You don't get shit you don't ask for

When we were raising money for FlightCaster in Fall 2009, we met with dozens of investors, both VCs and Angels.  Most of them turned us down.  The investors that did put money into FlightCaster provided us a ton of value, both in terms of their capital and all the support/guidance/networking.  

And what about all those investors that had turned us down?  They actually ended up providing a lot of value as well, and that's what this post is about.  I had noticed a funny trend from each one that had turned us down.  They all closed with a variant of this statement:

"If there's ever anything I can ever do to help, please let me know."

At first, it sounded like a standard pleasantry, in the same vein of "I wish you the best of luck." But then, I started thinking about why it was that every investor was saying it.  I realized that there are two forces at work here:

The first is that many investors are genuinely nice guys that do root for entrepreneurs.  Many made it as entrepreneurs and remember the pain and the hustle.  If (and this is an important if) an action is not at odds with their fiduciary duty to their limited partners, most investors will do what they can to support you.  

The second force at work is pure incentives.  Investors know that relationships matter.  An investor that passed on a company may want back in at a later point if that company takes off.  Or she may want to fund a future company of that entrepreneur.  Doing favors without an investment is a cash-free way to prove to the entrepreneur that they have real value to provide in addition to their capital.  

So, back to our story.  I decided to take them up on their offer.  All of them.  I literally contacted every investor that turned us down and asked for a concrete favor.

We had just launched the FlightCaster product and were working hard to meet people in the industry.  My co-founder Evan Konwiser was not yet recognized as the thought leader of the travel industry that he is today.  We had a big conference coming up where every leader of the travel industry would be in attendance.  And we knew no one.

With a few hours on LinkedIn, I was able to see which investors knew someone that knew someone we wanted to meet.  I sent a personalized version of this email to all those investors that offered to help:

 

Thanks for offering to further support us as we build FlightCaster.

Right now, we're preparing for the PhoCusRight conference next week, the travel industry's largest get together.  We're trying to make some connections with people at the conference.  Can you help us connect with leaders in the Business Travel divisions of Expedia or Orbitz?  Or any other introduction that you feel would help us?

Thanks for the help!

Jason

 

And you know what happened?  A huge number of those investors responded within 48 hours, and most of them were able to help in some way.  And it was the most impressive investors that responded the quickest.  Here's the response I received from Ron Conway the next day (using his classic all caps):

 

I KNOW THE CEO OF EXPEDIA…send us an email template to send to him

Ron

 

So, yes, we got introduced to the CEO of Expedia because Ron Conway, who had previously passed on investing in us, was willing to help.  Booyah!!  Why did he do it? Because Ron Conway is also one of those guys that is fundamentally rooting for the entrepreneur.  

The other reason he did it?  Because we asked.  You don't get shit you don't ask for.

 

 

A few tips on asking for help:

 

Ask for what you want

This is a common Paul Graham statement to YC companies.  Figure out exactly what you need and just ask for it.  Don't play games, don't posture, don't hint.  Just ask for what you want.

 

Make your request very concrete

We didn't ask for general advice.  We did our homework and made very specific requests.  It's much easier for people to respond to concrete requests.  Even if they can't provide for that direct request, the specificity of the request helps them find an alternative way to help.

 

Don't use and abuse

I only wanted to ask these incredibly busy investors for help once or maybe twice.  Obtaining industry introductions was one of the most important necessities of our startup. I made sure to ask for something that they could provide with minimal effort and risk.

 

Pay it forward

We're all part of the same innovation community.  This whole entrepreneurship thing is hard for everyone, but fortunately, everyone has something to offer.  Don't procrastinate on giving back.

 

Say thank you

Investors love knowing the outcome.  For both personal and professional reasons, they're interested in long term relationships.  Do your part by keeping them up to date with your successes.  I like to email everyone that helped me immediately prior to something showing up on Techcrunch.  It helps me communicate to them that I appreciate everything they did to be a part of our success.

 

Give it a shot.  The worst that can happen is that they say no.  And even that's not so bad--investors love knowing that you hustle.  So hustle.

 

 

 

Thank you to all the outstanding individuals that didn't invest in FlightCaster but still went out of their way to support us:

 

Stewart Alsop and Gilman Louie of Alsap Louie

Jon Callaghan of True Ventures

Ron Conway, David Lee, Kevin Carter, and Topher Conway of SV Angel

Brad Feld and Shawn Broderick of TechStars

Jeff Clavier of Softtech VC

Steve Anderson of Baseline

Micheal Dearing of Harrison Metal

Mike Maples of Floodgate

Jonathan Ebinger of Blue Run Ventures

Angus Davis

Pooj Preena

George Pierce of Venture Catalyst

Sam Landman and Michael Yang of Comcast Ventures

Peter Ziebelman of Palo Alto Ventures 

David Shen

Sharam Fouladgar-Mercer of Shasta Ventures

and many more...

