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[Bearbeiten] Adventures of a Startup CEO: No Guts No Glory

Original Audiofile may be obtained from http://ecorner.stanford.edu/authorMaterialInfo.html?mid=1681

Warren Packard DFJ, Venture Capitalist

Andrew Frame ooma, Entrepreneur At age of 15 started an ISP in Las Vegas, sold it at 19. Worked for Cisco since he was 17 for five years. Then joined another startup and later started ooma. Now he talks about the lessons he learned from ooma about starting a company

Andrew Frame packed parts of his experience into the following ten lessons.

[Bearbeiten] 1) Dislocating Large Markets

It's very difficult to start a company. So why start in a small market? start in big market, study competition. ooma is starting in an expanding market, but with low bar for innovation (telecom). he didn't have the one brilliant idea for a product, he started with a market. figured out strengths and weaknesses of available solutions and found a way to enter with disruptive edge through tech they created.

[Bearbeiten] 2) Active Recruiting

actively recruiting, no joboffers on monster or so... two different sorts of recruiting: execs and staff.

executive recruiting you need the best for the leadershipteam, so ooma does active scouting and recruting for execs. Before giving the offer-letter, make sure to take the time to really get them engaged and emotionaly hooked. Most of his execs signed the offer on the spot. They know the numbers it takes to get this specific exec but they really have to get into the situation where the exec is sure about the company and as long as the numbers are ok, they will sign. They should be excited not because of the money they'll get (because it also might not be the best offer financially) but for the company and their future work alone.

staff recruiting they have one employee who is a talent scout: when they need a new staff member, they give a list of five companies where the ideal employee might come from and then go in and try to get one of their employees.

[Bearbeiten] 3) organisational design

clear communication, clear demarcation of responsibility product management is in the middle of everything. prodmanagment is driven by the market and the "ideapool". everybody can participate and submit ideas to the ideapool. it doesnt have to be in tune with the market. product manager should figure this out when deciding which idea to turn into a product, etc. (?) @1200 But besides the collaborative environment and brainstorming-culture, at the end of the day, everyone knows which decisions belong to them. clear demarkations are key for a healthy company.

Put your trust in God and keep your powder dry.

[Bearbeiten] 5) alignment of vision

playbook, that governs everything leadership offsite: every year creates a playbook vision statement: where do you want to be in two years? vision (everybody inputs and create a vision) --> how do we reach it? might be far away --> 6 strategic imperatives: if they accompllished all strategic imperatives, they got to the vision. if all strategic objective done, they accomplished the strategic imperative and so on

1 vision
has 6 strategic imperatives
each of which has 3 strategic objectives
each of which has n tasks (with owner, due date) (high level tasks)

once this is setup, it's only red, yellow, green light on each task --> piece of cake

[Bearbeiten] 6) managing mis-hires

going to happen many CEOs agree: one of the biggest mistakes they have done is firing someone too late, especially at the leadership level. wrong exec (for the company/the vision): move quick "praise publicly, criticise privately" but open comm (also criticism) is important. redundency should not come as a surprise, but if it has to, if there is an issue, you need to address it and get it resolved soon.

[Bearbeiten] 7) building for scalability

leadership team, that scales --> company that scales

execs should have experience in all of the following fields in order to ensure a scalable company structure:

startupexperience
big company experience
experienced massive success
experienced massive failure (have to be prepared for bad times, cause they going to happen)

if exec team, that meets all four requirements, then coorp is built for scalability

[Bearbeiten] 8) product development

he was at a startup, where engineers chose what was built. it was super cool, but nobody bought it. process has to be in place for product development. and before engineering starts, engineering and product management have to reach agreement on what to build. requirements will change, but creative tension has to be between engineering and prodmanagement team. engineering team wants to do a brilliant job, but prodmanagement should be a thorn in their side. demand higher quality, other features etc. (what prodmanagement thinks or knows, the consumers want) this process allows to create multiple products.

