Love Thy Haters
Long before the glorious day of our acquisition, we were just grateful that Y Combinator had let us into their exclusive program after a dramatic rejection. This program, with Paul at the helm, was oriented toward key developers, who really do have all the leverage in this industry. I was one of only two “nontechnical founders” in the program. Despite having programming experience in high school and college, I was devoting my time to doing “everything else” at the company, though that assertion was met with quite a bit of skepticism. A running joke that Steve had to endure at Y Combinator meetings was “What does Alexis do?” One of the advisers in the program even overheard me speaking German (I’m proficient, thanks to my mother) and remarked to Steve, “Alexis sounds much more intelligent in German.”
I didn’t think I sounded that dumb in English. Fortunately, as a guy who grew up with the name Alexis, I quickly learned that it’s those with the lowest self-confidence who belittle and bully other people. When it comes to put-downs, I ran out of “fucks” to give back in grade school, so now I just embrace it.
When we launched reddit, I made a note of the exceptionally bad feedback we got. There weren’t a lot of haters, but the bad feedback was incredibly useful. I printed out all our most vitriolic and negative feedback and created a “wall of negative reinforcement” beside my desk. I quoted people who said that we weren’t doing anything innovative and weren’t going to have a chance—a particularly clever commenter renamed the Summer Founders Program the Summer Flounders Program. We were the first Y Combinator startup to launch, after all, so although not many people had heard of the project run by Paul Graham and his associates, the ones who did trained their gaze directly on us. I loved all the negative feedback. The more baseless, the better. I wanted to know exactly whom I’d be working to prove wrong.
My favorite piece of motivation would come a few months after we launched. We hustled a meeting with Google, thanks to a fortunate (albeit slightly strategic) seat I took beside Chris Sacca, Google’s head of special initiatives, at a dinner that Paul had organized after our first startup school. We hit it off well enough, and Chris sounded open to having Steve and me visit Mountain View the next time we were in town. Score. Once we had a meeting with Google, it seemed prudent to also try to schedule something with Yahoo!, too (I’m not sure what their share price will look like when you’re reading this book, but back in 2005 they were actively acquiring young teams that embraced popular technology, such as del.icio.us and Flickr).
Our Google meeting went splendidly. We met with scores of people and even ended up getting an acquisition offer that Steve and I turned down. There’s no better confidence boost than turning down an acquisition offer, especially from a nerd-tastic company like Google, but it’s also terrifying, because you don’t want to regret it.
Yahoo! was a different story. After a cheery meeting in Mountain View, we went down to Sunnyvale for a chat with some Yahoo! folks. In short, they were not impressed.
We took them through a demo and talked about our traffic numbers, which admittedly weren’t all that impressive back then. Our company was still only a few months old, and Steve and I were still a two-person company, but we hoped they’d see the same promise in us that Google had.
Out of nowhere, the guy who was running the meeting said:
“You are a rounding error compared to Yahoo!”12
He said it flatly, smothered in a hearty condescension sauce. Maybe it was just part of a very strange negotiation strategy, but after that the meeting went quickly downhill. We left soon thereafter, fired up our Metallica mix CD (yes, I know), and took our rental car back to SFO. Back in Boston, I printed out a new piece of paper that would become the centerpiece of my wall. It had only five words on it:
YOU ARE A ROUNDING ERROR.
Those five words still motivate me to this day. And that executive is still working in the ranks of Silicon Valley, still (I hope) fueling the fire inside more founders like me.
You Can’t Make Progress When You’re Not Taking Steps
It’s not all “up and to the right” (the direction of the line on a traffic chart that tracks soaring logarithmic growth) for startups. Most of them will never enjoy that kind of growth. Reddit certainly never did. Instead, you’ll have weeks when user growth (or customer growth, or another kind of growth) isn’t moving up as fast as you’d like, or not moving at all, or worse, going down. The latter is the best time to spur your team to action, but the other situations are seductive, since plenty of founders are lulled into an “It’ll get better” mentality. It can, but only if you start attacking the problems.
What’s a good place to start? Customers. Users. The people you’re trying to prevail upon to care about your business.
Outliers are outliers, remember, so instead of being disappointed when you’re not the next Facebook, be happy to be your own company that solves a real problem with an elegant solution and wins in a market that’s underserved. Investors want to know they’re going to get a return on their money despite the terrible odds, and investors realize that Mark Zuckerbergs aren’t born every day (thankfully, given the identity crisis Mark would have—though there is at least one child named Facebook in Egypt).13
Experience is traditionally undervalued in the tech sector because we’re accustomed to the wunderkind myth. But that being said, there are so many things I’d end up being smarter about if I had reddit to do all over again. Fortunately, Steve and I applied these lessons to hipmunk. For instance, back then I remember worrying a lot about designing business cards. In fact, I’ve still got my original business cards from reddit, and they terrify me. I was learning my way through Photoshop, and it shows. I also have no idea why Steve and I both chose the title Director.
