Without Their Permission: How the 21st Century Will Be Made, Not Managed

by Alexis Ohanian

  I asked one of the inbound press requesters how she had heard about us—Hacker News (News.YCombinator.com —a reddit for startup news). Journalists are getting story ideas from us. And why not? The zeitgeist has never been more evident, so it makes sense to write about what we’re already starting to buzz about.

  This successful launch story is rather typical. Build something people want, launch it to the world, try not to vomit, and see what happens.

  A few months after our launch, Kayak, a major competitor, filed their S-1.4 And it didn’t matter. It didn’t matter that one of our many competitors had already made $128 million in revenue that year and was looking to raise another $50 million. We didn’t need to ask anyone’s permission, certainly not theirs, to start a competitor. We’d simply built a better travel search experience and we believed we could win with superior execution.

  Kayak inadvertently did us a favor just months after we’d launched. At a major travel summit, the Kayak CEO was asked about hipmunk, and he declared, “I find their bravado refreshing. I find their product unremarkable. […] The Internet’s a busy highway. I hope they don’t end up as roadkill.” He couldn’t have done us a bigger favor, and Adam shrewdly capitalized on it when he took the stage. He announced, “I’m Adam Goldstein, CEO of hipmunk, the startup that Kayak’s CEO can’t stop talking about.”

  Online, an upstart company of three people in a San Francisco apartment is immediately on the same playing field with a multi-million-dollar company preparing to go public. And we can win. All our investors are betting on it.

  Revolutionaries in Cairo

  “And that’s how we know we’re on to something with hipmunk. Questions?”

  I made sure to put extra cat photos in my slide presentation for the forty or so Egyptian entrepreneurs in the audience. I figured it couldn’t hurt.

  I was there at the Marriott in Cairo just a few weeks after the social media–fueled revolution that toppled Hosni Mubarak’s regime. In fact, I was speaking as part of a collaboration between the US and Danish governments designed to win hearts and minds by providing mentorship for Egyptian Internet entrepreneurs. Just weeks earlier, Mubarak had literally turned off the Internet in Egypt. Now here I was answering questions—the same questions I get asked by startup founders in Brooklyn—for a group of Egyptian revolutionaries. Not the bullshit kind of “revolutionaries” people like me are sometimes called for the work we’ve done to build companies or nonprofits—these men and women had brought down an authoritarian government and were now working to rebuild their country through entrepreneurship on the open Internet.

  Talk about inspirational. I didn’t leave the Marriott until long after nightfall. We were speaking and mentoring during daylight hours, and the entire group buzzed over dinner with stories and perspectives from the Egyptian founders, whom we’d had the privilege to meet. It was a mix of young and old, American and European, but we were all united in awe of the founders, who were hungry to bring their dreams to fruition online. I barely saw the Great Pyramid, but frankly, I didn’t mind. Inside the obligatory photo of me in front of one of the Seven Wonders of the Ancient World, rocking a hipmunk shirt I designed, of course, is a person beaming because he had a hunch validated.

  This was the first time in all my travels that I’d seen a situation like this. Living and volunteering in my own homeland, Armenia, for three months exposed me firsthand to the relentless resourcefulness of entrepreneurs at all levels of society. But even with all Armenia’s woes, the country was nothing close to the rough state Egypt was in when I met with my startup peers there. They faced far, far more challenges than I did in the process of getting their companies going. And they were doing it with the same bullish ambitions in spite of tremendous hardships, such as a thirty-year dictatorship that had been recently overthrown by a haphazard collective of revolutionaries with the hope of crowdsourcing a constitution and holding Egypt’s first free and fair election in decades. They had no hesitation. They were as fearless as any other entrepreneurs you’d meet, only they had legitimate fears in a country that was figuratively and literally rebuilding.

  Taking the agony out of travel also turns out to be the basis for a viable business in many contexts, including on the congested streets of Cairo. That’s what five cousins—Aly Rafea, Mohamed Rafea, Gamal Sadek, Mostafa Beltagy, and Yehia Ismail—are doing with Bey2ollak (it’s Egyptian slang, used when telling someone about something you’ve heard), a mobile application (iOS, Android, BlackBerry, Windows, and even Nokia!) that allows commuters to crowdsource more effective routes to avoid the city’s notoriously awful traffic. Turn on the app and check road conditions updated by your fellow drivers. Return the favor next time you’re stuck in traffic with a simple touch (select red for bad, yellow for meh, and green for clear). It works. And it doesn’t require expensive infrastructure or—you guessed it—anyone’s permission.

  The app launched supporting only one platform, BlackBerry, and ended the day with five thousand installs. When I met them in Cairo, they had expanded to multiple mobile platforms and had tens of thousands of users. Today, Bey2ollak has hundreds of thousands of active users. And they started it all without spending a single Egyptian pound on advertising. The same online platforms that let Egyptians coordinate protests and share their revolution with the world also let them share their secret for beating traffic. The same social media strategies that I’ve been using for a travel startup based in San Francisco are working for a traffic-fighting startup based in Cairo. And why not?

