Brad Hargreaves | Building Things

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Archive for the ‘themoreyouknow’ tag

You Can’t Get There from Here

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I love seeing people join startups, and it usually makes a lot of sense for everyone. Young tech companies tend to have great cultures and incredibly smart people from which to learn. And lots of startups are very generous with salaries and options — in many cases, enough that an employee can maintain a close-to-market salary and keep the lottery ticket too. But there’s one situation in which it doesn’t make sense to join an established startup: you actually want to start your own company.

As I’ve written in the past, many people who go into startups aren’t necessarily looking for the salary, lottery ticket and cool culture, as much as they may publicly say so. They’re looking to gain independence, establish themselves as leaders and self-actualize. They’re looking for the things you get from founding your own company and believe that joining a startup as an employee will be the quickest way there. But that’s a poor strategy, especially for non-developers.

That tactic mistakenly applies a corporate model of advancement — in which one starts in low-level jobs and wiggles into a management position over the years — to entrepreneurship. You aren’t going to get promoted to founder by spending a lot of time working for founders. You become a founder by starting your own company. Yet over the past year I’ve seen a number of people fall into “the non-founder trap”, which goes something like this:

1) You decide you want to get into a startup. You don’t feel that you have enough [intelligence/confidence/experience/money/ideas] to start your own company, so you search for a job within an established startup.

2) After several months of searching, you take a job in the business development / marketing department of a 10-person company. While your last job paid you $100,000 per year, you accept $60,000 and 0.3% in options.

3) While you occasionally advise on high-level decisions, 95% of your job is emailing potential clients and taking sales meetings — the same stuff you were doing at your last job. The fundraising, investor relations, and personnel management is done by the CEO.

4) After a year or two you would like to leave, but unfortunately your $60K per year salary hasn’t let you save up enough to quit your job and start something of your own. You also don’t feel that you have a good sense of how to raise money or manage the earliest days of a startup. So you begin searching for another job at a small company and return to step (1).

There are plenty of counter-examples. I know a number of people who fell in love with startup life and founded their own companies after working as an employee of a startup. But it’s not a great path for people who really want to be founders, who will struggle to be happy at their jobs and fail to save enough to go out and build their own business. If you want to be a founder, go out and start something. The inspiration, confidence and experience will come.

Written by Brad Hargreaves

January 9th, 2011 at 6:27 pm

The Event Strategy

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Jason Cohen has a great post on unfair advantages. One of Cohen’s differentiators — personal authority — is the most useful to first- and second-time entrepreneurs.

So the question arises: how do you build strong and scalable personal authority?

I’ve heard blogging come up often, but I don’t think this is the way to go for most people. Blogging is hard. Rather, building personal authority through blogging is hard, and at the very least it’s total feast-or-famine. Unless your blog heavily incorporates a recognizable brand — like Chris Dixon or Fred Wilson — most people will probably lump your content into the “read it somewhere” bucket and forget that you had any association with it.

Events are different — when you run an event, you’re in front of the crowd. You get to send out regular emails to a large group of people, and the inbox is vastly more powerful than a RSS feed (this is also why I’ve moved some of my content over to In short, events are typically a much better tactic to gain the kind of personal authority that Cohen praises.

Starting an event series is daunting, but it’s actually quite a bit easier than it seems. I get asked about events a lot, so I’ve sketched out a basic strategy to building personal authority through an event series. I try not to be too servicey here, but I think this strategy is too important not to be spelled out:

1) Pick a topic. It should be big enough to potential draw a crowd of hundreds but not so big that you’ll lose focus (and high-quality people). And it goes without saying that this should be something in which you’d like to gain thought leadership. Competition and geography is also important — there probably isn’t room for another general “tech” event in New York right now, so most new events focus on specific verticals, processes or technologies. Over the past two years, I’ve helped create recurring events around gaming, marketplaces, and failed entrepreneurs, all of which fit in the sweet spot.

2) Build your promotional tools. Create a group page on, setting everything to “public” right off the bat. Meetup will actually promote your first event to its membership, which can be significant if you don’t already have a big email list. Create social media pages and an online landing page if you have the technical skills.

3) Find content. This usually means (a) a keynote or (b) some panelists for your first event. Pick the biggest names you can reasonably get in the room. Don’t get too cute or tricky — people are attracted to speakers they recognize and trust.

4) Find 2-3 solid venues. Good places to look include law firms (they love the attention of hosting tech events for free), bars with A/V and desperate restaurants. If you have great relationships with people at each of these types of places — which isn’t that hard to do — you will instantly be one of the most popular people in the small community of tech events organizers.

