Brad Hargreaves | Building Things

Brad Hargreaves on entrepreneurship, community and life

Archive for the ‘getting it built’ tag

Finding Developers and Women

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I’ve been stewing over this post for a while. It gets a little bit closer to being written every time I meet with an “idea guy” who is looking to find a hacker to build his or her (but typically his) dream site. Interestingly, a lot of these guys spend a decent amount of their spare time at an analogous task: picking up women.

I’ve always wondered why they don’t see the natural parallels. For some reason, the principles that apply to meeting women are a lot easier for people to intuitively grasp than the same principles applied to meeting developers. Unfortunately, most of these guys happen to live in NYC, where there are way more available women than available technical cofounders. But the same ideas apply:

Go into their world. If you’re looking for single women, you probably need to venture outside of sports bars. Go to a more female-friendly club or volunteer for a cause. Go anywhere single women congregate. Similarly, I meet way too many “business guys” who only hang out with people like themselves — other business guys — and stick around events and meetups that are dominated by folks who think pointers are the handheld lasers you use to give Powerpoint presentations. If you want to meet the technical co-founder of your dreams, you need to find the places they hang out — technology-specific meetups and user groups, Hackers and Founders, et cetera.

Understand their motivations. Or alternatively, “Don’t assume their motivations are the same as yours.” In the dating scene, this is obvious — not everyone wants the same thing from the evening’s encounter. And as many of us know, variations in motivation and interests can lead to some pretty awkward situations. Similarly, developers often have very different motivations than non-technical entrepreneurs. First of all, many (most) developers aren’t entrepreneurs. Given that entrepreneurship can be a bizarre and irrational pathology, this can make for a pretty big delta in motivations, perspectives and interests. Money, for instance, may or may not be a big motivator to an engineer — in fact, I’d say a plurality of engineers I’ve met would say that making a lot of money would be “nice, but definitely not necessary.”

This is a generalization, and above everything it’s important to understand the motivations and interests of the individuals you’re talking to, not the generalized category “developer”.

Show your value. Unemployed, balding 40-somethings have a much harder time picking up women than rich, balding 40-somethings. Truly smart, well-connected business co-founders aren’t easy to find. Be that person and demonstrate it early and often.

Speak their language. The number of “idea guys” who don’t even attempt to understand the basics of web development is hugely frustrating, both to me and most startup developers. Even if you can’t code, take some time and learn the basics. But don’t take learning the basics to mean that you actually know anything about making high-level development decisions — it just shows that you care. And like women in bars, technical co-founders appreciate it when you care.

Don’t try to fuck on the first date. Pretty self-explanatory. Get to know someone first, then seek a deeper relationship.

We need more hackers building startups and fewer writing black boxes for hedge funds, so I’m being honest when I say I hope more non-technical folks can use the skills they have to recruit talented developers into the startup world.

Written by Brad Hargreaves

October 10th, 2010 at 1:15 pm

Going Through Walls or Around Them

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I was having breakfast with a friend earlier this week, and we were talking about his business. Specifically, his relationship with his co-founder. Here’s how he summarized it:

There’s one key difference between us. When I see a wall in front of me, I try to figure out how to get around it. Should I scale it? Go around it? He doesn’t do that. He just walks through it.

A bad thing? No, actually, quite the opposite — it makes them a great team. Walls can be scaled, circled, tunneled under or simply plowed through. But as an entrepreneur, you have to get to the other side of any obstacle, and having as many tools as possible at your disposal is a good thing. If one strategy doesn’t work, you need the ability to try at least a few others on the road to cracking a tough problem.

It’s been said before, but it’s worth repeating: bring different personalities onto your team. Bring different backgrounds. Hammers see everything as nails, et cetera, and it’s impossible to totally check your biases at the door. The best you can do is bring together an interesting combination of biases.

Written by Brad Hargreaves

June 27th, 2010 at 6:36 am

Sources of Capital, by Google Hits

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Search: “Funded by {x}”

{x} = Venture Capital
45,600 hits

{x} = Private Equity
34,500 hits

{x} = Friends
24,400 hits

{x} = Family
19,900 hits

{x} = Angels OR Angel Investors
13,900 hits

{x} = the Devil
4,020,000 hits

Protip: Startup capital can be hard to come by. VCs, angels, friends and family and Lucifer the Archangel are all sources worth exploring.