 

 

 

Find discussion of this post on Hacker News 

******************
I'm Jason Freedman.  I co-founded FlightCaster.  
You should follow me on Twitter: @JasonFreedman.
You can send me a Linkedin request or become my bff on Facebook

 

 

 

 

Don't give bullshit advice

I chatted with a young guy last night about his new startup idea.  He's got a vision for a social commerce app with a few cool spins on it.  As I listened to him, I was thinking about how I had heard this exact pitch half a dozen times before.  I also knew I had a lot to offer him in terms of help.  I have a good friend that ran an almost identical company and failed.  I've worked in social commerce, and I know a lot of the players.  I have a lot of opinions about this space.  He then asked me that one question that all entrepreneurs with some scribblings on a napkin always seem to ask:

Do you think it's a good idea?

This is the question he had been so excited to ask.  He's just looking for some validation, someone else that believes in his idea.  And I gave him the same response I give to every entrepreneur with a new, unproven vision of the future:

I have no fucking idea.

When a new entrepreneur comes to you for advice, remember this little tidbit.  And no matter how wise/experienced/successful you become, don't forget it.  Your ability to predict the future is no better than his.  


Don't give bullshit advice.  Don't tell an entrepreneur whether you think his idea will work.  You don't know.  You have absolutely no idea.  Entrepreneurs have to see around several corners.  They have visions for a future that doesn't currently exist.  That vision currently doesn't exist because the product hasn't been made in just the right form and/or because the world is just not ready for it.  Yet.  And you can't predict how or when the world will change.  You may have decent product intuition, but the great achievements in innovation are so massive precisely because everyone else got it wrong at the time.  Don't be that guy.

The danger of providing concept feedback goes even deeper.   With any new concept, the degree of innovation will likely correlate with the odds of failure.  Really big swings, the kind that produce booming grand slams, have to defeat all kinds of odds.  How could you possibly know whether this is one of those times?

One of my favorite investors once explained how he looks for the next big thing.  He drew this venn diagram:

The big ideas, the ones that change the world, they have the potential for strong business fundamentals AND they are unfairly unpopular.  The left side is what most junior associates at VC firms focus on exclusively.  They desperately want to know things like cost of customer acquisition, total addressable market, lifetime value of a user, etc.  It's all useful analysis into the business model of a startup.  The right side is where the real disruption hides.  That's where you find the next uber-innovation. When a concept is unfairly unpopular, everyone is missing something.  And the entrepreneur that figures it out has a massive headstart on the rest of the industry.

When you tell an entrepreneur that you don't think his idea will work, there's a good chance you're right.  Given that almost all startups fail, I'd be willing to bet tht you're right.  Congrats Mr. Brilliant.  Go pat yourself on the back.  You also could be telling Mark Zuckerberg that social networking died with Friendster.  Instead, keep your mouth shut about the feasibility of the concept and find others ways to help.

 

A few ways you can help an entrepreneur:

 

Clarify Hypotheses

 There's often a few core hypotheses baked into an entrepreneur's vision.  Sometimes they're hidden amongst dozens of other feature ideas.  I like to help expose them so that the entrepreneur can focus on attacking those key challenges first.  With my bud's social commerce app, we talked a lot about his user acquisition strategy.  If he is building a business model based around viral user acquisition, then testing that hypothesis is one of the keys to building his business.  Tackle that first before obsessing about how you're going to scale.

 

Advise on Process

Clarifying hypotheses is really just providing insight into a process for thinking about product development.  I try to spend most of my time with entrepreneurs checking to see that they're up-to-date on lean, agile development, and customer development.  Usually people have heard the buzz words, but they often need to talk through how to actually implement a good process that will work for them. 

 

Make Introductions

Entrepreneurs usually need 3 types of introductions: to other entrepreneurs, to potential customers, and to investors.  I consider my network of relationships to be one of my most valuable assets.  I'll always try to connect people with the entrepreneurs and potential customers that either are most likely to help them or are most likely to give them quality feedback.  And I'll happily make introductions to investors when if I myself would invest.

 

Provide Support

The world is changed by determined people who foolishly plow forward, despite perfectly good reasons to quit.  I like to support that foolishness.  I usually just tell them about how many times I've screwed things up...it's helpful to know you're not alone.  And in all seriousness, the road is really, really long.  Having a heart to heart about all the ups and downs can be incredible helpful.

 

If you're an industry expert, this post is especially for you.  You have the most help to provide in terms of introductions and clarifying hypotheses.  And you are the absolute worst person to provide concept advice.  I refer you to Arthur C. Clarke's Three Laws of Prediction: 

  1. When a distinguished but elderly scientist states that something is possible, he is almost certainly right. When he states that something is impossible, he is very probably wrong.
  2. The only way of discovering the limits of the possible is to venture a little way past them into the impossible.
  3. Any sufficiently advanced technology is indistinguishable from magic.

    Interested in learning more about why experts get it wrong so often?  I highly recommend Wrong, by David H. Freedman (no relation).

     

    And finally a caveat.  There are an incredibly small number of people on this earth who do seem to be able to see around 2 corners repeatedly.  You should go to them for concept advice as much as you possibly can.  Paul Graham of Y Combinator is certainly one of them.

     

    Find discussion of this post on Hacker News 

    ******************
    I'm Jason Freedman.  I co-founded FlightCaster.  
    You should follow me on Twitter: @JasonFreedman.
    You can send me a Linkedin request or become my bff on Facebook

    Success in startups takes time. It's a long, long road.