  Building an audience doesn’t require a large advertising budget, certainly not at the beginning. Making something people want—something that people love, that solves a real problem they have in an elegant way—is the most effective thing one can do to generate buzz. There’s no secret to “going viral,” despite what plenty of self-appointed “social media gurus” may tell you (hint: if they call themselves that, run in the opposite direction). What online success stories have in common isn’t a cute mascot (but seriously, at least consider it); it’s tenacity. As my EgyptAir flight took off, I regretted not booking it on hipmunk, but more important, I realized there really is something special going on online in Egypt.

  I’m playing a small part in this massive network, but in Cairo and throughout the world, there are great ideas and talented people to pull them off—people who have an opportunity they simply did not have even a decade ago. And it’s unlike anything we can even fathom.

  Holy shit. This “Internet” thing is gonna be big.

  A Year In, I’m Out

  After a little more than a year of running the marketing and community building for hipmunk, essentially from my apartment in New York, I moved into an advisory role while we searched for someone to take over who’d be based in San Francisco.

  I didn’t realize it then, but the timing couldn’t have been better. Without a full-time job on my mind, I turned my attention to my social enterprise, Breadpig, and signed the deal to write this book. Then a few weeks later, I learned that two bills, SOPA and PIPA, were before the House and Senate respectively and were poised to pass before year’s end. If they passed, they would do considerable damage to Internet innovation, not to mention free speech. With the extra time on my hands, I dove into the fight and found myself meeting legislators in Washington a week later. I was subsequently invited to testify in front of the House, and I appeared in The New York Times as one of the faces of the opposition movement.

  In the year that followed my exit from hipmunk, Forbes magazine called me mayor of the Internet,5 and then, after we concluded our Internet 2012 Bus Tour across the heartland of America, BuzzFeed went all-in, saying I was running for president of the Internet.6 I was also included on Forbes’s 30 under 30 list, twice. Now, with my thirtieth birthday on the horizon, I look at twenty-two-year-olds with a bit of envy, but mostly awe. They’re much further along at that age than Steve and I were. I’ve got more work to do, but it’s going to be fun watching and helping where I can as hipmu
nk continues to soar.

  Not only is hipmunk growing as a business, it’s also growing as a company. At the time of this writing, it has just closed its Series B financing and employs thirty people in a new office in San Francisco. I continue spreading the word about hipmunk’s little rodent and handing out luggage tags to excited fans. Hipmunk is on a great course, and I’m extremely proud of everything it’s done so far and will undoubtedly continue to do. We have no idea what’s in store for ourselves or our businesses. That’s life, accelerated, on the Internet.

  In good times and bad, be relentlessly resourceful. And always be giving damns, lots of damns, about what you do, whether it’s the things you make or the service you provide.

  CHAPTER FOUR

  Startup MBA Part I—Make Something People Love

  I’ve got this great idea….

  Everyone

  Here’s the thing about ideas: ideas are worthless. That might sound harsh, but my experience has been that execution is everything.

  You might be thinking, “But what if someone steals my idea?” Trust me: most of us don’t have the spare time to start a company with your great idea, and even if we did, it’s going to be up to you to outexecute your competitors. You’re going to be dealing with competition from the day you launch, so you better learn to stop caring about them right now.

  Far too often, founders are so enamored of perfecting their ideas that they don’t even want to tell people about them. And then when they launch, they’re suddenly put in the position of having to tell their idea to everyone who’ll listen.

  Even better than telling is showing. In fact, any discussions you have—with advisers, potential investors, or clients—aren’t terribly valuable before you have a prototype. You need something to actually talk about—and test. The job of a good investor or adviser is to digest this and to ask tough questions. It’s not to embarrass you, it’s to see how you think and then help you diagnose the current state of your business and get you to the next step.

  Since co-founding reddit with Steve and starting more companies after it, I’ve invested in more than sixty tech startups and advised hundreds more through my role at Y Combinator. It’s given me a valuable perspective on many different startup scenarios that all serve as real-world lessons—some of these companies have been acquired, others have imploded, some continue to soar, and others are still finding their way.

  The one thing they all have in common is that they’ve “pivoted” at some point. At least, that’s the popular euphemism for “failed and adapted” these days. But no matter what it’s called, early-stage companies are bound to change their ideas along the way. It could be dramatic—like an entirely different market or a brand-new product—or it could be more subtle. But either way, a company that’s just a few months old is going to be different a year later. At this early stage, we invest largely in people, because, as I said, ideas are cheap. Another reason not to get married to your ideas, even the ones that seem perfect.

  Steve’s pre-reddit idea, My Mobile Menu (but really, who could forget MMM!?), came about because Steve hated waiting in line for his take-out food even though he already knew what he wanted before he walked into the restaurant. Steve thought he’d found a solution to one of modern life’s most vexing problems, but most people didn’t agree.1 So we had to find another problem to solve. What we settled on was our desire to know what was going on in the world at all times, and our frustration at the lack of a single, always fresh front page for the Internet. Then, as you know by now, we found our audience.

