mbas creating their first startup (advice)
Post on 17-Oct-2014
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For new MBAs who are thinking about creating a startup companyTRANSCRIPT
MBA to StartupFounder & CEO
Bryan StarbuckFounder/CEO of Stealth Mode startupFormer Founder/CEO of TalentSpring (Acquired in 2010)
Linkedin.com/in/bryanstarbuckabout.me/bryanstarbuck
Focus for CEO/Founder Skills are for the first 24 months of the company
Before Startup Your Company
BLOG: bryanstarbuck.typepad.com
My BackgroundMy Personal Background:
Computer Science degreeFirst 5 years of my career – focusing on mastering Software EngineeringSecond 5 years: Focusing on getting good at managing teamsThird 5 years: Building a startup from beginning to endMicrosoft for first 10 years. Shipped ~15 product versions
Managed up to 3 teams. Was a manager of managersI don’t have an MBA degree, but…
I read a stack of books of the MBA curriculum when at Microsoft to help my educationI spent a SIGNIFICANT amount of time doing entrepreneurial planning during my 10 years at Microsoft
Lessons from my First Startup
BLOG: bryanstarbuck.typepad.com
What I did WELL with Startup #1Did I DID do well:
Wrote FULL business plans before startup the companyDid FULL Due Diligence on the idea to make sure it was worthy “Taking the big leap”I threw away ~15 business ideas after finding problems in due diligence, until I found the one to create Startup Idea #1
I recommend this to everyoneIn hindsight, the business model was solidI focused on a business model that had strong valid economics to monetizeSelected RoR Open Source as my platformI am a closer (Needed to raise capital, hire, close sales, etc.)Master the ability to raise capitalKeep spending VERY LOW
BLOG: bryanstarbuck.typepad.com
What I did WELL with Startup #1Continued…
Did I DID do well:Talked to a TON of target customers pre-launch2-month Dev ship cycles (after launch)I talked a LOT to startup people. Learning beyond BigCo/MBA/Theory was absolutely criticalWorked in one of the big startup markets (Bay Area, Seattle, NYC, etc.)Focused on METRICS an ANALYTICAL analysis when managing executives during growthThe Strategy (and strategic analysis guiding everything) was VERY STRONG (saving us many times)Built a great board of directorsClosed the acquisition
BLOG: bryanstarbuck.typepad.com
Learning PAINS during Startup #1
Mistakes MADE: (and then Corrected)Should have done MORE and STRUCTURED validation talking to customersStarted with a non-Microsoft co-founder (since I also didn’t have startup experience)I wasn’t great at designing web product UI. (My strength had been at Desktop App UI design)I should not have worked at Microsoft 10 years. I should have worked there 4 years.I should have worked at a Startup before creating my own
Once the Venture was Going
BLOG: bryanstarbuck.typepad.com
Painful when Running the CompanyWhat I would change, if I know then what I know now:
I didn’t know the “Newest Cutting Edge Marketing”It would have saved us ~8 months to 12 months and possibly our one pivot
Focus on a deliberate company cultureLearned how to filter executivesMany small things during Sales-Learning-CurveGreat advances in UI design neededPatents are often not needed in startupsDon’t start a company when a huge recession will start when launching and ready to start selling
Don’t sell recruiting (hiring) services when companies stop hiring, lay off and have massive unemployment
Advice for MBA Entrepreneurs
BLOG: bryanstarbuck.typepad.com
Advice to MBAs looking at Startups (1 of 10)
Startups are probably the MOST FUN and REWARDING career (for the right kind of person)
Being a TOP PERFORMER is required to join a startup
Having the same Job Title for more than 4 years can be a problem
Only applicable to top performers
This frequently happens at big companies
A startup can enable greatly accelerating your career
ALL top performers can move to “VP of XXXX” by being aggressive, moving companies, spending 70% of your career at sub-200 person companies and keeping a startup aggressiveness
BLOG: bryanstarbuck.typepad.com
Advice to MBAs looking at Startups (2 of 10)
A great career should probably look like this:
BigCo 2 years
Startup Employee 3 years
Medium-Co (100 to 200 employees) as a “Director” for 2 years
If starting this with an MBA at age 26, reaching “VP of XXX” for a 20 to 60 person company by age 36 to 39.
