Startup School And Survivor Bias
Takeaways from Startup School 2012
Startup School is an event put on by Y Combinator at Stanford University with speakers from successful startups and VCs. I have watched Startup School streams online before, but this year was the first time I had ever attended in person. Not to beat a dead horse, but I will say that the predominantly young male audience sporting t-shirts and various levels of hygiene created the quintessential startup vibe.
Startup School weekend is a good networking opportunity but of the awkward kind due to the typical awkwardness associated with startup culture. For example, I met someone I see all the time that turns out to be a fellow SF zombie programmer who also works from home. We have been neighbors for over a year without proper introductions. I also met a cofounder of a hugely successful startup who hilariously downplayed his role, and at another point, I'm pretty sure I was being hit on.
Demos and pitches were flying everywhere as well. I am bad at disguising my boredom for social local mobile apps, but yes, I saw a demo for another one of those. A "Yahoo! Pipes for Excel" was an interesting idea. An iPhone app that, without giving away too many details, could essentially tell you whether or not you need to exercise more — also interesting. I will definitely have demos and business cards ready for next year.
Zuckerberg on dropping out to start a company
Zuck went on stage first with Paul Graham and shared (publicly for the first time?) about his actual plans to return to Harvard after his summer in Palo Alto, the one made famous in The Social Network. Harvard has a policy where students can take extended breaks and push back their graduation date. He didn't decide to drop out until Facebook had reached 1 million users. The real story doesn't fit the drop-out founder image promoted by Hollywood and the press.
Zuck also brought up that he can't relate to the allure of starting a company for the sake of starting a company. I thought it was notable when Paul Graham interjected that he wished more founders wanted to start companies out of necessity. Then Zuck advised founders to work on ideas that were fundamental and to not just copy others (with some fun jabs at Myspace). Zuck's segment was interesting, but I preferred his last interview with Michael Arrington at TechCrunch Disrupt on the IPO, HTML5, mobile/mobile web strategy/growth, etc.
Stripe, Uber, and Weebly are "killing it, bro"
It was awe-inspiring when Stripe, Uber, and Weebly shared their stories and presented their growth trajectories. They all went through the infamous trough of sorrow before finding product-market fit in their respective markets (without pivoting?). Their hockey stick graphs shot up and to the right like the Felix Baumgartner video played in reverse. Some interesting facts:
- Stripe was originally to be called "/dev/payments" (Jack Dorsey would not approve).
- Stripe's founders spent time in Buenos Aires, a nocturnal city on a programmers schedule.
- Uber doesn't actually own any cars or employ any drivers.
- Uber provides more economic opportunity for drivers than the incumbent model (taxis).
- Uber has real problems with government corruption and bad regulation.
- Uber ran an ingenious promo called Ubercade: youtube.com/watch?v=TqtiLYFoafw
- Uber wants to be the low-end Uber (UberX) vs. Lyft.
- Uber has a surprising amount of sophisticated data science under the hood.
- Weebly has built a solid foundation in a no-brainer, but unsexy market (long-tail web design).
- Weebly's office has a secret room behind bookcases in their library (like Pixar, etc.).
The other companies represented at Startup School (Github, Pinterest, and Stack Overflow) were already known for achieving massive growth but they had interesting things to say as well.
Y Combinator: Be careful who you start with
Jessica Livingston, Partner at Y Combinator, warned aspiring entrepreneurs to be careful about who they start with. She also talked about investors' herd mentality, the time and energy it takes to be successful at fundraising, and the importance of focus: writing code, talking to users, and exercising. Y Combinator has funded over 460 startups, the vast majority are unheard of and presumably not breakthrough successes like Airbnb or Dropbox (yet?). This number alone was one of the more interesting data points of the day. Will Dropbox and Airbnb pay for it all 10x over? (The answer is yes.)
Ben Silbermann emphasized the importance of committing to your work. He also said it's important to do one thing well. Form follows function; features follow form. His slide about the opportunities Pinterest has from a data science perspective was interesting. He also emphasized the importance of meetups and grassroots marketing, specifically their effective Pin It Forward campaign that functioned essentially like chain mail.
Ben Horowitz: Be 10x better
Ben Horowitz, Partner at Andreessen Horowitz, talked a little about running Opsware and their IPO. Horowitz implied that building an MVP, practicing Lean Startup, getting an MBA, etc. were overrated. He emphasized the necessity of being 10x better than the status quo or competition for users to care or consider switching. He also said that he invests in founders that have leadership (not management) qualities and used Bill Clinton as an example.
Github: People, product, and philosophy
Github is a bootstrapped company that has recently raised $100M. The founding team was large and had complimentary skills (RoR developers, a designer, and a git expert). Tom Preston-Werner talked about evolving mission statements, the importance of designers, and how Github optimizes for user and employee happiness while building their product. He also talked about the value of learning through employment opportunities which can be counterintuitive for entrepreneurial types.
Ron Conway is long on Google and the Internet
The theme of Ron Conway's segment seemed to be that the Internet is still in its youth. Conway said that he believes Google is a 50+ year company with its peak still ahead of us. He also talked about how a Twitter monetization guy told him that Twitter would never see as much growth as Pinterest because of the superior economics in e-commerce, a core space with unrealized potential. He also talked about funding entrepreneurs through their entire careers and used Ev Williams as an example.
Hiroshi Mikitani invested in Pinterest over drinks and karaoke
Hiroshi Mikitani, founder of Ratuken, the #1 ecommerce company in Japan, talked about acquisition strategies, competing, and venture capital in Japan. It sounded like Pinterest was a strategic investment for his company primarily for geographical reasons. He projected that mobile transactions will increase from 25% to over 50% in the next 2 years. The audio was too low during this talk and it was the second-to-last of the day. I was still surprised by how many walked out during this speaker.
Joel Spolsky's story
Joel Spolsky talked about funding Fog Creek by consulting during the dot-com boom. Spolsky explained how the big consulting firms went under because they didn't see that the market had dried up until it was already too late. He spent time discussing the advantages of growing organically and on Fog Creek's profit-sharing plan for employees. He talked about using his reputation and profits from Fog Creek (along with investment from USV) to start StackExchange in order to displace the "evil" Experts Exchange. Spolsky stood out by not cropping out the y-axis on his growth charts.
Startup School is an inspiring event, but let's be honest, it's mostly an exercise in survivorship bias. For every successful startup that runs their bank account down to $100, maxes out their credit cards, has trouble fundraising, etc., dozens (hundreds?) more do the same but end up in the deadpool. I think we would be better served by hearing more of those stories too. Nevertheless, thanks to Y Combinator for putting on the event. It was definitely an inspiring weekend.