    My first startup was Student Lofts in 1998, a loft-building company for college dorms rooms.  I started it on my 3rd day of freshman orientation.  It was the first time I ever created something of my own.  My second startup was DC Discounts, a local discount card company that I started while I was working on Capital Hill.  I started it 3 weeks into my internship when I had grown bored of answering mail.  My third startup was Openvote, an online platform for polling your community.  It was the first time I ever did anything on the web.  My fourth start-up was FlightCaster.  It was the first time I ever found success.  It's been a long road.

    1998 - 2002: Student Lofts made good money for a college student.  But on my per hour basis, it was below minimum wage.

    2000 - 2001: DC Discounts failed before launch.

    2006-  2008: Openvote failed without making any revenue.  It took my investors' money and everything I had, plus credit card debt.

    2009 - 2011: FlightCaster sold.

    I've been doing startups for over a decade now.  I have skipped summer vacations.  Passed on interesting internships.  Missed on-campus recruiting.  Worked through every Thanksgiving.  I was near-broke for most of my 20's.  I have failed dozens of times.  I've been depressed.  I've been lonely.  In case you were wondering, startups are really, really hard.

    Do I regret any of it at all?  Not a chance.  I've sat in BigCo cubicles for very short periods of time.  I know with absolute certainty that it's not the life for me.  I've chosen the life of an entrepreneur because, well, there's nothing else I would rather be doing.  I love creating things from scratch.  I love innovating.  I love motivating people to go beyond what they think is possible.  I love fixing problems.  I love the thrill of closing deals.  I love the rush of being responsible for so many different moving parts.  I love interacting with fantastic people.  I love feeling proud of what I'm doing.  I love being able to go rock climbing at 3pm.  I love biking to work.  Startups are hard, but there are certainly benefits.

    It took 4 companies and 10 years of education to get it right just once.  I've read 1000s of blog posts and dozens of books.  I've asked 100s of people for advice.  It's been a long, long road. 

     

    I just chatted with an MBA student that came to me for advice.  He was planning on spending his 2nd year of business school working on his startup.  

    I asked him: What then?  

    He responded: If it takes off, I'll turn down McKinsey and do it full-time.

    **sigh**

    Sorry dude, it doesn't work that way.

    I could be wrong.  Maybe your startup is going to hit the market just right and take off.  You'll be so busy trying to scale, you'll barely have time to deposit checks from investors...

    But, I'm probably not wrong.  If you work really hard, you'll get a product launched and hopefully build up some buzz.  Maybe there will be some traction.  But when that decision to McKinsey is due, there is a 99.9% likelihood that you won't have enough traction yet. But if you keep at it, work your ass off, stay determined, iterate like crazy...well, then you might just make it big.

    But that's not going to ever happen, is it?

    You already know you're going to take that McKinsey offer.  You're Eduardo Saverin from Facebook's infamous history, who did a summer internship at Lehman Brothers while Facebook was skyrocketing with growth.

    And that's okay, if that's your decision.  I don't have grudge against the jobs that 99% of people do.  Entrepreneurship is not for everyone.  If you decide to take a job that makes sense for your career and helps you support your family, I support that decision 100%.  But when you ask for advice about your 'startup,' my response is never going to be about your product.  I care far more about you and the potential implications of you romanticizing what it means 'to do a startup.'  My advice:

    Don't waste too much of your own money.  

    Don't waste anyone else's money.  

    Don't drag any co-founders or employees along with you.  

    Do it as an educational hobby, but don't call it a startup.

    If you're on the fence about entrepreneurship, just don't do it.  This is a big plunge.  If you're not ready to jump both feet first, than you're just not ready.  If you want to be an entrepreneur, a real entrepreneur, you should know up front what you're going to do with that BigCo offer letter.  Skip the whole romanticizing entrepreneurship part. There will be lots of failure.  Lots of opportunities for giving up.  Real entrepreneurs, for whatever reason, keep going at it.  And they know that from the start.  If you're signing up for that long road, give me a call.  I'll help you in any way that I can.

     

     

    Find discussion of this post on Hacker News 

    ******************
    I'm Jason Freedman.  I co-founded FlightCaster.  
    You should follow me on Twitter: @JasonFreedman.
    You can send me a Linkedin request or become my bff on Facebook

     

    Don't plug leaks when you got no boat

     

    My first company, Openvote, was a question and answer site where people could poll their community.  We had dreams of the site being a forum where bold conversations could take place.  We wanted people to expose the real issues going on at their school or company and really push the envelope of controversy.  We knew that, if successful, we could become a powerful way to give people a voice.  We also knew that the site could easily spiral out of control.  We were very concerned about this prospect.  Very concerned.

    We knew we would need ways for users to flag comments that were inappropriate.  But wait, what if people were flagging good comments just because they disagreed? We'd need a way to monitor who was flagging what and allow the community to vote on whether a comment should be removed.  This would probably require some sort of moderator system to help facilitate the process.  Which would also mean that we would need a process by which the community could elect moderators.  They'd need a page so that there would be transparency in the community.  There was a lot to do.

    Fortunately, a lot of companies have tackled these types of problems.  We researched how the Wikipedia community is managed.  We looked into Digg's sorting algorithms.  We studied Reddit's process for using moderators.  We followed Hacker News's karma system.  And all of these sites had one thing in common:

     

    They had users.

