder himself. 

Now I know a lot of you are thinking that this is just going to be another Arrington - Huffington battle, and I will admit there is a chance that several members of the humbledMBA team get pushed out over power struggles. But, at the very least that will make for good tech drama. And I think we can all agree that that alone is worth it. 

So, starting today the entire team (that's actually just me) will be starting full-time at 42Floors.  All of our blogging will now be posted on 42Floors first.  We will continue to repost here on humbledMBA with some delay.  There are no immediate plans to shut down humbledMBA any time in the future. While we are not disclosing deal terms, we can tell you that everyone on the team (again, just me) and all of our investors (as if) are thrilled with the outcome.  This was far more than an acqui-hire; 42Floors is getting all of our technology (actually it seems Twitter is getting most of that) and all of our customers (note to self: Can users that don't pay be called customers?  hmm. Return to that thought later). 

So Long and Thanks for All the Fish.


Find discussion of this post on Hacker News

 

Public speaking for normal people

 

I just gave a presentation on 42Floors to 150 people.  It went well. I was really proud of:  1) our team, 2) our product and 3) the way we were able to present it.  It was as if we were telling people about it in our living room, but there just happened to be 150 people there.  Afterwards, several people told me that it felt like it was a very polished presentation.  But the reality is we didn’t practice at all.  In fact, three minutes before we went on stage, my co-founder turned to me and said, “Jason, we really should’ve practiced.” I said, “Nah, don’t worry.  We’ll be fine.” And we winged it, and it came off ever so naturally. 

Before I pat myself on the back too much, let me tell you how I felt inside.  Thirty seconds before I was supposed to go on, I was standing there on the side and all of a sudden my heartbeat went from normal to racing like I was in the middle of marathon.  Uggghhh.  I hate it when this happens.  It's kind of like how you feel when you blush: you're reminded how little control you have over your own body.  For a brief moment, I was upset with my body for reacting this way. I was upset with myself for reacting this way, actually.  I should be more confident than this.

For some background, I’ve done a tremendous amount of public speaking. I did speech and debate in high school, I’ve spoken to lots of large crowds, I have given this type of presentation many, many times before. This was also a really friendly crowd, and it was super informal. There was no reason for me to be nervous. But, there I was ready to go on, and I was worried that people standing near me would literally be able to see my heart beating this fast.  

However, in those thirty seconds, from when my anxiety took hold until I started speaking, I squashed that nervousness almost completely.  And that's what this post is about.

The key to public speaking is establishing a routine that solves for the thirty seconds between when your anxiety starts and when you need to go up on stage.  After that nothing else really matters.  Most normal people do not engage in public speaking regularly enough to be able to actually change any of the fundamentals about how they speak.  The very best you can hope to do is to not sound worse than you do when speaking in your own living room.  And that itself is actually a really good axiom to start with:

 

Don’t try to become a good public speaker, just try to speak like a normal person while in public.  

 

And the key to speaking normally in public is to squash your anxiety thirty seconds beforehand. Here are a few tricks that I know. Give them a shot.

 

 

How to Speak Like a Normal Person While in Public:

 

Dribble Twice, Spin Once  

So this trick will take a little bit of time to develop, but it’s probably the single most important thing that I’d recommend.  When you watch a basketball player go to the free-throw line with the game on the line, he or she does the same routine every single time. It's always some sort of dribble twice, spin once routine.  With the spotlight on him, he doesn't want to think about some small aspect of his form.  He wants to not think at all.  So he focuses on his trivial routine: dribble twice, spin once, shoot.  The best he is hoping for is to shoot as well as he normally does in practice.  

I do the same thing with public speaking.  I have found a very specific set of physical actions that I do seconds before I start speaking.  For me, it’s a specific stance that I get into where I stand up very straight, my toes are slightly pointed out, I take my hands and I clap them together.  I grasp my hands together really firmly and rub them slowly with my elbows held high.  

I do it this way for one key reason – this is what I usually do anyway.  As in, if you see me in my own living room, surrounded by friends, recounting a story of a time when I did something really awesome, you will often find that I am naturally in this stance.  This is my natural confidence stance.  So, when I’m feeling nervous, I force myself deliberately to take on my confidence pose.