[Bearbeiten] 9) intellectual capital

when he gets asked: how big is their marketing budget? he answers: they have infinite intellectual capital. marketing is an intellectual exercise nowadays. it doesnt depend on big sums only. smaller companies may get highger exposure with less capital. good thing to keep in mind: introducing a product thats in its nature designed to be viral. (like social networking sites, etc.)

[Bearbeiten] 10) mentorship

important! giving & receiving lots of different successful styles he had a CEO mentor early on: have someone he can ask questions to his mentor: was youngest vice president in GM he saw him at a conference and begged him to be his mentor. keep asking, eventually they'll see the passion and if you've got great ideas, they'll crack...

and: pass it on. mentor e.g. people from your team.

[Bearbeiten] Conversation w/ Andrew Frame, Warren Packard and Q&A

[Bearbeiten] DFJ (VC)

silicon valley: sharing is great for the whole ecosystem. but entrepreneurship exists all over the world

so in 2000 DFJ started with different offices around the world build up ecosystem like silicon valley around the world --> more centres like silval and even more and more diverse ideas may emerge.

[Bearbeiten] mentorship

crucial, get experienced people on the board, etc.

[Bearbeiten] right time for an idea

how does one know, when it's right for an idea? andrew: it's evolution. most entrepreneurial ideas start as very lame, boring. but they evolve. he focussed on the market --> base case. concept had a lot of holes in it. so when they started raising money, VCs kept pointing at the holes. --> so better address them. first round 6.5m USD, but took over a year to raise it. people tell: not gonna work, but keep on...

BUT: address problems. if an idea doesnt work, change it. --> anectote x-fire video games social network

[Bearbeiten] recruiting

% time recr.? 15-20%

60 employees, interviews every single empl and asks cultural standard: art and science --> good feeling of the person: what drives them? how is this person in the culture? rejected people occasionally cause it didnt feel right

[Bearbeiten] marketing

why not throw the VC money at marketing? doesnt do the right thing for business. is not intellectual leveraged capital --> spend money on SEM (search engine marketing), PR, limited and VERY focused advertising

xfire didn't spend one USD on marketing, only social network, word of mouth. hotmail: idea from the VC: message at the bottom about hotmail --> viral marketing --> every user was an advocate for hotmail

--> also innovate in marketing (not only on the product or service side)

[Bearbeiten] bad idea / good idea vs. bad team / good team

can a bad idea have great success as long as driven by right people and resources? bad product, e.g. same product as a bigger competitor in a big market --> might work with a very clever team VC: start off with bad idea, no problem. but great team changes it into greatness. ok idea & great team better than great idea & ok team

great team with failure, no problem for warren. would fund it again - and did it.

[Bearbeiten] is too much money out there in the VC world?

no: money that goes to entrepreneurs shouldnt be limited at all. early on even strange ideas (like ebay at the start) should get money. (but he hinted at yes somehow)

[Bearbeiten] how to look for people at the start

how did Andrew look for people? early stages: work with people you worked with already. product manager: worked at cisco. started as advisor, then left cisco for ooma.

connecting back to best people you ever worked with. just one step at a time. talk, brainstorm. nobody will steal your idea, cause the process to develop it into a business is just too painful and you're the only person who is passionate enough to go through that. dont be afraid to share idea...

[Bearbeiten] job of a venture capitalist

VC: find good entrepreneur and something great, longlasting, sustainable. their goal for every company: taking it public, sustainable company. and thats only possible with a product, that adds value.

[Bearbeiten] which tools does ooma use?

they use excel for operational management (updated by someone) --> keep it simple

safe time, by talking to people who've been through it already

[Bearbeiten] why Andrew and Warren became what they are now

VC: why became a VC? (?)

VC: individual who loves to know a little bit about many things. and thats great for VC

vs. entrepreneurs: extremely focused people

andrew: always liked to create systems and manage them.

[Bearbeiten] hiring demographics

just the best person for the job, no matter where she/he comes from or whatever

[Bearbeiten] manage by impending event

the last 30 days before a deadline: race. but after deadline people definitely breath out. and: celebrate every single victory: when they hit a deadline, the day after, andrew organises a big party --> keep it a fun environment

people are people: have to have their breathers to keep going for the next big deadline.

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