     

    We had no one.  No one was spamming us.  No one was leaving inappropriate comments.  No one cared about us.  We were irrelevant.  We weren't pre-product-market fit; we were pre-product!  

    We were solving problems that hadn't occurred yet!  And I see this from entrepreneurs all the time. It makes sense.  You pitch your vision all the time.  You invest emotionally in a dream and begin to believe in it as if it's already happened.  You have to because investors/advisor/friends/employees need convincing that this thing is really going to happen. 

    And if you let those big fictitious plans infect your product development process, you're in a lot of trouble.  Product development is about figuring out the single most important problem that exists right now and doing that and only that.  It's much harder to do than it sounds.  Somebody has to keep the whole team focused on those issues that are most critical right now.  And that somebody is you.

     

    Tips for focusing on the right priorities:

     

    Read Getting Real

    I recommend this book more than any other book.  Written by the guys from 37 Signals, Getting Real flips the way most people think about product development. Instead of starting with the big vision and working backwards.  You figure out the most important features and build those before doing anything else.  Every single MBA interested in entrepreneurship needs to read this book.

     

    Break features into V1, V2, Vx

    Take all those awesome, creative, forward-thinking ideas and throw them into a bucket that you label VX.  Keep V1 as your minimum viable product.  Put your next feature request into V2.  You'll be shocked how many times you re-prioritize after V1 and never end up doing what you originally planned for V2.

     

    Do stuff that doesn't scale

    This is one of my favorite tricks.  Anything you can do upfront that reduces development time, you should do.  Even if that means doing something manually.  Even if it means calling up people one-by-one.  Sign-up forms don't have to be implemented up front.  A recommendations algorithm can be replaced early on with brute force hustle.  

     

    Create hypotheses

    The goal for a startup is to find product-market fit before running out of money.  Once (and if!) you find it, your goal will be building your business.  But until that happens, you should assume that your hypotheses are wrong and work as quickly as possible to disprove them.  Make sure everyone involved in the company understands the hypothesis on which you're currently working.

     

    Use link-testing as trial balloons

    Have a hypothesis for a new feature that will take 2 months to build?  Design the page in a day, throw it on your site, and invite people to use it.  When people go to click on the link, ask them to join your beta-testing list for this new feature.  You can even A/B test this with alternative features to help you decide which to build first.

     

    Track your speed of experimentation

    How long does it take you to prove or disprove a hypothesis?  I love seeing early-stage companies that can execute at such a speed that they're testing a meaningful hypothesis about their company every month.

     

    As an entrepreneur starting from scratch, you're not maintaining a battle ship; you're inventing a new type of raft while on the verge of drowning.  Don't plug links when you got no boat.

    tl;dr: stay lean.

     

     

    Find discussion of this post on Hacker News 

    ******************
    I'm Jason Freedman.  I co-founded FlightCaster.  
    You should follow me on Twitter: @JasonFreedman.
    You can send me a Linkedin request or become my bff on Facebook

    Everyone sucks at interviewing. Everyone.

    So...

     

    Just.  Don't.  Interview.

     

     

     

    Interviewing is broken.  Has been for years. This rigid commitment everyone seems to have to the standard resume/cover letter/interview system of hiring is just plain insane.

    I've been fascinated by hiring processes for years.  Hiring great talent is such a massively tough challenge, and I see so few companies that do it well.  Even the best companies hide a deep dark secret: their hiring processes don't predict success accurately.  It's long been whispered that Google's sophisticated HR scoring system has little correlation with an employee's success at the company.  One management consultant for a top firm told me recently that, despite incredible efforts to improve hiring analytics, the best predictor of success for junior employees was still just their SAT scores.

    Paul English, one of the absolute best said this about his style of hiring at Kayak:

     

    "At times, I've fired maybe one out of every three people I've hired. That might make people think I'm bad at hiring, but I think I'm quite good at hiring."


    So, Paul English, one of the most respected out there, gets 1 out of 3 wrong?  Shit.  This stuff is hard.  But Kayak is at a stage of development where the organization can sustain the disruption of people leaving.  Most startups I know have such difficulty firing because everything is already so unstable.  Can't fire during a product launch. Can't fire during a funding round.  Let's give him 3 more months and see if things improve...

     

    I don't claim to be good at hiring, but I do have a particular style that I learned from some advisors.

    I never actually interview people.  Ever.

    I think of hiring as mutual courting. The only way to court in a work setting is to spend time working together.  Whenever I'm thinking of hiring someone, whether entry-level or senior, we do a project together.  I pay them a reasonable contractor fee for the work, and I make sure it's the type of work that's easily definable, has clear deliverables, and lasts a few weeks.

    Sometimes we do this process and the project goes outstandingly well, and we make a full-time offer.  Our ability at this point to define a job description and compensation package is remarkably easy.  We know what we're getting.  The employee is also motivated at this point because we've all proven ourselves to each other. He's learned the real strengths and weaknesses of the business and of working with the team.  A decision to accept a full-time offer at this point is a well-informed one.

    Sometimes, the project turns out only so-so, at which point we wish the very best to the applicant and do whatever we can to help him find a role that is perfectly suited for him.  There's no termination paperwork, no 6 months of trying to make it work, no awkward conversations about his progress behind closed doors.