5) Make sure you have great attendees. Personally email people with leadership roles and deep rolodexes in your topic area. You need these people to show up, and you need to work to get them there. If you don’t, your event will easily become a mixed bag of job seekers, service providers and wannabes. Don’t let it.

6) Play up your social benefit to maintain great content. Because you are providing education to the community and helping entrepreneurs, people will want to help you. You’ll be able to land meetings with awesome people because you are running a community event, and they’ll often be honored to speak. Keep a steady stream (at least one per month) of events happening. I’m pretty agnostic on the “charging” topic, although I usually encourage people to keep their events free if they can. It’ll just make your life easier since attendees are less likely to get upset about all the little things that invariably go wrong at live events — and keep in mind that your goal is to build personal authority, not start a niche events business.

7) Leverage your membership to run events for you. By now, there will be many people approaching you for access to your membership. Your job now shifts from promotion to curation. Learn to distinguish between the self-promoters and the innovators. Pick people who will run awesome events and enable them with venues and promotion. Retain control of the branding and means of promotion (e.g., send the emails yourself, don’t sell your list) and dole out spotlight as you see fit.

The last point is especially critical — events die when organizers feel the need to exert too much control and burn themselves out. If you’re running an event series that regularly gets >50 people per event, it’s very likely that you have smart, well-connected people in the audience that would love to share the stage in exchange for doing almost all of the work.

Written by Brad Hargreaves

November 15th, 2010 at 7:15 pm

The Scene Will Kill You

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If you’ve taken a deep dive into tech startups, you know about the scene. The scene is the siren song of the innovation community. The scene will kill you.

The scene is building sexy things that gain the approval of a certain (small) group of people. Sexy things get lauded, and celebrities coalesce out of the blogosphere’s protoplasm. The scene builds and sells a dream. Skip to the beginning of the line; pass go; collect $200 and a DUMBO loft. Get in SAI 100, speak at conferences and spend your Friday nights at launch parties. The scene lends these things great importance. The scene assigns value to popular acknowledgement of value rather than actual value. The scene is all these things – it is at once a state of mind as well as a loose community of people in any city with a large startup community.

I will spend this weekend’s post on a warning: the scene will kill you. It will misdirect your efforts and focus your attention on the cool and the shiny rather than the substantive. Your product will be driven by the spotlight rather than the user or the dollar. It will inspire envy of your co-founders, your friends and your colleagues.

People in the scene don’t say nice things about other people when they aren’t around. They’re too political, too strategic for that. Don’t expect these people to watch your back. If you’re in the trenches building a product or raising money, you must surround yourself with people you trust. You cannot tolerate politics and political people.

Building a startup requires blinders. Fred Wilson is right — being agnostic to the zigs and zags of competitors is critical. But it’s not just about ignoring competitors; it’s about identifying fads and unproductive behaviors and mercilessly cutting them out of an organization. And if you don’t do it, someone else will — and they’ll have a competitive advantage, whether for market share, talent or financing.

The scene provides a useful disguise for wannabes and dilettantes. The back-biting and politics of the scene enable B- and C-level players to skip from venture to venture, destroying value and poisoning relationships.

The scene is why I enjoy hanging out with developers. Developers/engineers tend to be grounded by a sense of the inherent usefulness and value of products. In a city like New York that is swimming with smart, non-technical entrepreneurs, it’s surprisingly easy for an entire community to be distracted from building meaningful things that tackle real problems. The webutante is dying, but not quickly enough.

The scene will kill you and your company. That’s as clear as I can make it. The scene is the antithesis of innovation and collaboration. Avoid political people and cut them out of your organization wherever you find them. This won’t necessarily make you successful, but it will let you be happy with yourself regardless of how things turn out.

Written by Brad Hargreaves

November 7th, 2010 at 9:54 am

They Have Money. Can They Spend It?

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Most B2B entrepreneurs have a general sense of the ROI they would get by selling to any particular client. Sell your product to the government, for instance, and be prepared for years of investment and dedication before seeing any money. But once you’re in, your company has a client that is willing to pay very well for your work. If you were to sell to smaller organizations, you could likely get away with much shorter sales cycles — but there is a significantly tinier pot of money on the other end.

So there’s a direct relationship between the amount of money a client can spend and their difficulty in spending it. But it’s certainly not a perfect relationship, and I’ve seen the imperfections trap many entrepreneurs — including me. In fact, the relationship probably looks something like this:

Relationship between money to spend and purchasing process difficulty

When selling software or services, being below the line of best fit is critically important to keep yourself sane and your margins high. Go too far above the line and it’s unlikely that you can even make the business work — the cost of selling each unit will overwhelm the available revenue.