Written by Brad Hargreaves

June 4th, 2010 at 11:19 am

Spend for your Next Job

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Lots of people talk about startup burn rates. But there isn’t quite as much said about personal burn rates. But if you want to accomplish anything in your life, managing your personal burn is far more critical.

Lack of control over personal finances is the biggest reason why people who want to start companies don’t. It’s difficult (often impossible) to do a startup the right way while managing a full-time job. But quitting the day job cold-turkey is pretty much impossible for most people. Why? Well, expenses have a strange way of rising to meet income. It’s a rule with spooky consistency, especially in a city with so many opportunities to spend money like San Francisco or New York. People who make $50K a year tend to spend approximately $50K, and people who make $200K a year tend to spend $200K. And from from what I can tell, people who are used to making $200K don’t “feel” remarkably wealthier than people who are used to making $50K.

But since expenses tend to scale to meet income, we spend for the job we have. We lock ourselves into apartment leases, phone contracts, credit card debt, car leases and lifestyle expectations based on our current salary. And that sucks, as our material obligations lock us in to work that we don’t want to do forever. Thus, I propose a new rule of personal finance: set your expenditures to meet the anticipated salary of your next job.

If you are planning to leave the corporate world to start your own company, cut your personal burn now. Move into a cheaper place. Ditch your cable TV and your car. Stop going out to expensive dinners. Suddenly, you’ll find that your job becomes a lot more of an option and a lot less of a necessity. Then, you’re free.

And from my experience, you won’t feel much poorer.

Oddly, I think this principle actually works in the other direction as well. If you are solidly on the corporate track and are expecting a promotion to the next rung on the ladder (and salary level), spend a bit more than you would otherwise. Keep following the rule — set your spending to the salary of your next job. Lock yourself into an apartment that is slightly nicer than you can afford. Make yourself a little desperate to have that raise. This is, of course, counter to most of the personal finance advice you’ll read out there. But I think most of the people dishing out financial advice for a living are more interested in telling you want you think you should hear (“Clip coupons!” “Don’t go to Starbucks!”) than something actually meaningful. Necessity on the path to desperation can go a long way to making meaningful things happen.

But so can freedom from material obligations. If you are unmarried and without children, loans or serious health issues in New York or San Francisco, it is entirely feasible to lower your monthly personal burn rate to $1500 – $2000/mo. I know people who have gone lower — the lowest I’ve heard in NYC is approximately $900/mo — but I wouldn’t wish that lifestyle on anyone. And you can reasonably make $2000/mo by tutoring on weekends, waiting tables on Friday and Saturday nights or doing some very part-time development work — which leaves the rest of your time to make startup magic happen.

Written by Brad Hargreaves

May 29th, 2010 at 2:58 pm

Why Everyone Should Get Funded (Once)

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The smart money says there’s plenty of capital out there. And from the perspective of near-term return optimization, they’re right. In fact, there’s probably too much capital out there, especially in major centers of innovation like New York, Boston and the Valley. If you were to seed fund the “marginal 10%” of companies — the companies that barely miss the current threshold for funding, if such an objective measure were to exist — the financial returns would surely be dismal.

But that’s not the only way to look at it. I argue that — from a long-term perspective — more companies should get funded.

Running a funded startup is an incredible education unlike any other. As someone who has run (a) bootstrapped startups that I couldn’t get funded, (b) bootstrapped startups that purposefully didn’t raise money, (c) angel-funded startups and (d) venture-funded startups, the learning experience delta between {(a),(b)} and {(c),(d)} is incredible. Taking money increases the volume of things going on and pushes your company to the next level. It increases the amount of stuff you have to figure out. It opens doors and enables conversations that few bootstrapped startups can have. If you pick the right investor and leverage it, the things they say about “opening their rolodex” can absolutely be correct. And you learn a lot of critical stuff about how to build a business from those people. Even taking “dumb money” can make it an order of magnitude easier to get in the door.

And most importantly, it’s a guaranteed lifetime addiction to entrepreneurship.