Jumping back to this public speaking event the other day.  At T minus 30 seconds, my heart was beating incredibly fast, but at T minus 25 seconds I had one thing on my mind – hands clasped together, assume the pose, everything else will work out.

You need to find your confidence pose. Whatever your two dribble, spin once routine is going to be, you need to find it long before your public speaking moment.  The single best way to find it is to ask your co-founder or friends to find it for you.  Show them this post, tell them you want help finding this pose, and then at some point in the next several weeks, they will see you do it naturally and can point it out for you.  And then, you need to figure out exactly what it is about this pose that feels good and practice it over and over again.  So the next time when you’re up on stage and you’re getting really nervous and you have that weird feeling where you just don’t know where to put your hands and you just know that in your pockets is like the most awkward thing in the world...at that point – dribble twice, spin once, and shoot.

 

Death to Powerpoint

Powerpoint is this devious device that takes reasonably good speakers and makes them painfully bad. Traditional bullet-point laden Powerpoint decks are only useful for communicating your ideas with visuals and emailing them to people. They are not useful for aiding you in your speaking ability.  And that’s why most really good speakers stopped using Powerpoint in the traditional way. Throw away all slides that have more than ten words on them (or move them to an appendix).  

It’s okay to use slides when they takes almost no focus off of you, the speaker.  That’s for two reasons.  The first is, the focus really should be on you, so having an Apple-like slide with one or two words on it is totally fine because it communicates a point and gets the focus back on you.  (Note—the only exception is when you demo your product.  Then you do want the attention on the screen.)  The second reason is even more important:  Powerpoint bullet slides take away your attention from your audience.  When you turn around to read a slide, you are forcing yourself out of your own rhythm. 

 

Speak to Two People

Remember our goal is to speak like a normal person in public.  The best way to speak like a normal person is to actually talk to a real person, and not hundreds of people.  So, as I stand there about ready to speak – in my stance, rubbing my hands together – I look to the left side of the room and to the right side for a random person that seems comforting.  When I actually start speaking, all I want to do is speak to those two people. I’ve never met them but I want to lock in on those two people and just tell them a simple story as if they were sitting in my living room.  I can pace back and forth and look left and right in the crowd, and yet all I’m really doing is going back and forth between my two people.   It’s super simple; it totally works.

 

Embrace Your Ums

Um is a verbal tick.  It is unconscious and nearly impossible to remove.  If your career is going to be an actor, public speaker, politician, whatever . . .  go work on your ums and this post was never for you anyway.  If you are a normal person, you are not going to get rid of them.  And anyone who harps on you because of them is actually doing you a disservice because they are forcing you to speak differently than you speak as a normal person.  Paul Graham is one of my favorite public speakers, and he says um all the freaking time.  But, he’s a powerful speaker, he’s lucid and most importantly, he’s authentic.  Focus on what really matters.

 

Don’t Memorize

Memorizing does absolutely nothing for you.  The only thing worse than a scripted, memorized speech is a ‘read’ speech.  So, don’t ever read your speeches, either.  You are pitching your start-up and trying to inspire people to believe in your vision.  It doesn’t matter what the actual words are, they’re all judging you anyway.  And when you memorize your speech, or read your speech, you are communicating that you suck at this.  And you don’t.  You’re a normal person – you have the capacity to speak like a normal person.

 

Practice with Live Ammunition

Over-practice can really hurt you, especially if you do it in a fake way.  One of the worst things you can do to prepare is to practice over and over again alone.  Because that is nothing like the situation that you are going to be in.  We speak very, very awkwardly alone.  When you are making passionate speeches inside of your car, you look like a crazy person and you feel like a crazy person.  Your performance there will be nothing like your performance on stage. Your goal, always remember, is to get back to how you speak in your living room.  So do that.  

Ask your co-founders to put you on the spot in front of groups of people.  So, if you guys are at some random party, empower your co-founders to play this little trick on you:  Without giving you warning, they can yell out for everyone to get quiet because you want to tell them something.  You will have zero time to get nervous, you will have to start immediately, and you will do the best job that you can.  And if you do that five times before your big public speaking engagement, you will be far better prepared than if you had spoken to the mirror a hundred times.

