My last couple of posts have been about finding technical cofounders, either at the start or over time. Many of you have chimed in with your own experiences and thoughts. And I’ve promised to talk about what it takes to find cofounders. Here goes.
The Ideal
You hear about it all the time. Three friends leave Facebook along with two friends from Google to start a new skunkworks project. It gets some traction, some revenue, some press, raises some money, gets huge and then sells out to Google or Disney or whoever. And then the process starts all over again.
This all sounds great, but outside observers often make a fatal mistake; we think, “Wow, that was a really great idea. If I had that idea, I could have done that.” Or even worse, “I totally had that idea. I would have done that but I couldn’t find anyone to help me past my prototype.”
What the external observer fails to account for is the power of pre-existing relationships. How do companies like this get started? At bars, parties, over lunch, and over time. Notice that the company was formed by “friends.” That’s really how it works. So, how to get started?
Making Friends
Many people, especially engineers, are not particularly extroverted. But at the end of the day, if all good entrepreneurial endeavors are born from relationships, it is necessary that you be a social creature. That means cultivating many personal relationships — and not just on Facebook or Twitter either. A good litmus test? If you know somebody well enough that they would consider inviting you to their house for a party or dinner, that’s a good indicator of a strong relationship. We’ll call these “strong ties.”
There may be countless other relationships which are not quite that far along, and you’ll need those too. These are your “weak ties” and will be the people who can help you find accountants, lawyers, customers, and vendors. Some of these relationships will ultimately evolve into “strong ties” as well. You need a lot of both.
So how do you go from being “just you” to having all of these relationships? One stupid thing you could do would be to move to Silicon Valley. In one move, you will manage to weaken your existing strong ties, blow up your weak ties, and force yourself to rebuild all of that from scratch. But too many people assume this is the only answer. (In fairness, there are a lot of great people in the Valley, and if you know people there already, it might help you move forward; but that’s a subject for another post.) But even there, you have to be a relentlessly social creature and meet anyone and everyone who might be potentially interested in what you’re doing.
When I talk about becoming “social” I am not talking about being some kind of socialite, bon vivant, or “party animal.” I think we all are frustrated with the constant barrage of networking events and the people who want to “be seen” at them. I’m as cantankerous and introverted as the next geek, yet I’ve made it my business to become extremely well socially connected — and not because it’s cool to be connected, but because I’ve sought out people in my area and around the world that care about the things I care about.
Getting Out There (in Engineered Contexts)
One way you can become more social is to go to events and meet people. Startup Digest (which I co-curate here in Baltimore) is a great way to find out what events are going on in your area that might be relevant to startups.
Many “businesspeople” feel out of place at “geek” events, and vice-versa. But if you are really serious about starting businesses, you need to get to know people of all stripes. Go to each event and tell people your story and even more importantly, ask people about theirs. What’s your story? “You’ve been doing X for Y years, and now you want to try to do Z.” Nothing more than that. People want to help you succeed.
As I mentioned, we all get frustrated with traditional networking events — stand around drinking a beer, talking to 10 people who find you odd, and pretty soon you’re checking the clock. So, instead of going to generic networking events, think about ways you can “engineer the context” of the event. Here are some:
Events with a speaker plus networking are almost always better than events with none.
If there’s no speaker, make sure there’s a focus or targeted community you want to understand better.
Events with multiple speakers (like Ignite) are even better because they expose you to many points of view.
Raise your hand, ask questions; share your expertise and passion publicly and let others find you.
Be the speaker. Find a way to present to a community you care about.
Be authentic. Don’t pass yourself as expert on something you’re not.
Hold your own events, or sponsor others. Host a Tweetup, targeted to people you want to attract.
Befriend thought leaders; ask how you can help with later events.
These are just a few ways you can go about building your network of potential cofounders. But these all pale in comparison to what I’m about to tell you.
Start Coworking Today
If you really want to start building your network of potential cofounders where you are, there is simply no substitute for spending time with a lot of them on a regular basis. Coworking is a great way to do that.
Coworking is a worldwide movement based on shared workspaces for creative professionals. They’re run by their respective communities with the goal of getting teleworkers out of the house and making friends. In Baltimore, I helped to form Beehive Baltimore in February 2009, and it’s grown to include over 100 professionals in its ecosystem. On any given day, there are between 10 and 20 professional programmers, designers, marketers, and entrepreneurs that participate in our community. That same story is repeating itself in every city in every country around the world.
There’s simply no substitute to being around people, sharing ideas and the occasional laugh with them, and getting a feel for what makes them tick. In a sense, you’re engineering the kind of workplace context that occurs when “friends from Facebook and Google” leave to form a startup.