Phone number censored for the sake of whoever has it now.
Focusing too much on a rather inconsequential item, such as business cards, underscores a larger problem I had with relinquishing control to more talented people—also known as delegation—which becomes even more important as the team grows.
Find People Who Give a Damn; Hire Them; Repeat
A startup will begin its life in your head. Maybe you’ll start building it yourself, or maybe you’ll recruit some friends to help you. Those first team members, whether they join as founders or employees, have a tremendous impact on your company’s fate.
You cannot succeed with a broken team, so hire wisely and fire quickly. One ideal quality in an employee can be best summed up as: “Gives a damn.” I’ve heard it called different things by my peers, but you should be hiring people who take pride in their work. Whether they’re developers or salespeople, if they don’t give a damn about the mission of the company and the quality of their work, you and your team will suffer.
Startups have so little going for them. They start out unknown, understaffed, and underfunded. That means decisions like early hires become priorities of the greatest magnitude. You see, the primary advantage you have is your absolute focus on solving a specific problem better than anyone else. Larger companies simply cannot have that kind of focused dedication, nor can they inspire a work ethic as passionately as a startup can (another reason why it’s not worth paying attention to the competition, because it’s the ones you don’t know about yet that are probably going to be drinking your milk shake).
To get you started, here’s a list of questions I like to ask potential hires:
What have you built? What interests me most is what you’ve built outside of work.
You’re interviewing for job X, but how do you feel about doing Y, which is only barely within the scope of X?
What about working at a startup appeals to you?
You’ve got a week left to live—we can safely assume I’ve given you the week off. What do you do?
What’s the last awesome thing you learned?
If you could do literally anything you wanted for a living, what would it be?
What’s your spirit animal?
If you’ve had the pleasure of working with an elite team, you know what a difference it makes. And if you haven’t, you know what it’s like when it’s not working. And it’s bad.
So what sorts of people do you actually want on your team? In early versions of Y Combinator, Paul Graham used to ask teams to tell him something about each founder that shows how that person is an “animal.” Here’s how we responded in our application:15
Animals? We’re a freaking zoo…. 16
Steve regularly works extra hours at his current programming job, even when overtime isn’t an option (i.e., working for free), to fix nagging bugs. At school, Steve often works late nights with computer science friends helping them get assignments working….
When it comes to design, Alexis literally won’t rest until every pixel is aligned—sleep deprivation is the status quo, and when it comes to working in general, coffee makes sure he’s the last one to go to sleep at night and the first one up in the morning.
The difference between working with people who care and working with those who don’t is vast, and the repercussions don’t just lie in the work they do but in every element of your interactions with them. Surely you’ve been in jobs with co-workers who just don’t care, let alone take pride in their work. It’s a nuisance in those situations, but when it’s your own company, it’s absolute poison.
From the Investor’s Perspective
Having had hundreds (thousands?) of cups of coffee with startup founders, I’ve become aware of some interesting trends, and although I’m by no means a perfect investor, I’ve identified some clear indications that a founder is cooking with bacon. (I’m trying to make this phrase a thing—please help me out by using it anytime you want to say “doing a good job.”)
Ultimately, as an investor, I want to be afraid. Not for my safety, but afraid that a founder is going to make a huge dent in the universe and I won’t be there to help with an investment. What makes me afraid? When that founder shows me a product that’s gaining lots of traction (traffic, revenue, or, ideally, both).
I still meet with founders during office hours at cafés across New York City and even at various cafés on my global travels, because I want to give back to the entrepreneurial community that has done so much for me. I also have selfish reasons: as an investor, I want to build a reputation as someone who brings more than a checkbook to a company looking for funding. That said, while twenty minutes’ worth of advice and possibly investment will be helpful, the reason the open Internet is such a phenomenal place to operate is that there are no gatekeepers.
You could be told by me, or any other leader in this industry, that your idea won’t work. There’s nothing stopping you from proving us wrong. The editor of this book is a gatekeeper whom I managed to win over, and while he has impeccable taste and a winning personality (are you reading this, Rick?), he could’ve said no to me. But innovation online doesn’t have a doorman. The only barriers are an Internet connection, a laptop, and you.
