I started SpeakerText in October 2008 during the financial apocalypse. No one funded us. No one was gonna fund us. And I’m definitely a nobody. We launched in January 2010 after burning through just $4k of cash. While I’m still mostly a clueless hack, there are a few things I learned along the way that I think founders and proto-founders reading this blog might find useful. Here’s a few them, in list form:
- Fake it ’till you make it. No one is interested in the company you’re going to start in the future. Starting is a declarative act. Just go for it. People won’t follow unless you lead. And once you convince yourself that you’ve got something, it’s a lot easier to convince others to join you.
- Pitch like a mofo. The difference between your initial idea and your ultimate product is the difference between a slab of rock and the David. There’s a thousand problems you need to solve, and the only way you learn about them––much less solve them––is to pitch, pitch, pitch and pitch again to every smart person you meet. Listen to what they have to say and regardless of how jumbled and contradictory their suggestions or complaints are, try to look for patterns and distill the deeper underlying pain points or problems with your model. Think of it as crowdsourcing. The masses have much to teach you, if you let them.
- Advisors, they’re easier to find than you think. This goes along with my above point about pitching everyone you meet. Most people are afraid of embarrassing themselves, so they keep quiet, especially around successful, important people who could help them. Don’t. I landed my first advisor––Joe Kennedy, the CEO of Pandora––when I pitched him after a talk at Stanford. He gave me his card; I followed up. There was no formal arrangement or anything, but I was persistent, hit him up with questions only when I was truly flummoxed (ie didn’t waste his time), listened and kept him updated on our progress.
- You need a Co-Founder, not an Engineering Bitch. Lots of business-y, idea-type people who say they’re looking for a co-founder are, in reality, looking for what is best described as an “engineering bitch.” Here’s how the pitch sounds from the engineer’s perspective: ‘For ten whole percent of equity, you will slave away to build a prototype out of my shitty idea, not have any say in the decision-making process…and oh yeah, you could be fired at any point.’ This does not make for a happy long term relationship. Instead, find someone you know and trust––I called up an old college friend––who will call you out on your bullshit and push back when you overreach. Date for a bit, then split the equity.
- Recruit college kids. They’re young, hungry and don’t need of a living wage. Experienced, talented software engineers have lots of options in life, and most of them involve getting paid. College students, on the other hand, have less options, and probably have their living expenses covered by financial aid. Thus, the opportunity cost of joining your half-baked venture is dramatically lower than it is for legit professionals. For students, your startup is more like a resume-enhancing ‘extra-curricular’ than a regular job. The right person will love the responsibility you’re handing them. Score for you, score for them.
- Go to job fairs. You’ll be the only startup there. This is a corollary to the previous point. I went to the Columbia Engineering Career Fair in October 2009 and left with ~150 resumes. We hired three guys from that batch and paid them in iPhones. Doubtful we’d have access to such a rich employee pool any other way. Bonus: Distinguish yourself by being the approachable guy in the T-shirt. Lots of the attendees will be wearing suits for the first time––and hating it. Your casual garb will looks very enticing.
- Sell the Vision, Not the Reality. You may or may not have a working product. Your product may or may not suck. You “team” may not really exist. But that doesn’t matter. What matters is your vision of what the product will be and how it will change the world. That is what gets people excited. That is what will make people work like dogs for no money, tell all their friends and drop everything just to get a product built.
- Treat everyone you hire like a co-founder. In normal jobs, people put up with a lot of grief and bullshit because they’re getting paid. In a ghetto startup (like mine), that’s not really an option. Treat people well, be honest, and don’t bullshit them. Trust and your rep is all you got. Err on the side of sharing too much. It builds trust and earns buy-in from the people you hire.
- Try before you buy. When you’re hiring folks, don’t promise equity upfront. Specify some sort of trial period where the person is to accomplish a specific, delineated task. Make sure you own all the IP created during this trial period, and make no promises for later. After the month or so is over, then sit down and talk equity. Making this clear from the outset will put both parties at ease.
- “Stealth Mode” = FAIL. Your idea, as it exists today, sucks ass. Ok, let me rephrase that: My idea started off sucking ass. But I pitched smart people…and dumb people––and learned from both. Originally, SpeakerText was going to be a tool for journalists (I was a journo) to automatically transcribe and search within their audio interviews. Tiny, contracting market. Huge upfront software licensing fees. Customers are technophobes. #FAIL just waiting to happen. Had we kept our plans a secret, SpeakerText would probably just be one big bucket of fail today. Instead, after having tons of holes poked into our idea by friends, cousins, VCs, baristas, entrepreneurs and bored women at parties, we turned SpeakerText into a tool for video publishers and even our crappy v1.0 works with the massive market that is YouTube. Outcome: last night a Biz Dev guy from Disney/ABC sent me an email asking about partnering with some of their online properties. Reminder: we launched on just $4k.
- In case you missed it earlier: PITCH PITCH PITCH. Over the last 15 months, I have pitched nearly every sentient being I have met. This includes a guy I met at 4am after doing CPR on his mom (I’m a paramedic). The dude turned out to be a senior partner at a major international corporate law firm, and 6 weeks later he offered to take me on as a pro bono client. My point here is that you never know who can help you and you never will until you open your trap and pitch. Not only will this help you find help, but it will DRAMATICALLY improve your pitch and lower your fear/nervousness when time comes to pitch real investors. Plus, it adds big time on the competition research front, because your friends/acquaintances/ex-girlfriends will see articles about competitors and share them with you on Facebook.