I learned much of this the hard way. My first company, GoCrossCampus, promoted campus-wide games through student governments. Another company I was involved in sold software to technology transfer offices within universities. For both of these businesses, the amount of bureaucratic red tape involved in the purchasing process was way out of proportion to the amount of money our clients were able to spend. University bureaucracies are notoriously budget-constrained, and student governments can rarely spend more than a few hundred bucks on any particular purchase.

While there are often fewer competitors in these difficult markets, I would caution any entrepreneurs against reading too much into the competitive landscape. Often, highly frictional organizations will stick with fundamentally inferior products (e.g., mainframe systems) rather than switching to any new solution — yours or your competitor’s. If there isn’t any competition because all the other firms have entered or left, that isn’t a good thing. In other words: when you see a graveyard, don’t play there.

Like this? Vote for it on my favorite news site, Hacker News.

Written by Brad Hargreaves

September 11th, 2010 at 12:00 pm

Your Decisions are Wrong. Is Your Methodology?

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I made a lot of mistakes while running GoCrossCampus. Lots of people ask me questions that more or less amount to “If you could have done X differently, what would you have done?”

I always answer these questions sincerely. “Oh, I would’ve done A rather than B and C rather than D” or something like that. But in the back of my mind I know that counterfactuals make for odd teachers. That is, the information I have about the specific problem has obviously changed — and the more interesting lessons come from shifts in my decision-making methodology.

These “If you could have done X differently” questions are essentially asking “If you knew back then what you know now, how would the decision you made have changed?” Interesting, yes. But the information that led to the decision — for instance, my beliefs on the marketability of a product or the right way to scale an app — isn’t that useful. Rather, the juicy bits are the framework through which I took the information and produced an actionable plan. Consider the following question:

If you could do it again, how would you structure your financing round?

And answers:

I would’ve clearly taken a priced round rather than a convertible note given the difficulty we had in closing the round.


Given the information I had at the time, I would not have done anything differently. That is, even though my information was wrong, my decision-making methodology was sound.

In other cases, my methodology may have been wrong yet my decisions right — something we in the business call “getting lucky”. But those two replies are answering the question on different levels. One is concerning facts — the who, what, when, where and how of the situation at hand. The other is concerning methodology — given the facts at hand, how did I come to a decision?

When evaluating past decisions, too many entrepreneurs focus on the facts rather than the methodology. Methodology is replicable. The mental algorithms I use to convert data into a decision are used over and over again. Data is all too often ephemeral and unrepeatable, and condemning a decision-making methodology that was plagued by bad data is often a quick way to take a step backward (or vice versa, endorsing a poor system that got lucky due to circumstance or poor data.)

Focusing on the methodologies rather than the facts will allow you to see patterns and make better decisions in related but non-identical situations. If I get hit by a car, it would be odd to simply say “Wow, next time I’ll see the car.” Rather, I’m going to make fundamental changes to the way I think about crossing the street — specifically, how I gather information and translate that information into actions. Why should a startup be any different?

Written by Brad Hargreaves

August 1st, 2010 at 1:32 pm

Venture Fundraising in Four Graphs

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Relating investors on board to chance of ever closing
Comparing months you've been fundraising to your chance of ever closing
Comparing Active Investor Conversations to the time cost
Comparing Hope and Time

Written by Brad Hargreaves

July 25th, 2010 at 1:21 pm

Go Into Sales

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Let’s say you’re a college student who wants to be an entrepreneur. Let’s also say — for one reason or another — you don’t want to jump in and dedicate all your time to an idea right now. Maybe it’s money, maybe it’s confidence, maybe it’s the lack of available co-founders or some combination of the above. From what I’ve seen, most people in this situation do one of the following:

1. Join a big company and plan to do your startup later.

2. Join another startup as a non-founder.

3. Go to graduate school.

I have a different suggestion: go into sales. Take a commission-heavy sales job at a company that gives you the ability to source and manage your own leads with as much independence as possible. Find a larger company in your space of interest and just go learn to sell things there.

The ability to sell is the most underappreciated startup skill. In the get-bought-by-Google model, you just have to be able to code and (possibly) market a product. Ideally, you build something so awesome it just takes off by itself. Sadly, this rarely happens. Instead, almost all companies have to sell something at some point in their lives. And this isn’t a bad thing. It can keep your company (and you) independent of venture capitalists and other control-seeking investors. Having a fundamental understanding of the psychology of sales and the sales process can be the difference for your startup.

Also, sales isn’t IBD analyst-style slave labor. There’s literally no cap on the amount you can make, which means that you can potentially bring home a decent six figures a year if you’re really good — way more than most first- or second-year analysts in investment banks. The hours can also be ridiculously flexible; if you’d like, you can work hacker hours.