What are you waiting for? Start building. And once you’ve got something you’re pretty sure people want, here’s how to take advantage of the world’s biggest stage.
You’re Introverted? Did Myers or Briggs Tell You That?
They’re both wrong. Those Myers-Briggs tests that business schools love are notoriously flawed. In fact, several studies have shown that when people take the test a second time, as many as 50 percent of people will get classified as a different personality—even after only five weeks.17 By all means take the test, but take it about as seriously as your horoscope. I do not believe we’re confined to these slots, although we may have predispositions.
I see personality evolution happen in the span of just a few months at Y Combinator. It takes work, primarily practice, to get up onstage in front of people and pitch. That’s why YC insists that founders show up every Tuesday for dinner to pitch to their fellow founders. This has two effects: first, it helps people practice the important art of the demo, and in addition, it shames founders into having something new to show every week. If you see your fellow founders every day, it’s hard to get a good answer to “What’ve you been working on?” because it’s only been a day. If you haven’t got a good answer after a week, something’s wrong.
Start pitching. Pitch your cat for practice (they’re notoriously hard to impress). The elevator pitch is standard for good reason—you’d better be able to explain your company in an engaging and understandable way within a few sentences—the time it takes to get in the elevator with that potentially life-changing person and successfully pitch her before she gets off at the executive floor.18
If you want a stranger to give a damn about what you’re working on, you’d better give a damn yourself. Speak sincerely, not like a salesman, and hack away at the words in your pitch until they are as few and as jargon-free as possible. Explain it to the executives like they’re five.19 Well, a precocious five.
Walking and Talking Billboards
I somehow didn’t learn that the word swag was an acronym until recently—though it’s occasionally called schwag (not to be confused with low-grade marijuana). Swag stands for “stuff we all get.” If you’ve been to a conference, you likely ended up with a tote bag full of it: shirts, pins, stress balls, the list goes on and on. It’s become an acronym because expectations are so low. There’s nothing special when we all get something. T-shirts and stickers are ubiquitous these days, so I’ll use the former as an example of how to approach this.
When you hand people a shirt, you’re basically asking them to be billboards for you. They’re giving up their torsos for your brand, and most people think they’re doing you a favor by even allowing you to give them a shirt. And the truth is, they are.
Why do we decide to hang on to shirts years after they’ve become unfit to wear in public? Sentimental value (and a very tolerant spouse). Your shirt will end up ignored in the closet or in the donation bag unless you can infuse it with some value. A brand people believe in has value, but none of your would-be walking billboards will give a damn about your brand if you don’t.
So make swag that people actually want. It’s hard enough to get people to be evangelists for your brand, so don’t chafe them with a crappy shirt. Once it looks and feels good, make them earn it. I’ll coyly tell people who ask for swag to “prove how much you love [insert product name here].” Or I’ll surprise customers who’ve already demonstrated their love—by means of great feedback or lots of activity—with a gift of swag.
If you do it right, you’ll give your customer a story to tell when someone asks about the shirt. Now you’ve got an evangelist. She’s going to be the one carrying your brand, feeling sorry for people using your competition, and converting them. She’s infinitely more valuable than the billboard on the highway, because she’s not doing it for the money—she’s doing it because she gives a damn.
Here’s the good news: if you’re making a product or service or idea that people like, this is a tremendous boon. You should certainly do things to encourage your s
upporters to spread the word. But the future looks far more daunting for the people and companies who dissatisfied and disrespected their customers. The Internet will be their reckoning, because the World Wide Web is flattening the planet. As long as all links are created equal, we have a level playing field—a global platform from which ideas can spread.
CHAPTER FIVE
Startup MBA Part II—Blueprint for Growth
A startup is a company designed to grow fast��. The only essential thing is growth. Everything else we associate with startups follows from growth.
Paul Graham, “Startup = Growth”
Paul Graham, founder of Y Combinator, identifies the core defining characteristic of a startup as growth, which makes it fundamentally different from other types of businesses.1 No matter how successful a brand-new brick-and-mortar bakery is, it’s still not a startup because it’s limited by space and muffins and employees, which all require time and capital to grow. I love muffins, but what makes a startup special is that unlike a bakery, it can grow logarithmically (i.e., it can experience hockey-stick growth, up-and-to-the-right growth, and “Holy shit!” growth—okay, I made that last one up). That’s because of software. Write the code that solves a real problem and brings in revenue in the process, and investors want to invest in your company—even when it’s just two founders in a living room—because they know that in a year it could employ fifty people and earn millions in revenue. That’s what we’re betting on.
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