    Sometimes, a talented person can't, for whatever reason, commit to a 3 week project.  But maybe there's a smaller project he can do over nights and weekends.  Maybe there's an open source project of mutual interest.  Maybe he can take 3 days off his oyher job and work half a week and a weekend with us.  If it's a student, maybe he can join us for part of spring break.  And if none of that works, then well, we can't hire him.  And we wish him well and do our best to refer him to a company that will work.

    But what we don't ever do is engage in some interview/code puzzle/awkward question process that has nothing to do with what it's really like to work with us.

     

    Courting great people, working together temporarily as contractors, and then only engaging in full employment when everything proves out as hoped--that's the way to go. This method is spreading throughout the startup world, and I think it's good for everyone involved.  Most of the BigCo business world doesn't work this way.  Most larger companies have HR departments that hire through a more formal process.  I would guess that BigCo Inc. could actually be far more flexible than it currently is, but that's out of my scope of expertise.  I know for certain that startups can be more creative (and less insane) in their hiring practices...and they should.

     

     

    Find discussion of this post on Hacker News 

    ******************
    I'm Jason Freedman.  I co-founded FlightCaster.  
    You should follow me on Twitter: @JasonFreedman.
    You can send me a Linkedin request or become my bff on Facebook

    How to Email Busy People

     

    I was just chatting with a friend that is a successful entrepreneur, advisor, and angel investor.  He has 1700 unread emails in his inbox.  1700!  

    This happens to him every month or two.  All it takes is a few days of vacation, a company emergency, a funding round, or any other real life issue.  Email just loads up on him.  He's always trying new GTD strategies, collaborative software, inbox fixer programs.  They all help to some degree, but the reality remains that he receives a shit ton of email.

    You know who else receives email like this?  Every VC you've ever emailed.  Every angel investor.  Every biz dev contact at company XYZ.

    I get a lot of email, but nothing at this level.  I've got my inbox zero strategy, my gmail labels and filters.  It's all basically manageable for me.  But not for investors. Investors are constantly flirting with suffocation from email overload.  Every once in awhile they just delete and start over.

    If you're trying to reach one of these guys to pitch for investment, advice, or a deal, you need to be conscious of their needs.  Email etiquette from company founders often just sucks.  And when you receive no response back from an investor, you'll never know that it was your email etiquette that sunk you, not his actual disinterest.

    You need to assume several key realities about the target of your email.  He has received 300 other emails that day.  He has temporarily forgotten how you met.  He has temporarily forgotten everything you've already talked about.  He has 20 seconds to spend on your email before deciding to handle it later (which may mean never). He probably won't click any links or open any attachments.

    All of this is irrespective of the fact that he may indeed care about you and your startup.  But email is such a burden on his life that he just can't be accomodating when it comes to triaging hundreds of emails.

    So a few email etiquette tips:

    Subject Lines Matter
    A lot.  Your subject line should be uber-concrete and descriptive. Bad:  "Re: fundraising advice".  Good: "Seeking fundraising advice for my startup FlightCaster (as per intro from John Smith). If you can fit the entire question into the header, just do it and include #eom at the end, which means 'end of message'.  Yes, it feels weird.  Do it anyways.

    Use Your Company Email Address
    Everyone has multiple email addresses now.  When you randomly email or respond from your personal gmail account, you make it harder for your target to search his archives for context on your conversation.  If you don't include your company name, he won't even know what you do!

    Remind Him of Context
    You met him at a conference and had this fabulous conversation about your startup, and he totally got it.  You just know he got it.  Guess what?  He's had 137 conversations with other entrepreneurs in the last 3 weeks.  Remind him of where you met, what exactly you do, and how you met.

    Limit Your Entire Email to 5 sentences or Less
    Seriously.  I know it's painful.  You have so many important things to say.  However, getting it read is more important than getting all that explanation in there. Preferably it's 3 sentences.  Your goal is to make it easy for him to respond immediately from his smartphone.

    Make Your Ask Explicit
    If you want a meeting, ask for a meeting.  Provide some time options and ask for a specified length.  If you want an introduction, ask for an introduction.   If you're looking for funding, tell him you're currently fundraising and ask to meet to show him your pitch.  Don't be sly.  Don't hint.  Make the process ridiculously easy by just asking for what you want.

    Respond Immediately
    Show your target respect by responding to everything immediately.  Just because the VC you're emailing might not get back to you immediately, doesn't mean that you have the same privilege.  Ron Conway famously makes immediately email responses a pre-condition for investment.   

    Include a Short, Professional Signature
    My standard signature includes my name, company, blog, Twitter, and LinkedIn.  If I want a phone call or fax or meeting, it'll include phone number, fax, address.

    Find discussion of this post on Hacker News 

    ******************
    I'm Jason Freedman.  I co-founded FlightCaster.  
    You should follow me on Twitter: @JasonFreedman.
    You can send me a Linkedin request or become my bff on Facebook

    The #1 defining characteristic of entrepreneurs

     

    They bounce back.

     

    It's THE defining characteristic of being an entrepreneur.  Some

    entrepreneurs are creative, some aren't. Some are tech-focused, some

    aren't. Some are business savvy, some aren't.  But bouncing back.

