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This interview is ~40min. If you just want the audio, use the mp3 version. You can also get the video on your iPod/iPhone via iTunes.
For more interviews, visit the Traction Book site.
This interview is ~30min. If you just want the audio, use the mp3 version. You can also get the video on your iPod/iPhone via iTunes.
For more interviews, visit the Traction Book site.
Many entrepreneurs think they are building an empire or sparking a powder keg, when they are really trying to start a movement.
I think beginning with the wrong expectation will greatly increase your chances of failure. You need to be prepared for the movement lifestyle. It's struggling to get customers, fighting to get people to care, or even to get people to give your idea a ten-second glance.
My last company was a powder keg. My current one is a movement. The differences in day to day life are staggering.
Containment vs convincing. Short term success vs the long haul. Be prepared.
Empires are rare. They're rare because they take a lot of money, time, and conquest to build.
Canonical examples are Amazon and Zoho. They start with a city (books, network management). Then they take go out and conquer neighboring markets, with no end in sight.
Eventually empires have to start building all sorts of infrastructure. It gets complicated. You're probably not building an empire.
Powder kegs are also rare. They're rare because they're all about the perfect idea, which involves doing the right thing at the right time.
Canonical examples are Skype, I Can Has Cheezburger and now Chatroulette. Once released they immediately take off virally.
You spark that powder keg, and it explodes. Then it's all about containment. If you can keep it under control, you can make an awesome exit, e.g. Hotmail, but you can just as easily implode, e.g. Friendster.
In any case, you probably don't have a powder keg to spark.
Attempted movements are a dime a dozen. If you're in a startup, you're probably trying to start a movement.
Movements are all about getting followers. You simplify your core idea and construct a message. You court evangelists, one by one.
If you can do this, eventually your movement may grow on its own. If it's a mainstream enough idea, it could grow into a revolution. Canonical examples are Wikipedia and Twitter.
More likely though, if all goes well you'll end up with a good business with happy customers who tell other people in similar situations about your products.
When you have your idea, you like to think of it as a "game-changer," i.e. an empire or a powder keg. With high probability, it is neither. It's a movement. Of course, it could eventually turn into an empire (Google) or have its powder keg moment (Twitter). Bu it won't start out like that.
So before you start focusing on getting traction, you need to know what kind of company are you starting. It will mold your focus and expectations correctly. And while your at it, also decide whether you are selling vitamins or painkillers.
This interview is ~30min. At Jimmy's request, we did not record video, so I put his picture up throughout the audio. If you just want the audio, use the mp3 version. You can also get the video on your iPod/iPhone via iTunes.
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Continue reading Jimmy Wales on Getting Traction.
When I sold my last company, we had about twenty million cumulative user registrations, were signing up about one million new users a month and were sending out about one million emails a day.
When you get those kinds of numbers, the one in a million occurrence happens quite frequently.
- The craziest person you've ever met. An all caps rambling email that makes little to no sense.
- The angriest person you've ever met. The accusatory email claiming something ridiculous like you deliberately hacked into their computer or caused it to go haywire and they are reporting you to the Attorney General's office as consequence.
- The strangest piece of mail you've ever received. The African woman who insists your site is a dating service where you personally match people up and so physically mails to your PO Box a profile with picture.
- The code path you never knew was possible. How did that get in my server logs / in my database / on that screen shot?
- The check in the mail. We didn't take checks. Yet that didn't stop people from sending them.
The first times these happened, I was pretty amazed/scared/intrigued, or whatever the case may be. But what was really amazing to me, was how repetitive these events were.
These cases above happened on the order of one in a million, which means I was getting a few a month.
The same you-hacked-my-computer emails. The checks in the mail. And yes, I would receive about one letter a month from some African person who misunderstood my site and sent me their life story with picture. It was always from Africa. And I never quite figured that one out.
The YC/Ron Conway angel investing strategy seems to me to be: focus on finding really smart, determined people, and the returns will follow.
Their strategy makes perfect sense for them, but not necessarily for me.
Here's them:
- Essentially unlimited funds to invest in who they want.
- Incredible deal flow, probably capturing a large % of promising early stage startups in their investing spaces.
- Lots and lots of deals.
Here's me (you probably know what's coming):
- Orders of magnitude less funds.
- Orders of magnitude less deal flow.
- Orders of magnitude less deals.