 

One final note to that group of 150 people that just saw me speak:  Yes, I was absolutely, totally, freakin' nervous.  If that’s you as well, you already know how to reach me, let’s practice together.

Find discussion of this post on Hacker News

***
 
 

And please come check out my new startup, 42Floors

We're fixing commercial real estate.  Forever.

Sign-up to learn more at 42floors.comand like us on Facebook, and follow us on AngelList, and follow us on Twitter.  We're now showing-off screen-shots on our AngelList page.

 

******************
I'm Jason Freedman.  
I've got a sweet-ass new company: 42Floors.  
Previously, I did FlightCaster.
I welcome connections on Linkedin,  FacebookAngelList and Twitter.

Most startups are spending money too fast. Slow it down.

You're acting as if the current bubblicious fundraising environment will continue indefinitely. 

You're acting as if all of your unproven hypotheses will turn out correct.

You're acting as if your seed round valuation increased your likelihood of success.

You're acting as if your investor excitement at the seed round automatically transfers to a bridge round.

You're acting as if you won't need to pivot.

You're acting as if Good Times RIP never happened.

You're acting as if you already have product-market fit.

You're acting as if you already know that you're the next Dropbox.

You're acting as if headcount is a definition of your success as an entrepreneur.

You're acting as if you've forgotten how to be scrappy.

You're acting as if being a cockroach is a bad thing.

 

 

Stop Acting As If

 

 

If you're seed-funded, you're probably spending money too quickly.  I'm seeing it everywhere right now.  Take honest stock of where you are in your startup.  What  true risks do you face?  What are proven data points and what remains as a hypothesis? 

The traditional criteria for Series A funding is stable and significant month-over-month growth in traction and, for many of us, revenue.  If this isn't you, you need time to get there.  The ideal time to raise your A round is when you have stable growth for at least 4 months.  You still need 2-3 months in ideal situations to do the raise and you never want to be signing documents on fumes or they'll smell your desperation.  Combine all that with the fact that it's difficult to raise in Nov/Dec and June/July.  Now work backwards, how much time do you actually need?  Are you spending money too fast?

I bet most of you have to answer yes.

The Series A capital crunch is very, very real.  But it's not externally motivated.  There is no liquidity reason that explains why there's plenty of money available to seed concepts and not enough money available to A rounds.  In fact, the A rounds have just stayed the same, while the seed round funding has exploded.  My own view of the situation is that investors realized that it was worth throwing money at a good team in a big market in case they go on to build Dropbox.  By the time that team spends its seed money, it's pretty clear whether they're going to be a hit.  If you don't look like a home-run like Dropbox did that stage, you're not going to sail through your A round.  Investors are going to judge you through all the traditional Series A metrics and not the dreamy team-based standards that got you through the seed stage.

So what happens when you start to run low on seed cash but you haven't proved Dropbox-like traction or revenue yet?  You start thinking bridge round.  You go back to your investors and you gauge their interest.  These are the same investors that you forced to decide on you in less 39 seconds during your bubblicious seed round.  The same investors that felt like they overpaid for that initial equity or signed convertible debt with sky-high caps.  Even if they're good guys, even if they like you, even if they believe in your vision...they have a fiduciary duty to their LPs.  You will be significantly diluted or you will cease to exist.  For many of you, it will be the latter.

 

 

And it will be your fault.  You spent your money too fast.

 

 

For those that make it through bridge financing with heavy dilution, you will still report it to the world as a success.  Why wouldn't you?  Your investors will reiterate their faith in you to everyone that will listen.  Why wouldn't they?  No one will know that you had heavy losses.  As a startup community, we don't share our losses openly when the startup is still in process.  And for that reason, the data that backs up all my assertions won't be available for several years.  By that time, the hands will all have been played.  Don't wait for overwhelming evidence before you act.  Go get some advice, think hard, and then act decisively.

 

Prepare Now for The Series A Capital Crunch:

 

Adjust your runway to 18-24 months

For the typical seed-funded company that raises $750k to $1.5M, you should give yourself at least 18 months until you need your A round.  With 2 months of buffer, 2 months to raise the money, and 4 months of traction needed as evidence, that's 8 months taken out of that 18.  At least.  That gives you, at most, 10 months to find product-market fit.