    Yeah, that's what makes an entrepreneur.

     

    I'm working with some business school students right now on an

    entrepreneurship project.  They're putting together a pitch deck as

    part of their spring semester, and I'm advising them.  After 4 weeks

    of work, they were still 'concepting' the investor deck and hadn't yet

    produced a reasonable first draft.  I was growing concerned with their

    progress.  They were doing typical MBA things that may have worked

    well in, say, consulting, but were a poor match with entrepreneurship.

    I was most concerned with their slow rate of adapting to the

    entrepreneur's mindset.

     

    Finally, after another week of too little progress, I emailed the group's

    leader this message:

     

    "I think it's wake-up call time for both you and the team.

     

    I have significant concerns that this project will come to fruition

    with any level of acceptable quality and depth, both in terms of

    normal school standards and my standards, which are considerably

    higher.  I'm not saying you won't get there, but as of yet, I've seen

    no evidence that this team, as currently led, will make it.

     

    I doubt there are many things in your life that you have done poorly.

    I fully expect you to take a tough round of feedback in stride and

    respond with gusto.  As always, I am on your side and available to be

    helpful in any way that I can."

     

    It was a pretty tough message to send and to receive (I assume, far

    tougher to receive).  I do like being a nice guy, supporting people

    with positive encouragement.  I come from a summer camp background and

    believe in helping build people up.  

     

    Except when that doesn't work.

     

    And positive encouragement doesn't work with certain kinds of

    smart people.  Some smart people (and lots of them go to business

    school) have had too little failure in their lives.  They're so

    successful in everything that they do, that they are not accustomed to

    tough feedback, disappointment, gut-wrenching failure.  These smarties

    develop an unhealthy fear of failure.

     

    In my follow-up conversation with this student, we talked a lot about

    the concept of iteration.  He had led his team through 4 weeks of

    planning and discussion with no real output yet.  I told him to get

    the team together and come up with a version in the next 3 days.

    Whatever it is, at least then we could start iterating.  It made total

    sense to me--enough planning, let's get to a minimum viable product!

     

    His response took my breath away.  He said:

     

    "If my team burns the midnight oil for 3 days, producing a deck and it

    turns out to be no good, their morale will be crushed.  I can't do

    that to them."

     

    And that right there is fear of failure.  Five uber-smart,

    accomplished people can't handle a tough round of feedback?  I highly

    doubt that.  Actually, it's not fear of failure, it's fear of the

    possibility of failure.

     

    There are two massive implications to protecting yourself from

    failure.  The first is that you limit yourself by choosing challenges

    that are guaranteed wins.  You lose out on all sorts of experiences

    that would've been incredible learning opportunities because you didn't want to risk failing.  

     

    The second implication, which is far more dangerous, is that you actually believe

    that your skills are limited.  When forced into new, tough situations,

    you give up before trying.  Just think of how many times you've given up on

    yourself without really testing your own limits.

     

     

    I've failed at many, many things in my life.  I've become quite good at it actually.

     

    I remember so vividly how I felt when my first company failed.

    It wasn't just that the company had failed, it was that I had failed.

    And in my mind, it was even more than that.  I had failed because I was

    a failure.  I remember the regret I felt for skipping those traditional

    business school job opportunities. Working at a consulting firm,

    making a stable salary, and not failing.  In that moment, consulting felt like it would

    have been the best thing in the world.  Instead, I was stuck in a very

    lonely depression, unsure of what to do.

     

    Funny thing though.  That only really lasted like 3 days.

     

    Failure is like swimming in the deep end.  As long as you don't drown,

    it's not as scary as you thought.  After 3 days, I called up my co-founders and we

    agreed to do another start-up together--whatever that would be.  Four

    weeks later, we started FlightCaster.

     

    Entrepreneurs bounce back.

     

    ***

     

    I had a really good talk with the MBA student leader a few days ago.  I

    reiterated that I believed in him and that I am on his side, available

    to help.  With half a semester left, he has plenty of time to bounce

    back.  He had no plans to be an entrepreneur.  In fact, he picked this

    project because he wanted to step outside of his comfort zone and

    learn something new.  I am confident that he's going to blow

    away all expectations, including his own.

     

    This conversation just happened.  I've written this post before I

    actually know if he is going to make it.  The team's final project

    isn't due until the end of May.  I've asked his permission to

    publish this post now, and I'll update you all in a few weeks with

    their progress.

     

     

    Find discussion of this post on Hacker News 

    ******************
    I'm Jason Freedman.  I co-founded FlightCaster.  
    You can find me on Twitter: @JasonFreedman.
    You can send me a Linkedin request or become my bff on Facebook

    The busiest week of your life

     

    A few months ago, an entrepreneur friend called me up to ask about a meeting he had coming up with a VC.  He had met the partner at a conference, gave him the elevator spiel, and was now asked in to do a pitch.  He hadn't planned on fundraising yet, but now that he had this meeting in 2 weeks, he wanted help getting his pitch together.

     

    I told him to cancel it.

     

    Or at least, change it.  Make sure it's explicitly not a fundraising pitch.  Meet in a coffee shop, tell him you only need advice--do anything except pitch him.  And make sure he knows it's not pitch time.  The beginning of the fundraising needs to be a well orchestrated process.  You want to have already established a list of desired investors. Already have met them and shared your product. Already have built a personal rapport.  And, you want to control the timing of the start.