You’re creating the same opportunity for after-work drinks and weekend interaction. You’re creating a shared context for the reinforcement of ideas and exploration of imagination. And it’s vitally important you do this with others.
Relationships First, Ideas Second
Ideation is a social exercise. But ideas are cheap. If you have an idea but haven’t yet strengthened it by sharing it with others, odds are it’s still a pretty weak idea. (And if you’re scared to share your idea with someone, gosh, well, I’ll get to you later.)
I keep a list of about 150 business ideas at any given time. My idea list over the years has included ones closely resembling Google Earth, e-Bay, Foursquare. These ideas, while great, were in many ways obvious and “in the air” at that time — what mattered is execution, and others beat me to it. And that’s OK. It just shows that execution is the only thing that matters.
Sharing ideas with others allows you to get buy-in from other potential cofounders. If you are able to get three or four of your coworking friends excited about an idea, and one of them suggests a tweak that makes it even better, chances are you have something pretty strong there. Run with it. Get that team to build it at night and on weekends. They very likely will, because they believe in the idea. (IndyHall Labs is a great example of this dynamic.)
Your Cofounders Are Your First Investors
If you can’t convince technical people to at least show interest in working with you on your idea, you are likely going to have a very hard time changing that later by waving money at them. At the end of the day, people want to work on stuff they believe in. Start from there.
Also, investors will be excited to look at a team of eager people who are already working together to attack an interesting problem — much more so than a lone entrepreneur who needs to “raise money” to “find programmers.”
Put Yourself Out There
In the end, entrepreneurship is not something you really control. You have an idea of where you want to head, but almost always you end up someplace else. That’s fine. And that’s the point. Entrepreneurship is something that happens to you.
And so, if you start today and get yourself out there, talking about ideas, asking people about theirs, developing weak ties and pushing your weak ties to become strong ties, you’ll get there. And people will start finding you. Because over time you’ll learn that some of your ideas resonate, some don’t. And you’ll pursue the ideas that resonate.
Resonance drives interest. Your cofounders will find you. If you build something awesome, customers will find you. If customers find you, investment will find you. A large percentage of VC deals happen not because someone pitches them, but because VC’s find a hot growing business that’s attracting attention.
It’s been said that advertising is a tax for being boring. And there’s probably an analog in startup-land. Don’t be boring. Be remarkable. Get out there and meet the people you’re going to build your future with. That’s how this process works, and it can happen anywhere in the world if you employ the right approaches and understand that it’s relationships that drive the startup engine more than anything else.
Some interpreted my last post (about finding technical co-founders) as advice to “do nothing” — to wait until the stars align to start working on an idea. And in a way, that is what I’m suggesting. But that observation is really part of a larger picture of how a fully functioning entrepreneurial ecosystem works. In such a system, both ideas and businesses are born from personal relationships. However, outside of a few niche industries in a few niche geographies, these ecosystems do not (yet) exist. What then?
Start With What You Have
You may know I am a big fan of Dr. Saras Sarasvathy, the entrepreneurship researcher (now at University of Virginia’s Darden School of Business). Her clear-eyed analysis of the entrepreneurial process suggests that entrepreneurship is a behavior and a process. She believes that entrepreneurs are made, not born. And I absolutely agree with her.
The last thing she would suggest that an entrepreneur do is “wait” before taking action. Instead, she suggests that all entrepreneurship is a series of successive “small bets” — specific kinds of bets, with “affordable” downsides and higher, or possibly even uncapped upsides. By participating in this process, the entrepreneur actually changes the world around them and influences the success of their later activity. In short, they begin to mitigate the risks of their own bets, enhancing the upside and lowering the downside of the entire entrepreneurial process.
And this is exactly how entrepreneurship works. In this model, you never “wait around” — you start right away, taking successive small risks, and then going from there.
Doing It Right (and Wrong is OK too)
Matt Mireles wrote in on the last post to express his objection that he felt that I was suggesting that folks “never even try to get off the ground.” And I realized that wasn’t my intent at all.
Matt wrote (among many other thoughtful comments):
At least in the stall spin you have altitude to lose! Your advice seems to be “don’t even try to get off the ground.” This bothers me.
Who cares if you throw the prototype out? Who cares if you switch from PHP to Rails? That’s all sunk costs. The only thing that matters is that you make progress, build the team and get customers.
…
Case in point: SpeakerText. My original co-founder built the site in PHP and the app in Flash. The product kind of sucked, but there were some cool features, it got the idea across and we used it to get some good press. He ultimately wasn’t ready to commit and we did the whole stall spin thing you describe (although we parted ways amicably and he still helps out from time to time). Burned through some cash, our angel round imploded, etc.