 

Keep headcount low, low, low

Stop thinking that your headcount defines your progress as an entrepreneur.  Stop asking everyone how big their team is.  Keep your team small until there's overhwhelming proof that more people will equal more growth.  The BackType guys had a team of 3 and they did just fine!  Be a cockroach.

 

Raise more when you can

When things are going well, raise more money.  If your seed round was raised on convertible debt, don't wait for that equity round.  You may have 3-6 good months which are providing additional data on your company, but still far off from what you need for an A round.  If you can add on more money on good terms through more convertible debt, do it!

 

Keep AngelList up-to-date

AngelList traction will explode in 2012.  If you have the ability to raise additional funds between rounds, AngelList is going to be the way you do it.  Keep your profile up to date.  Keep engaging with investors.  AngelList makes it easy on both sides to keep everyone aware of your progress.  If you have pent-up demand from an over-subscribed seed round, AngelList can help you broadcast some recent progress and pile on some back-up fuel.

 

Top companies get their A rounds pre-empted

If you're doing well, your A round will be pre-empted by smart investors. Recognize that the lack of a pre-empted A round means that you're going to have to really earn it.  If your investors are really pleased with your progress but not pre-empting the next round, than you should take their enthusiasm with a grain of salt.

 

Find an Adviser that will tell you straight

The best source of data on whether you're being realistic with your spending is from advisers that are still entrepreneurs and are only 18 months ahead of you.  Preferably a friend that has no financial interest in your company.  If you don't have someone like this, make sure you get one quickly.  Make sure it's someone that calls you on your shit.

 

Cut headcount now

If you were overzealous and you're reading this entire post with a sense of dread, the time to act is now.  Recall Sequoia's advice in the RIP deck--the CEOs that are decisive are the ones that last.  Believe me, I know how painful it is to let people go, especially good people.  But if you're running heavy, there's really no way to tighten the belt without reducing headcount. 

 

Embrace austerity as a company culture

I know how it feels to be funded with other people's money.  After months or years of bootstrapping, of promising your cofounders and employees that everything would be better once you're funded, you just want to fulfill that promise.  It's so natural to overspend.  Resist that temptation.  Don't believe for a second that expensive perks are necessary to retain great talent.  The same truth in hiring holds now as it always has: engineers stay with companies that respect them and challenge them and, in the end, provide them a real opportunity to change the world.   

 

 

That's it.  I've said my piece.  If I'm wrong, you'll just grow a little bit slower.  If I'm right, acting now may well reverse a failure into a success.  Slow it down.

Find discussion of this post on Hacker News

***
 
 

And please come check out my new startup, 42Floors

We're fixing commercial real estate.  Forever.

Sign-up to learn more at 42floors.comand like us on Facebook, and follow us on AngelList, and follow us on Twitter.

 

******************
I'm Jason Freedman.  
I've got a sweet-ass new company: 42Floors.  
Previously, I did FlightCaster.
I welcome connections on Linkedin,  FacebookAngelList and Twitter. 

How to find a business cofounder that doesn't suck

I got a really big response to this post:  Please, please, please stop asking how to find a technical cofounder.  There were three types of responses:

  1. MBA friends pinged me to apologize for being that guy.  Several of them proudly informed me of their attempts to learn to code.  (Hell yeah!)
  2. The Hacker News crowd applauded with approval.  Ranting on MBAs is pretty on theme in our world.
  3. And a bit surprisingly, a bunch of hackers pinged me asking for help on how to find a good business cofounder.

 

I have to admit that I had never really thought much about that third one.  Supply and demand are so off when it comes to technical talent that I thought that all good coders must be able to find business cofounders easily.  Of course, this is just plain wrong.  Finding a great business cofounder to complement your technical abilities is a big challenge.  There are few great ones out there and they're usually great because they're already proven...which then means they aren't looking for a new technical cofoudner.  And just as MBAs don't have a prayer at evaluating technical talent, coders really struggle to evaluate unproven business cofounders.

This stuff is hard no matter what.  Finding the right cofounder is harder than hiring and hiring is already super-tough, bordering on impossible.  But there is more to finding a business cofounder than just iteration and luck.  You need to approach the problem correctly.  Start with this:

 

Don't search for a business cofounder.