     

    ***

    In 2009, having just completed Y Combinator, we were starting the fundraising process for FlightCaster.  My Startup Advisor had given me some tips on the fundraising process.  One of those tips was to stack the investor meetings altogether.  

    And we did.  Our first week of fundraising was one of the most intense weeks of my life.  We had on average 5 pitches a day up and down Sand Hill Road.  While my co-founder drove between pitches, I would furiously email admins, arranging times and places.  Late into the night we would alter the deck.  It was absolute insanity.  In many way, we would have performed better if we had gone slower and given ourselves time to breath.  

    That would have been a mistake though.  Doing a lot of investor pitches all in a row accomplished several important things for us:

     

    Iteration

    We were substantially changing the deck everyday, often times several times per day.  Every time, we got a new question, we built an appendix slide to answer it. Every time we got stuck in the flow of the pitch, we were able to alter the deck to flow better the next time. 

     

    Rhythm

    By the third day, the pitch just rolled off my tongue.  My co-founder and I had a give-and-take by that point that was just seamless.  When an investor had a nuanced question about the data inputs in our algorithm, I could skip to appendix slide 49 without looking down.  That level of conformability meant that I could spend more of our time and energy focusing on the investor and his decision making process than my own nervousness.

     

    Buzz

    Investors talk to each other.  A lot.  Especially if you're raising in Silicon Valley, you should expect that every investor that is meeting with you has already talked to a bunch of others or will as soon as you leave.  Most investors rely on social proof as part of their filtering mechanism.  You don't want an investor to call up his friends, mention that he talked to you, and find that he's the only one.  That's a clear indication that you're not going to be 'hot' deal.  Investors all want to be one step ahead of each other, but they rarely want to be more than one step ahead.

     

    Syndicates

    Especially if you're raising a multi-angel seed round, you'll most likely be building a syndicate.  When you stack your pitches, you get all the balls in motion at once. As other investors learn that their friends are negotiating term sheets or signing convertible notes, it becomes easier to bring them in on the deal.

     

    Due Diligence

    You want your investors to make quick decisions.  If you give them months to analyze your startup, than they will find something wrong.  Don't take it too far though.  If your round is overhyped and you rush the investors, than you'll be stuck with a bunch of people you don't really know and that aren't fully on board with your vision.

     

    Synchronization

    You want competitive term sheets because that's the best way to increase your leverage in the round. As PG tells us, term sheets breed term sheets.  It often is that the absence of a competitive term sheet process will mean that you get zero term sheets.

     

    Speed

    You want the whole fundraising process to take as little time as possible.  Several weeks for angel rounds and no more than a couple of months for VC rounds.  Most importantly, you desperately need to get back to your product and to your users.  Additionally, you need to be very careful that you don't become a shopped plan.  A shopped plan happens when you fundraise too long (usually 8+ weeks).  Investors hear that you've been out for awhile and start to wonder why no one else has bitten.  The lack of fundraising success itself becomes the reason that they won't invest.

     

    All this means, that you should have a definitive 'start' to your fundraising process. And when you hit day one, it should be the beginning of busiest week of your life.   Done right, you'll meet with fabulous people who will all be rooting for your success, regardless of whether they choose to invest.  With awesome planning and a bit of luck, you'll have great options for investors that will be with you for the life of your company and probably your career.  Treat the experience with the respect it demands and do your homework far in advance.

     

    Find discussion of this post on Hacker News

     

    ******************
    I'm Jason Freedman.  I co-founded FlightCaster.  
    You can find me on Twitter: @JasonFreedman.
    You can send me a Linkedin request or become my bff on Facebook

     

    Don't be an idiot. Find a great Startup Advisor.

    Some naiveté is an important part of doing a startup.  Startups are fueled on unrealistic dreams and contagious optimism.  The uber-successful entrepreneur always do things that no one thought would work.  Their pure insistence to do things their way becomes a new standard for how things are done.  

    And we entrepreneurs know this.  We're so used to people telling us that something won't work that we have developed a little voice that continually tells us 'They just don't get.  I'll prove them wrong."  It's a healthy mindset.

    The problem occurs when entrepreneurs take it to an extreme and fail to get any good advice because they want to do everything their way.  When I started my first company, I couldn't figure out how to split equity with my co-founders.  I hadn't read any good blogs and had never done this stuff before.  None of us were full-time yet and none of us had put money into the company.  We all had wavering levels of commitment.  We came up with this insane plan where we would track our time contribution each month and adjust equity dynamically.  We built a spreadsheet, talked through the variables, and mutually agreed that is was fair.  Each month, we would self evaluate our contribution as full-time, partial, or limited.  New shares would be authorized each month to take into account the varied work performed.

     

    It was just insane.  We were being idiots.  

     

    What would an investor have said if they had seen this insanity?  Eventually, we switched over to a normal equity split with vesting schedule according to standard docs, but it was a pain in the ass to convert over and involved some awkward talks amongst the co-founders.

    What was really telling about our equity spreadsheet insanity was that no one told us that there much better solutions available.  We didn't have anyone to ask.