  Our friends from the Y Combinator summer class of 2005, Justin Kan and Emmett Shear, sold their company, Kiko.com, for $258,100 (on eBay, of all places) when Google launched their web-based calendar. The Google calendar’s integration was so tight with Gmail that the writing was on the wall for Kiko. The Kiko team, ever the intrepid founders, used the sale as an opportunity to pivot. They repaid their investors and dove into Justin.tv, which is now the world’s leading live streaming video company. In the early stages, surrounding yourself with the right people is infinitely more important than having a good idea. Your relationship with your co-founder(s) is what’s more likely to make or break your company than your idea itself.2 Picking a co-founder is actually quite a bit like marriage, only there’s no sex—though from what I’ve learned from married couples, that’s actually just like marriage.

  Identify Genuine Need

  The Internet, unlike your mom, is fickle and ruthless (unless your mom is also fickle and ruthless, in which case you should have a leg up on your competitors). Attention spans are short, and there’s always a cute cat video just a click away. That means you’ve got to be compelling. And you’ve absolutely got to make something people actually want or they’ll never stick around, let alone come back.

  I encounter plenty of startup founders who have a great technology they’ve engineered and shoehorn that into a solution that they hope people will want. To me, this route is much harder than identifying a real problem first and then solving it as simply as possible.

  Worse are the founders who aren’t able to build anything yet and are simply brainstorming and drawing mock-ups in the vacuum of their own heads. Find your customers right now and talk to them. Are they just being polite? Bear in mind that most people don’t like giving bad (honest) feedback. That positive reinforcement about your idea doesn’t mean a thing until someone actually pays you or until you see repeat, engaged visitors coming to your website.

  So how do you make something that people actually want? Start with a real problem.

  Obviously it should be a problem for you, but be sure it’s also a problem for others. The thing is, sometimes people don’t realize they have a problem. And often just telling them they have a problem will only elicit an “Oh, that’s good enough for me.” As the old cliché goes, we’re creatures of habit. It’s really hard to persuade someone to try your thing when the status quo is good enough. But put a better solution in front of the same person and suddenly the status quo looks repugnant.

  This is precisely what happened with hipmunk. Few people Adam or Steve spoke with before launch thought there was a problem with how they searched for flights. They took for granted that you had to sift through tons of terrible flights and hunt across a mess of tabs for the best itinerary. It wasn’t until we launched and consumers saw our agony-free alternative that they realized how bad everything else was by comparison.

  You’ve undoubtedly encountered products or services that have frustrated you. Keep a notepad handy—I prefer digital, but analog is fine, too—and write down whatever is upsetting you. There’s a good chance you’ll find a business in those notes.

  Remember, Adam’s awful experiences booking flights for the MIT debate team motivated him to start hipmunk because he figured there had to be a better way to search for flights online. Similarly, Airbnb got its start because the founders needed to pay their rent and realized there were lots of other people who would pay to rent the founders’ unused space.

  So many successful companies start out like this: the founders were having a problem, and they found a way to solve it. A company doesn’t have to start this way, but it’s the easiest place to start. Make something you’d use (and, ideally, pay money for). That’s what we did in the case of reddit and hipmunk (the latter being the one having a baked-in business model from day zero).

  Another starting point is to have an idea that very few people other than the founders can actually build. These technical feats provide a natural defense against competition: remember, every hard problem you solve drops a massive obstacle in front of anyone who’d want to replicate you. Certain problems haven’t been solved because none of the few people smart enough to do so have made it happen. Look at something like Google, which Larry and Sergey were technically capable of building at a time when not many people were. Back then, there were very few people smart enough to build their own search engine, let alone imbue it with software that could crawl and ra
nk the entire World Wide Web.

  There’s also a third route: think of an idea that is rooted in a perspective that everyone else is missing because they don’t see the potential today. A friend and fellow startup dude, Chris Dixon, describes the extreme version of this by saying, “The next big thing will start out looking like a toy.”3 One example of this would be Kickstarter. Their first project, Drawing for Dollars, surpassed its humble twenty-dollar goal by raising thirty-five dollars, which came from three backers who bought artwork from an artist in Long Island City.4 Less than three years later, a team using the same platform raised ten million dollars in preorders for a futuristic watch called Pebble.5 The idea of a group of people pitching in to make something come to fruition is hardly novel, but the way the Kickstarter team leveraged the Internet to pitch to millions of people simultaneously (as opposed to a coterie of traditional investors) certainly was.

  Know What You’re Doing

  Once you’ve identified a problem, you might be tempted to dive right in and start trying to solve it. But you need to do your homework first. That means research.

  One of my portfolio companies, ELaCarte, which builds software to enable restaurant customers to order and pay through a tablet, was founded by a talented MIT grad, Raj Suri, who really wanted to understand the business he was diving into. When he first pitched me, he explained with the measured words of an engineer that he’d gotten a job as a waiter. An MIT PhD—a waiter? My former-Pizza-Hut-waiter heart grew three sizes that day.