 

It's approaching the problem from the wrong angle.  When you search for a business cofounder, you're saying that you can't handle the business side of your startup. That's just dumb.  I know hundreds of technical founders that handle the business side of their startup just fine.  And if you're not yet good at the business side of startups, you need to get good.  That doesn't mean you need an MBA (Hah!).  You just need to understand the basic fundamentals of startup economics: cost of user acquisition, lifetime value of a user, market size, etc.  If you're not learning this stuff, you're doing your startup a disservice.

Now, it does usually follow that if and when you find a good non-technical cofounder, he will take over most of the business side of the task list.  But that is usually because in pre-product market startups, building the product is the biggest bottleneck for moving forward so the non-technical guy just picks up all the lower priority stuff that gets left over...like the business stuff.  So, don't judge your potential cofounder on his business ability.  You need to find a different heuristic.  I have one key insight to offer:

 

Find a business cofounder that truly rocks at something.  Anything.

 

Something. Anything.  Well, almost.  FInd someone that is good at one specific, concrete thing that is valuable to your startup right now.  If you're talking to a 100% generalist, it's just not going to work.  Not yet anyways.  He may turn into an impressive entrepreneur someday but that will be on a future startup after he's burned your's.  Good non-technical cofounders need to be able to contribute on day one or they become restless and start causing trouble like invading product development with feature creep or distracting everyone with premature fundraising talk.

Also, being really good at at least one thing means that he's demonstrated the ability to reach high levels of quality.  Your hope is that he can then replicate that in all the needs that your startup will have over time.

 

Here are three types of non-technical cofounders that rock:

 

The Camp Director (motivation)

A camp director has this magical way of getting talented people to provide help.    It's mostly just sales, but being a straight-up salesman is not enough.  Camp directors sell a vision.  All the freakin' time.    If you're not good asking for help or don't enjoy it, this is the skillset in a founder that you're looking for.    

My technical cofounders almost never ask for help.  They solve coding problems by figuring it out for themselves.  Great engineers love the challenge of working through a solution on their own. 

Whether it be employees, investors, advisors, media, users, whatever, camp director style cofounders get people on board and generally love doing it.   Want proof that you found a great Camp Directot cofounder?  You'll see it everywhere in the quality of people that he attracts to help with all sorts of random things.

The Steve Jobs Protoge (product)

The Steve Jobs protoge rocks as a cofounder.  Obviously.  If it's for real at any order of magnitude.  If he has 1% the talent of Jobs, you're golden!  This type of cofounder is just obsessed about product design stuff.  You know intuitively while working with him that feature creep will never be a problem.  Launching early may become difficult because he's such a perfectionist, but that's a problem you'll deal with.

The great part about this type of cofounder is that they exhibit early proof everywhere they go.  They keep impeccably awesome apartments.  They have blogs that are exquisitely well-designed. They're own personal branding is clean, articulate, and meaningful.  They take great delight in simple products.

The Hustler (sales)

The hustler gets meetings and closes deals.  He's generally more scrappy than polished.  He never gives up and is endlessly creative.  I have only anectdotal data on this, but I feel like the best hustlers I know look, at first, to be fairly unimpressive.  Maybe there's some kind of chip-on-the-shoulder thing going on there that motivates a guy to keep going after a hundred no's.

Testing the hustler may be difficult to at first because they may not have had a good reason to hustle ever before.  For these guys, a little real life test will do just fine.  Check out how Tristan Walker got his job at Foursquare.  That's hustle.

 

 

Obviously, these are generalizations.  Obviously.  What did I miss?  Speak up in the comments (not that you guys would ever hold back...)

With all that said.  I want to reiterate one point.  Think really hard about whether you actually need that business cofounder.  Consider investing the time you'll spend looking for someone with improving your own sales/marketing/product skills.  Join a community like Y Combinator and they'll help you learn all the mysterious business stuff that isn't actually that hard.  In the end, if you make something people want, everything else will fall into place.


Find discussion of this post on Hacker News

***
 
 

And please come check out my new startup, 42Floors

We're fixing commercial real estate.  Forever.

Sign-up to learn more at 42floors.comand like us on Facebook, and follow us on AngelList, and follow us on Twitter.