    I think about that first equity spreadsheet whenever I talk to an entrepreneur with some dumb ideas about how to run their start-up.  As a rule, I never give product advice because I know for a fact that I'm horrible about predicting the future of industries.  As readers of my blog know, I give very strong opinions about process though.  There are many parts of the start-up process that don't need significant innovation.  An entrepreneur's education is to learn all these conventions that work well and then innovate on their product. One of the wonderful parts of our Hacker News community is that we're educating each other on all these conventions that work.

    In addition to being a good reader of great blogs and books, you need a great group of advisors. Many people have covered the value of having an advisory board to help you with introductions, investor credibility, insight into an industry.  I'm not addressing that here.  

    My recommendation is to find a 'Start-up Advisor'--someone that will advise you on the tactical and strategic parts of running your start-up.   At Openvote, we had some incredible senior advisors at the point that I came up with our idiotic equity plan.  However, they were either too senior to ask them about day-to-day execution details or too industry-focused to know how to help with start-up matters.

    Do you have a great Start-up Advisor that is helping you paddle through the currents?

     

    Attributes of great Start-up Advisors:

     

    Only a few steps further down the path

    A great Start-up Advisor gives advice that is undoubtedly relevant.  A entrepreneur that is several steps in front of you will still remember the challenges you are facing.   They can warn you about issues that aren't yet on your horizon.  My best Startup Advisors often seem to use the phrase, "then what's going to happen is..."  because they're tuned into your exact stage of development. Be careful with respected BigCo experts that are trying to be Startup Advisors.  Despite good intentions, their Google/Facebook/Amazon/Salesforce perspective may be wrong for start-ups at your stage.

     

    Happy to help with the small challenges

    You'll have big strategic questions with your startup.  Hopefully, all your advisors will help you with these big ticket items.  Meanwhile, you'll have a thousand small executional issues that will all be important in some small way and all cost you time to figure out.  How do I set-up an office?  What's an 83b?  Should we develop our iPhone app internally?  How do I write a terms of service?  A great start-up advisor will help you make good decisions on all these small items.  The aggregate of getting all this small stuff done right upfront is what becomes executional excellence.  

     

    Willing to call you out on idiotic stuff

    There are times when you're just wrong -- When you prevent getting good advice because you're in stealth mode.  When you dream up crazy equity vesting plans.  When you go way past your minimum viable product without launching.  A great Startup Advisor will give you advice with enough authority, credibility, and directness that you see the error of your ways and adjust without wasting too much time.

     

    Is respected by your co-founders

    A great Startup Advisor can break deadlocks or prevent them from even happening. Co-founder relationships take so much work to maintain, especially during the trough of sorrow, that it's relieving to have someone that can quasi-over rule everyone.  When a Startup Advisor weighs in on a dispute, small or large, that's one time when no one needs to win or lose the argument.

     

    Cares about you more than your startup

    My best Start-up Advisor on both of my last companies is a childhood friend who has always been a few years ahead of me in start-up land.  He's a great friend first and a start-up mentor second.  When other advisors lost interest because we had failed to find product-market fit and it wasn't as fun anymore, he was always there with support and guidance. Absolutely invaluable.  By the way, Paul Graham and Jessica Livingston are this way.  They support their YC entrepreneurs first and the startup second.  

     

    One of the great parts about being in the Y Combinator community is that we all serve as Startup Advisors to each other.  It's an incredible advantage. If you don't have easy access to great Startup Advisors like the YC alumni network, you need to find one anyways.  Until you do, you'll be making small idiotic decisions, never knowing that you're slowing digging your own grave.

    As always, if there's anything I personally can do to be helpful to you, please do let me know.

     

     

    Find discussion of this post on Hacker News

    ******************
    I'm Jason Freedman.  I co-founded FlightCaster.  
    You can find me on Twitter: @JasonFreedman.
    You can send me a Linkedin request or become my bff on Facebook

     

     

     

    Thank you New York Times for the shout out!

     

     

    Well shit.

     

    I'm not sure what happened with that post on the silliness of stealth startups.  Man, it sure took off.  200,000 page views, 800 Tweets, and still going.  I spent the week talking to dozens of entrepreneurs about their startups, answering Facebook and LinkedIn requests, chatting with people on Twitter.  Love it!

    And then...the New York Times calls!  As my roomate would say, THAT'S HUGE!

    I'm just getting around to posting about this now.  Check it out.  It's a nice write-up of the blog post.

     

    New York Times, 2/21/2011:  Got a Great Idea? Tell Everyone!

     

     The author also added a nice quote from our interview that I keep meaning to write an entire blog post around:

    "There’s one piece of advice that Mr. Freedman ignored, even though he heard it a lot from some wise, experienced people — that his idea wouldn’t work. Instead, he followed the wisdom offered decades ago by Arthur C. Clarke, the science fiction writer: “When a distinguished but elderly scientist states that something is possible, he is almost certainly right; when he states that something is impossible, he is probably wrong.”

    Thanks David for the write-up.  And thanks to everyone who spread the love.  Much appreciated.

     

     

     

     

    ******************
    I'm Jason Freedman.  I co-founded FlightCaster.  
    You should follow me on Twitter: @JasonFreedman.
    You can send me a Linkedin request or become my bff on Facebook