Paul Graham was just on Mixergy saying potential exits are so unpredictable, he doesn't even think about them when making investment decisions.
My premise is I can't do that because I simply don't do enough deals and don't have similar deal flow. Given these facts, I think angels like me probably need a modified strategy. Essentially, we should have a higher bar to invest.
Yes, we should only invest in smart, determined people. Yet I think we also need to think at least a little bit about exit probabilities and magnitudes.
But doesn't that contradict Paul Graham's point that they are inherently unpredictable? I don't think so if you concentrate on more realistic exit possibilities.
That is, I agree that exits are unpredictable, but big exits are way more unpredictable. Googles are pretty much black swans. IPOs are less rare, but still pretty rare (at least in the past decade). And 100M+ exits happen somewhat frequently, but are still rare enough that YC hasn't had one yet in its five year history.
But they will--it's just a matter of time. Ron Conway has had many big exits over his longer time span. Both YC and Ron Conway will make their great returns on these rare, unpredictable events.
And that's the thing. I don't think I can count on being part of any big exit event at my small deal rate. But I think I can ensure more of a chance of decent returns (as opposed to super great returns) by thinking a bit about potential exits.
I should probably look for founders with some idea about customer acquisition and/or market. For example, a founder doing something interesting in the dating space would probably be more interesting for my strategy than a founder doing something in a brand new market with great yet completely unproved potential.
The bottom line is their strategy might get them in on the next Google. However, me following their strategy at my deal rate will most likely not get me anywhere close to the next Google. But with a modified strategy, I can probably still make decent returns and work my way up to their strategy, which I would of course love to do if I could.
I've gotten more serious about angel investing lately, and I'm struggling with how to value prospective angel investments.
Let's say my target is to get 30%/yr on my angel investments. If my investments have 5 year time horizons (on average), and 10% hit the high mark, that 1 out of 10 that hits needs to have a 37x exit event (on my share). If I was more successful at picking winners, say 2 out of 10, that drops in half to 19x exit events.
By the above logic, which I'm starting to believe, I should only consider investments that have a realistic opportunity, albeit unlikely, to return 20x on my investment. Should I have such a cutoff?
As my share in the company goes up, it gets more likely that their high exit outcome will return the required amount. I probably won't put in much more money per deal, so a higher share for me means getting in early and/or being really hands-on.
This interview is ~40min. If you just want the audio, use the mp3 version. You can also get the video on your iPod/iPhone via iTunes.
Thank you to Prakash Swaminathan for introducing me to Alexis for this interview.
For more interviews, visit the Traction Book site.
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I see a lot of single founder discouragement on the startup interwebs. I'd like to start offering an alternative viewpoint, and I'd appreciate it if other single founders would join me.
Single founders are indeed rare, but we're out there. The perception is that we are rare because we never succeed, but that isn't the case.
I think you don't hear much about us because:
- We don't often get funding and the press/recognition that comes with it.
- Entrepreneurs are discouraged from being single founders in the first place.
- Most people, even most startup founders, aren't equipped to be single founders.
On the last point... I've seen a lot of posts lately on qualities that make good startup founders. I made the following list a while back when thinking about good co-founders:
- Intellectual curiosity
- Independent thinking
- Analytical thinking
- Likes to work
- Works efficiently
- Dedicated
- Emotionally stable
- Ability to focus
- Responsible
- Integrity
- OK with no salary for a period of time
- Shared financial/exit goals
- Shared product areas
- Compatible personality
For example, startups are an emotional roller coaster. With a co-founder, they can be up when you are down and visa-versa. When you are a single founder, you don't have to be up all the time, but you have to be up enough to keep going.
Basically you have to do everything yourself. There is no business co-founder and tech co-founder; it's all you.
Since most startup founders aren't equipped for this challenge, I think their knee-jerk reaction that it isn't a good idea makes sense (from their perspective). They can't see how they could do it, so they project that no one can. But that just isn't so.
There are at least three single founders on the HN leaderboard:
There may be more. These are just the ones I know off the top of my head, glancing at the list.
Don't get me wrong--there are many great reasons to have co-founders, and I have had my share of them. But in some situations with the right person, founding a startup yourself does make sense.
What else do you want to know about single founders? I have some topic ideas but I'd love your suggestions.
Update: additional comments can be found here (on HN).
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