 

******************
I'm Jason Freedman.  
I've got a sweet-ass new company: 42Floors.  
Previously, I did FlightCaster.
I welcome connections on Linkedin,  FacebookAngelList and Twitter.

 

 

 

The parable of Bug House. The world's toughest chess variation.

I love chess.  I love everything about it.  My Dad gave me a small, hand-carved chess set when I was 8 year old.  We would play up at the condo in the mountains on snowy evenings.  We played on vacations.  I always wanted to make sure he was playing his hardest.  God forbid he would let his 8 year old son beat him...

While I was going through my quarter-life crisis, travelling all over the world, I started collecting interesting chess sets in foreign countries.  While in Bolivia, I found a hand-carved chess set that was the size of a coffee table.  I had to have it.  I had to carry the base of that table in my lap for most of the 18 hour trip back to the states.  It was so worth it.

More recently, I've been playing Chess With Friends on the iPhone with one of my oldest friends Mike.  We average a little more than a game a month.  We must be 30 games in at this point. Sometimes when my phone buzzes with a new move notification, I get nervous.  I'm worried he's made a move I didn't predict.  Of course, this happens all the time, so my fears are justified.

When we hit the trough of sorrow with FlightCaster, Mike and I played pretty frequently.  There were a few mornings in which half the morning was wasted away thinking through moves.  In what was otherwise a pretty tough time emotionally, playing chess him was a welcomed reprieve.

Chess is comforting to me because it's an exercise in pure rationality.  At my level, still recreational, I can apply pure mental horse power to any problem and do fairly well.  Mike is a better player than me when it comes to strategy and experience with openings, so I often have to win by brute-forcing the visualizations of the moves.  If I do this, he does this, if he does that, I can do this...I've heard Bobby Fischer could think 14 moves ahead.  I can get up to about 7 until veins start popping out of my head.

Mike is also more gifted positioning player.  He understands at a more abstract level how to get his pieces into superior positions, even if it means giving up pieces in the process.  It's often a joy to watch...and incredibly frustrating.  If you play chess, you know the feeling.

 

***

 

Sometimes, while daydreaming, I wonder how similar chess is to startup life.  I've determined it's not.  I think there may be a lot of neat similarities to chess and entrepreneurship, but ultimately chess is too controlled.  One of the defining aspects of surving and thriving in startups is managing entropy.  Chess is calculated, predictable, strategic.  Chess is how startups look after they've already been successful and Harvard Business Review is writing cases about how the crystal clear vision of the genius founder translated into market domination.

But I've found a variation of chess that is a true equivalent to the chaos that is startup life.  It's called Bug House.  You're going to love it.

Bug House is a way to play team chess.  That's right.  Team chess.  4 people, 2 teams, 2 boards, 2 timers.  I was over at Dropbox with Ivan Kirigin and they introduced me to it.  No surprise, by the way, that those genius Dropbox guys are playing this insane game. They started playing a lot more recently after Makinde Adeagbo left Facebook and joined Dropbox, bringing the heat.  Just wait, Bug House may be to 2012 what Settlers of Catan was to 2010. (okay probably not, but still...)

 

Here's how you play.

I played with Ivan as my partner.  Ivan played white versus his opponent.  I played black versus my opponent.  The win in Bug House goes to the team the logs the first victory, on either board, against that board's respective opponent.  So, if I beat my opponent, Ivan and I as a team would win.  Each game is separately timed with 5 minutes per side.

So we both start playing our games independently.  No interaction for the first few moves on each board.  However, when Ivan captured a pawn from his opponent (remember his opponent was playing black since Ivan was playing white), Ivan handed the white pawn to me!  I could now choose to move my normal turn or place the pawn anywhere on the board.

Take a second and visualize the craziness that began to ensue.    Here's a random youtube video of some guys playing.

Every time, I thought through a strategy even a few moves into the future, it would totally fall apart if my opponent magically received a rook or a bishop from his partner.   Half a dozen times, I faced certain checkmate when Ivan magically saved me with captured pieces.  At our best, Ivan and I would communicate our needs to each other.  But with that fucking timer, there was just no time so I would just capture pieces and give them to him.  There was no planning, no control, no time.