For whatever reason, sales jobs are off the radar of most Ivy League college graduates. Since a nice degree doesn’t mean anything in sales, little to no recruitment is done on campus. And Ivy League undergrads love to be recruited.

There’s no better training for being an entrepreneur than actually starting your own company. But if — for whatever reason — that’s not feasible, sales is an good and woefully underappreciated route.

Written by Brad Hargreaves

July 11th, 2010 at 9:07 am

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

Diaspora: Think about Brand

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Charlie O’Donnell had an interesting post this morning on what Diaspora should do with their Kickstarter riches. One thing he didn’t mention? Figure out your market positioning and brand.

Let’s think of this in terms of the possible likely outcomes of Diaspora’s work:

Low: The team / product / initiative falls apart for some reason or another. Nothing is accomplished.

Middle: Diaspora creates a product that is useful but is restricted to the tech community and never gains strong adoption. Even techies still have both Facebook and Diaspora profiles, limiting the impact and fulfillment of the mission.

High: Diaspora gains mainstream traction, becoming the first legitimate threat to Facebook in years.

Right now, most of the focus is on the distinction between the “low” and “middle” scenarios: How does the team focus and produce anything at all? How do they build the basic operations of their business? These are important, but they aren’t the elements that are going to separate the “middle” and “high” scenarios. And to me, that’s the really important distinction — if they’re aiming to open the social graph, they have to reach beyond a small circle. But what are some of those upside differentiators, you ask?

Usability: How easy is Diaspora to install and customize? Does it “feel” nice?

Dynamics: Facebook spread because it is viral. It uses the fundamental structure of the social graph to spread and stick. Can Diaspora capture those similar dynamics?

Brand Association: This is Diaspora’s biggest long-term problem. Right now their brand is closely associated with a techie revolt against Facebook, and there are real questions about (a) how long this revolt will last and (b) how “deep” the revolt spreads into Facebook’s user base. Diaspora is currently riding a wave that may simply peter out in the near future, perhaps withing weeks if previous Facebook user “revolts” are any indication. In this frame, the Diaspora founders need to take the money they harvested from dissatisfied Facebook users and quickly pivot to a brand that has long-lasting and broader appeal.

Many great companies do this eventually (e.g., Facebook’s shift from a geeky Ivy League classes and social site to a full-blown online manifestation of the social graph), but Diaspora risks being pigeonholed sooner rather than later. It’s getting lots of press way too early and around a message that may work for them now but probably doesn’t reinforce their ultimate goals — and risks forever framing them as something very specific to a tech audience.

This doesn’t necessarily involve a change in strategy or mission — just the frame. Product is still the king, but brand matters if we’re going to be talking about these guys in six months, let alone two or three years.

Written by Brad Hargreaves

May 13th, 2010 at 8:24 am

How to Fail at Presenting to Hackers

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I don’t usually like pointing out others’ failures (I prefer to focus on my own), but one particular demo by a startup at this past Tuesday’s New York Tech Meetup is particularly instructive in How to Fail at Presenting to Hackers.

A brief guide to failure, courtesy this demo:

Expect your connections to high profile individuals will build credibility: Exceptions include Richard Stallman, Cory Doctorow and probably Steve Jobs. Don’t rattle off a list of Silicon Valley investors and expect us to be impressed. We’ll just wonder why you’re not showing us a product.

Put the conclusion before the story: It’s fine to say that you’re raking in cash or you have amazing clients, but do it after you show us the product you used to get there. Otherwise the story seems backwards and you seem full of yourself. Explain how something was built from the ground up, gained traction and eventually convinced people with money to buy your product and support you. That’s a story that resonates with hackers.

Ignore the allegiances and perspectives of the audience: This is more of a general presentation rule, but this company couldn’t have blown it worse with a hacker crowd. For instance: if your product has applicability to hiring for both Fortune 500 companies and early-stage startups, don’t show examples of how Fortune 500 companies can use it to gain leverage over potential employees. You seem to be enabling a corporate culture that your audience is rebelling against.

Send someone who isn’t a cultural fit with the audience: I’m sure your company has hackers. Even an executive CTO or VP of Engineering. Send them, not the business development executive you just recruited out of an investment bank.

Like any audience, presenting to hackers isn’t hard. But just as it wouldn’t be a good idea to wear jeans and Birkenstocks when making a presentation to the board of a Fortune 500 company, pitching a crowd of hackers requires a level of understanding and respect of the group’s culture. Anything less is simply going to waste everyone’s time.

Written by Brad Hargreaves

May 5th, 2010 at 6:59 pm