15 important lessons from this lecture:
00:00:19 How do you think about yourself, and your skillset, as a founder? How do you get ready? How do you know when are you aready?…
Entprepreneurs need skillsets, charisma, and a personality that give him or her a competitive edge, however people incorrectly perceive founders to be Superwoman, or Superman who are capable of doing everything.
Also, in his lecture A Checklist Of Counter-Intuitive Startup Rules, and his interview How Angel Investors Judge Startup Founders, Paul Graham of Y-Combinator makes a list of other personality traits and characteristics of successful entrepreneurs, noting specificially that he looks for entrepreneurs who already have a few successful ventures on their entrepreneural CV.]
So what actually makes a great founder? Here’s a checklist of the most important:
1.) Your founding team is important
00:03:53 It’s usually best to have 2-3 people on a team who compliment and trust each other rather than a solo-founder because each team member can compensate his or her strengths with the other co-founder’s weaknesses. This balance is especially important when pitching to investors:
- Do they collaborate well?
- Do they help each other get to the truth; do they reason rather than argue with each other?
- Do they learn collectively?
[EDITOR’S NOTE: Again, in his interview How angel investors judge startup founders, Paul Graham explains that the founder is more important than the idea. “When people come to me with an idea I always begin by asking about the co-founders. I care MUCH less about the actual idea than I do the idea’s foundings – what kind of people they are. A bad idea might be a bad reflection on the entrepreneur.
There are some people who just get what they want in the world, and if you’re going to try and start a startup you have to be one of those people.”]
2.) Your startup’s location is important
00:05:42 While the Silicon Valley is super strong at aggregating a lot of super-talent from around the world, not ALL of the great software people actually move here. Great founders are good at finding the location which contains the network which will be essential their obligations and tasks they need and the problem they want to solve. Silicon valley, for all of its strengths, may not be the best place for your startup.
In my (Ried Hoffman’s) opinion, I don’t think Groupon could ever have been founded in Silicon Valley because in its early days it grew because of its massive sales forces. Renting a 25 story building, whereby 24 of the stories would be sales people, would not have gained a ton of interest in Silicon Valley. Therefore, Groupon set up in Chicago, which is more open and adapted to this kind of business model.
[EDITOR’S NOTE: In his lecture Human Resources Management: Local to Global HR Department Models, Armin Trost explains that every organization has a headquarters based somewhere in the world, and there are historical, logisitical, branding, etc. reasons why companies choose to have their companies headquartered in a specific city, and that typically, a company starts out as an idea in a garage somewhere… and then grows: locally, regionally, nationally… Once you have one single, tiny customer in another country, at what point do you identify yourself as ‘international?’]
When starting a business, move to where the network is.
3.) Are you, or are you not contrarian is important
00:10:01 It’s easy to be contrarian. It’s hard to be contrarian and right. So your idea is ‘contrarian,’ how does a smart person disagree with you from a position of intelligence? If they present some serious flaws and holes in your idea, then perhaps your idea isn’t as contrarian and right as you’d like it to be.
Contrarian is also relative to the audience. The general population, that you’ll need to grow, may not like your contrarian idea, so it’s important to ask yourself ‘What do I know that the general population doesn’t know?’
There are many different ways to be contrarian.
4.) Knowing when to do the work and when to delegate is important
5.) Knowing when to be flexible or persistent is important
00:14:12 Entrepreneurs are vigorously told to have a vision, stay on track and stick through the difficult times. Conversely, entrepreneurs are also vigorously told to listen to data and customers, pivot, and be flexible.
As the entrepreneur, you must decide when you should be flexible and when you should be persistent.
[EDITOR’S NOTE: In his talk How to win clients without pitching, Blair Enns warns entrepreneurs that when it comes to pivoting, look at where you and your company are today because it’s almost certain that you can look back and see the series of switches behind you that lead to where you are. Those switches are things that you said “yes” to instead of sitting down, mapping out a vision of what you want your company to look like and the type of expertise you want to build and the kind of clients you want to represent, and then saying “yes” or “no” according to that vision. Essentially, it was the market that shaped your firm, not you.
Also, again in his talk Managing your professional and private life, Oussama Ammar argues that there are plenty of startups that exist, and are successful, that shouldn’t be. For example, many people have found themselves in a romantic relationship where one thing about the person is great, but then many other things are horrible. If you, as an entrepreneur, find yourself running a business that is making ‘enough’ money to keep running it, but you are miserable and not capable of pursuing other, better projects you enjoy, then you’re going to have to make the difficult choice of choosing between the money you’re making or walking away from that business.]
6.) Knowing when to be confident or cautious is important
7.) Knowing when to focus internally or externally is important
00:16:00 Should you ignore the world, or should you draw from the world; this depends on the current problem you’re trying to solve.
[EDITOR’S NOTE: For more information and advice on conducting consumer research and focusing externally, read my interview with Peter Spear. Also check out the books: Buy*ology by Martin Lindstrom and Consumer.ology by Philip Graves.]