Or as a startup CEO of a funded company
Staying at BigCo 4+ years builds a fear of making changes like this
BLOG: bryanstarbuck.typepad.com
Advice to MBAs looking at Startups (3 of 10)
Creating Pitch Decks, Business Plans and being in Entrepreneurship competitions in the MBA program can be very helpful
MBA programs are GREAT at:
Learning finance
General knowledge of building a mature company
Marketing fundamentals (Great theory and historic tactics)
Writing a Pitch Deck, Business Plan and competing in a competition on those ideas
BLOG: bryanstarbuck.typepad.com
Advice to MBAs looking at Startups (4 of 10)
MBA Programs have you learn AFTER graduating:
Cutting edge new Startup Marketing
Startups need a more automated, mass scale, LOWER COST of Acquisition and using new channels that didn’t exist 2 years ago
“Balancing” areas of a company when managing a company or product unit
Product building (but can easily be learned building product elsewhere)
BLOG: bryanstarbuck.typepad.com
Advice to MBAs looking at Startups (5 of 10)
BigCo can make employees RISK ADVERSE
Happens at year #4 and beyond
There is NO RISK in joining a startup right after college. If you have to leave it, it won’t cause a huge problem
People can build a dependence on requiring a $120k to $200k household income
Moving to a different company every 3 years can start to appear scary (when it shouldn’t, if that is the right career decision)
MBA Programs tell you how to build an Organization
In a startup, you do most of those jobs for the first few years
BLOG: bryanstarbuck.typepad.com
Advice to MBAs looking at Startups (6 of 10)
Don’t fall into the trap of multiple MBA founders
Internet startups almost always SHOULD look like this:
1 Founder to be CEO (can have MBA)
3 Co-founder or employees are all Software Engineering types
This is the first team of 4 FTE
Multiple MBA founders magnifies blind spots
Be careful of the company using the Microsoft tech stack (.net). Ensure you know why 90% of valley startups don’t use it, before making an informed decision on your startup
BLOG: bryanstarbuck.typepad.com
Advice to MBAs looking at Startups (7 of 10)
Channel Strategy:
Internet B2C Channel strategy is VERY NEW
Old Generation #1 Channels: Wholesale, Retailers, Shelf-Space
Old Generation #2 Channels: OEMs, VAR Resellers
New Internet Channels: Absolutely nothing like the above
New Channels for B2C Companies:
Some companies generate lots of traffic and are hard to monetize. Some monetize well but can’t get traffic. You should partner with your opposite
Affiliate deals
BLOG: bryanstarbuck.typepad.com
Advice to MBAs looking at Startups (8 of 10)
New Channels for B2C Companies: (Continued)
Acquire traffic from a partner company
Thinking strategically shows traffic flows behave like channels: SEO, SEM, CPA, etc.
Facebook: Via Apps, API to create posts, etc.
Viral: Facebook, Linked-In, etc.
Much more…
STRATEGIC NOTE on CHANNELS: Think of micro-channels and then assess each for either: a) Marketing to, or b) using Channel techniques against. All internet traffic is a micro-channel or originates from one, so start strategic analysis there.
BLOG: bryanstarbuck.typepad.com
Advice to MBAs looking at Startups (9 of 10)
Be careful of Out-sourcing Software Engineering:
It fails for startups 95% of the time
It fails even more often for MBAs who aren’t Software Engineers or Program Managers
For almost all startups and investors: Out-sourcing results in failing and is unfixable
Validation from Customers
This is absolutely critical. Far more critical than non-startup people realize
Read the LEAN STARTUPS book. It is an absolute must read. This is the BIGGEST mistake first time entrepreneurs can make
BLOG: bryanstarbuck.typepad.com
Advice to MBAs looking at Startups (10 of 10)
Seriously consider cycling between: BigCo ($1 billion+ revenue), MediumCo (100 to 300 employees), and in a Startup
Each will remove a blind spot
Each enables advancing career wise vs. learning from people who master in deep discipline
BONUS: The earn-out period after an acquisition is a great time to learn from BigCo or MediumCo
Startups are Incredibly FUN
I absolutely RECOMMEND it for all highly driven employees
BLOG: bryanstarbuck.typepad.com
Microsoft Founders of Startups (Acquired, IPOed, or Significant revenue):Jonathan Sposato @ Picnik: ACQUIREDDan Shapiro @ SparkBuy.com (Shell) ACQUIREDMike Matthew @ All Stars Directory ACQUIREDTA McCann @ Gist.com (Exchange) ACQUIREDJoe Giordano @ PayScaleRich Barton @ Zillow & Expedia IPOedMike Slade @ Starwave ACQUIREDKevin Merritt @ SocrataJordan Schwartz @ Pathable (MSN)Bill Bryant @ Qpass, Visio, Mixxer, etc.Hadi Partovi @ Tellme Networks & iLike ACQUIREDAlex Castro @ Delve Networks (Shell) ACQUIREDRob Glaser @ Real Networks IPOedGabe Newell @ ValveAlex St. John @ WildTangentBryan Starbuck @ TalentSpring (Shell) ACQUIRED
Rev, Acquisition or Market Cap
Amount:
Many
Ex-Microsoftee Founded Startups
IPOed 5Companies
3Companies
$1+ billion:
$100+ million: 6Companies
$30+ million:
Numbers are often confidential. Some information came from people in the companies listed
BLOG: bryanstarbuck.typepad.com
Anatomy of a Startup CEO
Classic Marketing
Product Building(Design, Software Engineering, etc.)
Corporate Finance
General Great Company Building
Ideas
School Level writing Business Plans, Pitch
Decks
Cutting Edge Startup Marketing
CEO Balancing managing the company
Startup Disruptive Ideation:Business models, break through marketing, etc.
Strategic Analysis to ensuring creating an idea for a startup
Direct Learn in MBA Program Often learned after MBA Program
The END
Next Steps:
Create your company and have a BLAST
Join the “MicrosoftStartup Learning” mailing list
Join here: http://groups.google.com/group/Knowledge-Startup-to-Microsoft
Bryan Starbuck’s Blog: bryanstarbuck.typepad.com