Tonight I attended an event for Startups at CalTech. The event began with presentations given by several founders and wrapped up with a key note speech by Bill Gross. For anyone who does not know, Bill Gross is a legend in the startup community. He founded IdeaLab in Pasadena, which has incubated over 100 companies, including just about every major Internet success story in the LA area – brands such as eToys, CarsDirect, eHarmony, Overture.com and UberMedia.
His speech chronicled his life as a serial entrepreneur and provided a 12 pieces of advice that he learned along the way. I thought it might be an interesting blog post to capture his advice.
1. Up Markets – try to align yourself with a market that is rising. If you are running with the trend, it is like running a marathon with the wind at your back. Yes there may be a lot of competition, but your opportunities to succeed are also greater. This is the most important piece of strategic advice.
2. Selling – Learning how to sell, pitch, and explain your product, is the single most important skill as an entrepreneur.
3. Passion – You have to pursue your passion! A young company will go through many tough times and often the fate of the business will not be known. Apple and many others experienced these dark times and persevered, only because their founder(s) had so much passion for what they were doing that they did not give up, when things looked bad.
4. Focus – Even if you think you are going to starve yourself of opportunity by limiting yourself to just one thing, in fact the opposite is usually true. He told the example of how he was building educational software products for kids and decided to build one specifically for Kindergarteners. That became, by far, their biggest seller!
5. Strengths – It is important to recognize your own strengths (and weaknesses). Build your infrastructure around your strengths, and find others to compliment and fill in around you.
6. Grow Slow – Do not get ahead of yourself; it is better to grow slowly. He told the story of how eToys was growing as quickly as possibly, trying to grab marketshare before Amazon did. When the .com crash happened however, they were over-extended and it killed the business. In retrospect, growing slower and not causing such vulnerabilities would have been a better strategy.
7. Survive – If you have a great idea but are early to the market, you need to stay lean so that you can stay alive until the market is ready for you. Mr Gross told the story of how Z.com could have been a leading entertainment business online but they spent their capital and folded that business before the market was there. In retrospect, they should have grown slower and maintained so they could stay alive until the opportunity manifested.
8. Testing – Test your core value proposition early and often – test, test, test! He told the example of how CarsDirect initially was just intended to be a simple test. They put up the site to see if they could attract buyers for a single night and received 4 purchases. Based upon this response, they went forward with the business. Testing as process is an idea I’ve written about before and also a major tenant now of the Lean method.
9. Perservence – If you believe strongly enough in an idea, stick with it. When Bill Gross founded GoTo, no one saw his vision for the Pay per Click advertising model. GoTo later became Overture.com, which of course eventually became Yahoo, and is the model that Google Adwords now uses. Had he not stuck with it at the time, none of that may have happened.
10. Funding – If you have a big idea, you will need big money to pull it off. Its that simple. No when you are going to need partners and seek them out if necessary. For smaller ideas, its often better to build the initial iterations yourself and seek funding later, but for big ideas, funding is a critical element of the venture.
11. Automation – Find automated ways for customers to bring new customers to you. Virality in other words. Its the single most efficient way to scale a business, though it can be difficult to crack. He is currently working on social media tools (UberMedia) and social networking (Chime.in) and exploring how to make this happen.
12. Opposites – Work with people opposite from you. This has previously been described as the hacker and the hustler team. Mr Gross talked about how early on, he made the mistake of always working with people like himself but soon realized he wasn’t getting the objectivity or rounding out his own skills this way. He recommended that entrepreneurs seek out their opposites instead.