- Vest, young man. Starting a company without vesting your stock is like getting your girlfriend pregnant on the first date. Sure, it could work out, but if it doesn’t, you’re completely hosed.
- Get creative with compensation––use the iPhone Payment Plan. Imagine you’re a highly-trained software engineer. A crazy guy with a “startup” (i.e. me) approaches you about doing some work. Scenario #1: Dude, I’ll pay you $2,000 for 150 hours of work…3-4 months from now. Scenario #2: Dude, promise to build this and I’ll give you an iPhone right now. Plus, as long as you’re working on it, I’ll pay your phone bill. If I like it and it works, I’ll toss in an extra $250 at the end and we’ll talk equity then. If not, you can keep the iPhone and I’ll even cover the cancellation fee if you want to ditch AT&T. We tried both approaches at SpeakerText, and surprisingly, Scenario #2––despite being a lot cheap––actually worked out a lot better. There’s something about the psychology of receiving a cool gadget that doesn’t quite equal out to the cash equivalent. Also, paying up for the iPhone upfront fosters trust, which in turn boosts productivity.
- Yammer is an awesome tool for fostering camaraderie on distributed teams. Use it.
- Build something people want before you attempt to raise money. The word for “visionary investor” is “entrepreneur.” If you’re an unproven schmo with no credentials like me, people generally––and investors in particular––will tend dismiss you and your crazy idea. (If you’re a former Google VP, then you can probably ignore this tidbit.) The only––and the strongest––track record you can have is the product you’ve built and the traction/market feedback you’ve gotten.
- Need legal advice? Do the Lawyer Hop. Every lawyer will give you an hour of their time for free. Remember that. Need 10 hours of legal counsel? Talk to 10 lawyers. Need to learn about IP, patents, etc.? Call a patent lawyer! More questions? Call another one! Don’t feel the need to restrict yourself to a local geography either. You can call up America’s leading legal luminaries and get an hour of their time for free, every time. This won’t work for producing legal documents, but it will work for fundamental questions of “is this legal?” “do I need to patent this?” etc. Also, different lawyers have different perspectives, so the lawyer hop a good way to get a holistic, composite understanding of a particular issue. Plus, when you need to actually hire a lawyer, you’ll know what a good one sounds like––and have a fat rolodex of people you’ve already talked with to draw from.
- Patent lawyers will always want your money…except the good ones. Asking an IP lawyer, “Is my invention patentable?” is like asking a car mechanic “Does my car need any work done?” Unless you find a good one, the answer will always be yes. That’s how they make their money, but not how you make yours. Buyer beware.
- Start a blog. Sound intelligent. Be interesting. The same reason you’re probably dying to pitch Fred Wilson and/or Chris Dixon is the same reason you should start a blog. Again, if you’re a no-name nobody like me, you’ve gotta build a name for yourself from scratch. Writing an intelligent sounding blog and then submitting posts to Hacker News, Digg, etc. is a great way to put yourself on people’s radar. Just last week I met up with an big time seed investor from the Valley. He had messaged me on Facebook after seeing one of my blog posts on Hacker News. Now he’s making intros to other big dogs and generally helping to legitimize our brand.
- Tell a good story. Deep down inside, all Americans love entrepreneurs. People are suckers for the crazy, epic shit we do as founders. Don’t downplay it; wear it your on your sleeve like a badge of honor. Although it may not feel like it now while you’re in the trenches trying not to die, you’re living what lots of people (especially older, middle-management types) consider the dream. Tell your story to the right person (i.e. the frustrated wannabe founder with 3 kids and a mortgage) inside of a big organization and they’ll become your champion, guiding you through the sales process and giving you lots of actionable intel.
- Comment on Brad Feld’s blog. But don’t kiss his ass. Important point to remember: powerful, successful people tend not to like having their ass kissed. People do that to them all the time, and my sense is that they hate it. And if they don’t, fuck ’em––don’t waste your time on people who want you to kiss their ass. More often, people in positions of power crave genuine interaction. The more powerful the person, the more they are surrounded by sycophants. Don’t be a sycophant. Outside of intros, a good way to approach these guys is to comment intelligently on their blog. I turned an exchange in the comments section of Brad Feld’s blog into a pitch for SpeakerText that turned into an intro to someone else. Never met Señor Feld before, but we had a legit exchange in the comments and took it from there.
- Help people. It just feels good. Honestly, I feel very lucky to have been helped and guided by lots of smart people who probably had much better things to do with their time. Guys like Seth Sternberg, the Founder/CEO of Meebo. Awesome dude. Sequoia-backed. Ridiculously helpful. When I grow up, I want to be like him. Starting a company can be really stressful and scary; depending on the day, it’s easy to lose hope and dwell on how fuct/clueless/ready-to-fail you and your startup are. If for no other reason, helping people who know even less than you do will make you feel good about yourself, boost your ego and as a result, make you into a more productive founder. Win-win-win.
- Tenacity is impressive. A lot of people “start” companies, but very few actually have the tenacity and drive to bring a product to market, hire people, etc. People will expect you to quit, and part of how you will impress them is by simply keeping at it, iterating your idea/product/vision, and making progress. As my Dad likes to say: Persistence and determination alone are omnipotent.
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