Even if the companies built with this seed money don’t succeed, these entrepreneurs are the foundation for successful companies in five or ten years. Every entrepreneur that fails to raise money and is forced to go back to the day job is a potential groundbreaking innovation that will never see the light of day. Claiming that “real entrepreneurs will always persevere” is bullshit. The people who create awesome, world-changing things are not always the people who are willing to work eighteen hours a day for no salary for years. They may be people without savings, with mortgages and with families. Creativity and innovation isn’t the just domain of scrappy 20-somethings, so why is entrepreneurship?

In economic terms, there’s a huge positive externality to all of this connecting and learning. That means that more of it should happen than will actually happen if every player is simply looking to maximize profit. If more startups are going to get funded, investors must believe in the positive social benefit of funding.

And I think it will happen. The comps are changing — more wealthy independent investors are looking at seed funding as philanthropy rather than a component of a diversified investment portfolio. A certain group of investors are considering their seed investments in the same pot as their patronage at the Met or contribution to an off-Broadway production rather than their private equity assets. This is a really, really important distinction, as it makes the returns of these capital deployments less of a factor. Wealthy independent investors aren’t blind — they see need for funding and innovation as the savior of our nation and economy. This isn’t just an investment; this is a moral imperative. And you can’t ignore the sexiness and cocktail party benefit of being in on the ground floor of a new hot startup.

There are good counter-arguments to be made here, but I think they are outweighed by the curation of a future generation of entrepreneurs. For instance, it is absolutely true that more capital will lead to more competition for the means of production (e.g., developers), driving up prices and making it more difficult for “good” startups to hire. This is absolutely true, but higher salaries for developers in startups isn’t a bad thing for the startup environment as a whole. After all, the world — even the world of hackers — operates by the rules of supply and demand, and higher salaries from startups will draw more developers from established tech companies and banks, for instance.

Seed funding is entering the world of philanthropy, and I think it’s a very good thing.

Written by Brad Hargreaves

May 16th, 2010 at 3:39 pm

What Kind of Business Are You Starting, Really?

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I meet a lot of entrepreneurs and hear a lot of ideas and business plans from all across the board. Most have — at the very least — a kernel of a good idea in them. But many don’t know what kind of business they are. There are an unbelievable number of entrepreneurs focused on technology when their entire business model is predicated on the success or failure of a marketing campaign, for instance.

This isn’t to say that technology isn’t important for those businesses, but rather that it isn’t the core differentiator that interests investors and makes or breaks the company. If you are running a sweepstakes business, for instance, I don’t want to hear about your awesome Rails architecture. I want to hear about how you are going to acquire users for $1.50 and monetize each for $3.00. Sweepstakes (in most forms) is a marketing business, and that is really what a potential investor or partner wants to hear about.

I like to put startups in three categories as defined by the core factors driving their success:

Technology Businesses: The core differentiator of your business is your technology. Generally, your company either (a) has real intellectual property around your technology and/or (b) is founded by leading engineers in the field.

Marketing Businesses: Your business is driven by its ability to acquire and retain users/customers more effectively than your competitors.

Relationship Businesses: Your business’s success or failure will be determined by your ability to forge lasting relationships with customers and/or strategic partners.

I’ve rarely found businesses that are truly driven by some combination of those factors. In most, one factor greatly outweighs all the others. And there are patterns behind misconceptions — most commonly, first-time entrepreneurs overweight the importance of technology as opposed to marketing or relationships. This makes sense, as an entrepreneur’s first goal is often to get a product up. But products are hard to build real differentiation around unless you are doing really innovative stuff, like building new database backends or search algorithms. In most consumer internet businesses, marketing is the most critical component. In B2B plays, relationship-building tends to make the biggest impact. And in general, progress on the core differentiator is what VCs mean when they talk about needing to “see traction.”

Want to generate awesome startup ideas? An interesting trick is to identify immature industries where the leading players are focused on the wrong differentiators. My own LabApp is an example of this — while the existing (immature) players are focused on relationship-building, I happen to believe that software commercialization is a marketing-differentiated business. As with all startups, time will tell if LabApp is on the right track, but looking at “differentiation-based” pivot points can be a great way to generate innovative and revolutionary products in immature industries. Some off-the-cuff ideas:

1) Take a relationship-based approach to marketing-driven social games to piggyback off of major brands’ name recognition. This is similar to what Arkadium is doing to much success with the social advergaming concept.