8.) Knowing when to work by vision or by data is important
00:17:31 Do customers and people really know what they want? Are they really telling you what they would buy? Data and vision aren’t always opposites, nor are they always hand-in-hand. Data might globally support your vision, but point out a few minor modifications that should be addressed.
9.) Knowing when to take risks and when to minimize risks is important
00:19:18 The only contrarian, disruptive, and potentially lucrative business ideas are the ones that also have risk associated with them. The aim is to distinguish risk-taking from intelligent risk-taking. A lot of this boils down to your critical thinking skills.
[EDITOR’S NOTE: Referring yet again to Oussama Ammar’s talk on managing your private and professional life, he reasons that when it comes to calculating risk, one of the best ways of keeping your storyline realistic, measurable, and positive is to maintain an entrepreneural CV (resume).
With seed funding, for example, many entrepreneurs optimize their company to obtain as much seed funding and Series A investment money as possible, and many entrepreneurs would rather gamble and turn down bad or mediocre offers in the hopes of a better offer. But now consider this from the perspective of the entrepreneural CV: that actually raising the funds and selling their company is an accomplishment that VERY, VERY few entrepreneurs can actually put on their CV; that the great majority of startups fail.
If the entrepreneur were to strategically accept a mediocre investment offer, then that entrepreneur has set himself/herself apart from all those other entrepreneurs, and this accomplishment will be a permanent fixture on his or her CV.
If, however, the entrepreneur holds out for a better offer, and that better offer never comes, then that entrepreneur will have nothing to put on his or her CV other than a failed business.
As an example, Aaron Levie, CEO and Co-founder of Box has only 3% of his own company he created; a very low percentage in terms of the industry. Yet in accepting this he has joined the exclusive club of only a handful of entrepreneurs to create a billion dollar company.]
10.) Knowing whether or not to focus on the short term or the long term
00:22:55 You should always have a long term vision in mind, just in case you accidentally lose your direction, but if you’re not focused on solving the problem that’s immediately in front of you, you’re in trouble.
00:23:30 Product distribution, not product idea, is fundamentally more important idea to deal with because no matter how good your product is, if you can’t get it to consumers, you’re ruined. Even below product distribution is financing for your product, because even if you have a really good idea, if you run out of financing and can’t get your product to consumers, you’re ruined. Therefore your current fundraising projects should also be setting you up for your next fundraising project which should be helping you solve other, different problems.
00:27:12 Today there are 1,000s of other similar products and services consumers can choose between, so you really have to be able to communicate the unique selling point that you offer that nobody else does/can.
[EDITOR’S NOTE: For a professional branding perspective on identifying your unique selling point, read my interviews with Art Director Julien Hérrison.]
00:29:14 The great majority of the time investors only agree to meet with you if you, as a founder, come through a reference, and this is mainly about time management. An opening sentence like “Sam Altman of Ycombinator, a mutual acquaintance of ours, sent me to you” means more to a potential investor than an entire pitch of useful and convincing evidence, data, and accomplishments.
00:30:15 Since its conception, Linkedin has always been labeled as a second, little tiny one next to the giants friendster, then myspace, then facebook… ultimately, I started Linkedin believing people wanted public, professional profiles, and that the world would be much better off with this, and further, Linkedin is getting closer to this than every other option out there.
Granted, it took Linkedin longer than I hoped it would to get there, and often times Linkedin was only covered by public relations as the “Friendster for professionals,” or the “mysapce for professionals…” but the internet eventually turned in our favor and we succeeded.
00:38:11 With software, speed to market is key. With hardware, accuracy is the most important because if you build and ship the wrong thing, you’re ruined.
00:42:14 Entrepreneurs and founders never have a balanced lifestyle, because having a balanced lifestyle means that he or she probably won’t invest what is needed in turning this idea into a business.
[EDITOR’S NOTE: For the final time in this lecture, I will refer to Oussama Ammar’s talk Managing your private and professional life, where he argues that the beginning of a startup is difficult because the kinetic energy that must be created at the beginning is incredible. This phase tends to be extremely taxing on both your mental and physical health, and leaves you with plenty of obsessive behaviors and social handicaps. This is because during this phase you are obsessively committed to one single goal: getting your startup up and running. During this phase, winning or losing one additional client can mean the difference between failure and success. But once your business is up and running, winning or losing one client probably won’t make that much of a difference.
One of the best ways to avoid burnout during this phase is to understand that this phase is temporary, and to create a contract with yourself, committing yourself to focus on your start for a pre-determined amount of time and where you expect the project to be by that time. Then respect that contract. If you haven’t achieved your results within the amount of time you set aside for it, let it go and move on to another project.
Another way to avoid burnout is to understand that life consists of five fundamental elements:
- Everything else
Now choose only two. If you’re launching a startup, then you must choose only one more and forget the rest. You’re launching a startup and have a family (wife and kids)? Then forget your friends, hobbies and everything else. Once your startup gets moving on its own, then you can replace ‘work’ with another fundamental element, such friends or hobbies.]