As time went down on both boards, we made incredibly fast moves.  I've used to regular speed chess.  I can see the board and make quick decisions.  That totally fell apart when the whole context of the game shifted dramatically move to move.  Veins were popping out of my head left and right.  I realized at one point that I had been holding my breath for too long.  Right, of all things, I also needed to remember to breathe.

 

By the way, Bug House is British slang for insane asylum.

And this my friends, is the perfect parable for startups.  

 

Happy Thanksgiving everyone...

 

 

Find discussion of this post on Hacker News

***
 
 

And please come check out my new startup, 42Floors

We're fixing commercial real estate.  Forever.

Sign-up to learn more at 42floors.comand like us on Facebook, and follow us on AngelList, and follow us on Twitter.

 

******************
I'm Jason Freedman.  
I've got a sweet-ass new company: 42Floors.  
Previously, I did FlightCaster.
I welcome connections on Linkedin,  FacebookAngelList and Twitter.

 

A new approach to minimum viable product

 

Startup buds!  Listen up...We're starting to get some flak for going a bit over zealous on the minimum viable product strategy.  Robert Scoble just ripped into us for approaching him with too many poorly-constructed concepts that are not ready for the light of the day.  Dismiss his criticism at your own peril.  I think he was right. 

Reid Hoffman's Rule #6 is "Launch early enough that you are embarrassed by your first product release."  He's also right.

 

What's an entrepreneur to do?

 


They're both right.  We need to be presenting far better first versions to the world AND we need to be launching much much earlier.  I wanted to give you a little view into how we tackle this issue at 42Floors.  If you go to 42Floors right now, you won't be impressed.  Sorry.  We're not ready to show what we're building to the whole internet world yet.  We have, however, been showing our product to lots of people in the commercial real estate industry.  They contact us on AngelList and we give them access to a private site and get their feedback.   Here's a frontpage that we've heavily tested with commercial real estate professionals:


We built this front-end and showed it to the real estate community.  We didn't scream "This is only a mockup!".  In fact, we alluded to quite the opposite.  We did everything possible to not show that we hadn't even started the back-end yet.  This is not beta testing, it's not even alpha testing.  It's fake website design testing.


Good customer development is filming the trailer and then deciding whether to make the movie.


We got tons of awesome feedback.  Brokers liked some aspects but not others.  Tenants had very different impressions.  We told them to be brutally honest with their feedback and they certainly were.  And we, in turn, were not emotionally attached to our product in the slightest.  This was full-blown hypothesis-testing mode for us.  Want to know the best test of whether you're actually in hypothesis-testing mode or simply going through the motions?  

 

Good customer development means throwing away code.  


And oh, man, have we thrown away code.  This front-end failed our tests.  The front-end above is not at all what 42Floors will be doing as a company.  It's actually from earlier this year when we were still searching for our product.  We threw it away.  When we iterate early on as a startup, we don't hesitate to try new things and that means throwing away old things.  It's soooo much easier to throw away code when you don't have a full-blown code base.  The emotional attachment to that sunk cost is very real.  

It's also very tough on morale to throw away something that's fully built.  One of the reasons we've iterated so quickly is that we never built the back-end.  We're now deep into our latest iteration and it's the one we'll launch with...soon!   When we do show you all what we've built, I'm certain it'll blow you away.  I can say that with such confidence because I have real data from all of our hypothesis-testing.  Paul Graham tells Y Combinator companies to launch when they provide a full quantum of utility.  When we launch, we will only be doing 1% of what we have planned, but that 1% will make some people in commercial real estate very very happy...so happy that they'll pay us money on day one.

If you're into commercial real estate, contact us now and we'll share it with you.  For everyone else, go ahead and follow us on AngelList and we'll keep you updated.  

 

Find discussion of this post on Hacker News

***
 
 

Please come check out my new startup, 42Floors

We're fixing commercial real estate.  Forever.

Sign-up to learn more at 42floors.comand like us on Facebook, and follow us on AngelList, and follow us on Twitter.

 

******************
I'm Jason Freedman.  
I've got a sweet-ass new company: 42Floors.  
Previously, I did FlightCaster.
I welcome connections on Linkedin,  FacebookAngelList and Twitter.