2) Use a marketing-driven model to gain independent adoption to a new CRM software product from the bottom up. Almost all SaaS CRM providers are currently relationship-driven, which leaves open a massive long tail of independent salespeople.

3) Use technology differentiation to pry government IT contracts out of the hands of bloated, relationship-driven contractors. Easier said than done, but someone’s gonna make a lot of money from this in the next 15 years.

Happy differentiating.

Written by Brad Hargreaves

March 22nd, 2010 at 6:05 pm

When You Should Hire a Dev Shop (other than “never”)

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I’ve always subscribed to the YCombinator / Paul Graham ideal that the best companies are built by founding teams of hackers, with perhaps a business guy or two (for example, someone with a strong business development, user flow or marketing background) thrown into the mix. But this often isn’t the way things turn out. Many capable founders aren’t developers, and I frequently meet with entrepreneurs that have taken a very different path. Most disturbingly, I’ve occasionally found myself agreeing with an entrepreneur’s decision to hire a development shop to build their product. Sometimes, it just makes sense.

But for every entrepreneur who has seriously considered the pluses and minuses of working with a dev shop in the context of the specificities of their business model, there are five who are hiring a dev shop because (a) they are lazy, (b) they don’t know any better, or (c) all of the above.

The reasons why I am not a big fan of development shops are too numerous to go into here. In brief, startups succeed because there is strong alignment of interests among all parties, especially with the people who are actually building the product. Development shops who work for $100+/hour and take no equity are poor partners in a startup. They have zero incentive to create a quality product or understand the nuances needed to capture a market and please end users. But all that is for another post.

For you entrepreneurs who are considering working with a dev shop to build your beta, I’ve written a handy guide to help you decide whether or not to pull the trigger. Read the scenarios and give yourself points accordingly:

3 Points: You actually do not know any software developers. I doubt this is the case for anyone who is reading this blog, but if you really can’t think of a single person to go to for introductions or advice, you may need to pay for it.

3 Points: You are pretty sure a LAMP stack is the pile of books on your coffee table, and Rails are what the Acela runs on. You probably aren’t the best person to hire and manage a developer.

4 Points: Money is no object. Don’t laugh. We’ve all seen projects like this.

4 Points: You are an exceptionally poor manager. As in you’ve been in management situations in the past, and you’ve been removed for being so incredibly bad.

4 Points: The development firm in question has some sort of special knowledge that is hard to find. Examples could be (a) experience building Facebook games under the new notification rules or (b) knowledge of how to build exceptionally secure e-commerce sites.

5 Points: You are developing software for government or major corporate clients. Being able to point at a specific development firm as “taking the responsibility” for the quality of the software is often reassuring to many government and corporate clients. I don’t necessarily agree with this bias, but from an entrepreneur’s perspective, it is what it is. Plus, most decent dev shops can point to at least a couple names of well-known previous clients.

5 Points: You have a development shop that will work for equity. This can be a good or a bad thing, and I should probably clarify it by adding “… and will actually get the job done in a timely fashion.” But equity-based work solves the misalignment of interests — there are just few dev shops willing to do it.

6 Points: You have a ridiculous project timeframe. For example, you need a beta built in four weeks. In this case, going through a hiring process is not an option. First, question why you need to get a beta out that fast. Then, really question why you need to get a beta out that fast. If your reasoning still makes sense, go hire a dev shop with the understanding that very little if any of the code that’s written can be re-used.

-4 Points: You don’t know exactly what you want. This doesn’t necessarily mean that your spec is vague; typically, it just means that a product will likely have to go through several major modifications before the dog food starts getting eaten. Unless there’s already a successful product out there that looks very similar to yours, you probably fit in this category. Iterating on a beta is a critical part of the startup lifecycle, and it is where the dev shop / entrepreneur relationship typically starts to sour.

Add all your points up. If you have more than 10 points, you can use a dev shop. If you don’t, you should go hire a team of hackers and build it the right way.

Written by Brad Hargreaves

March 7th, 2010 at 9:02 am