Matt’s experience, of working with mercenary developers, getting it wrong, losing some cash and probably also causing a certain amount of misery in the process, is not uncommon. And it’s perfectly awesome. It’s exactly what entrepreneurs should be doing, which is failing early and failing often! Think of the lessons that he’s now learned!
Does this contradict my other advice? Not at all. Because Matt did one key thing that victims of the “stall spin” never do, which is to control their downside risks. Matt lived to tell the tale. In flying terms, he gave himself enough altitude to live through the stall spin and recover; his willingness to learn from mistakes and his awareness of what he didn’t know made it possible for him to live, where most people die.
And that’s really what the last post is all about: how to avoid making fatal mistakes by aligning common interests, which is (in effect) a way of capping downsides.
I promised a follow-up post about finding technical cofounders, which will further explore what a functioning ecosystem looks like. But here’s a preview to ponder: in functional startup ecosystems, you see more alignment of interests, risk taking with capped downsides, and strong pre-existing relationships (by way of meshed social networks). Can’t wait to share those ideas with you.
In the meantime, take Dr. Sarasvathy’s advice and start now. Just control your downside risks, learn from failure, and know what you don’t know! And meet lots of people who can help you along the way. You’ll do great things!
Avoiding The Startup Stall-Spin:
Why Your Startup Needs Technical Cofounders
I’ve spent the last several years working with early-stage technology startups. More often than not they fall into one of these two categories:
They have an “idea” and are trying to raise money so they can hire somebody to help them realize it.
They already have some money and are trying to find a “technical person” who can “build it”
Let me say it now — if this sounds like you, you are probably already doomed. Seriously. Stop now and go back to middle management, or start your efforts over from scratch. If you stick on the current path you WILL fail. Here’s why.
Mercenaries Are Not Paid to Care
If you are trying to build something, you presumably care about it and think it is worth doing. (If you don’t really care about it but just think it can make money, you should stop reading my blog altogether.)
If you can’t make other people want to join your team simply on the basis that they like your vision (and like you) then you are going to be faced with “hiring” someone to “build” your vision for you.
And that person is not paid to care about your vision. Free agent programmers, while they may be consummate professionals and quality engineers, will most often build exactly what you tell them to build.
There are three major problems with this:
You probably don’t know what you want to build.
You will probably do a very bad job of describing what you want to build.
You will spend most of your capital building something that no one actually wants.
And when the “prototype is built” and the “programmer” hands you the keys, who is going to maintain the code? Who is going to make ongoing structural adjustments to reflect the needs of your customer?
How will you identify and collect the metrics that will inform your business decisions?
Most entrepreneurs give fuzzy answers here, like “we’ll raise money on the prototype,” or “we’ll hire someone once we have revenue,” or the most laughable answer of all, “we’ll outsource that.”
The bottom line is that there is no substitute for TEAM. And there are lots of creative ways to build teams, but it has to start on day one.
Why Entrepreneurs Fail to Build Teams Early
This one’s really simple: isolation, inexperience, and negative reinforcement from past experience.
Isolation: most novice entrepreneurs exist in some kind of vacuum, limited to their social circles from their previous jobs, schooling, or professional discipline. As an example, many smart “businesspeople” simply don’t know any good “programmers.” Good startup teams emerge from relationships that already exist. And if you don’t have relationships with people that can help realize your vision, odds are you also haven’t asked them what *they* think of the idea. That can be incredibly revealing and instructive.
Inexperience: novice entrepreneurs are, by definition, new to the game. They don’t know that founding teams don’t come from “help wanted ads” for “incredibly talented programmer who will build my crazy web service.” They simply don’t know. Memo: this is not how it happens.
Negative Reinforcement from past experience: Many entrepreneurs and experienced business people alike have exactly one idea of how to “find people,” and that is to “find someone” who can “do the job.” And since jobs are paid for by money, they assume that funding is important so the firm can “hire people” to “get the task done.”
The very idea of “hiring someone” sets the task up wrong. Here’s why.
I don’t give a @#&%& about your opinions — build what I want you to build.
You are replaceable.
And when you do hire someone on these terms, you get what you ask for — someone who will leave you for something that pays better (and who probably left something else to go bleed you dry).
The Startup Stall-Spin
As a pilot, I sometimes use flying analogies. A stall-spin, if you have never heard the term, is a dangerous situation: the plane tries to climb upward too steeply, loses lift, then begins to fall, spinning nose-first straight down towards the earth.
Often in the fall the pilot will incorrectly try to adjust the wings to “steer” the plane back into control, but at that point there is almost no air flow over the wings and this action makes the spin even worse. The only correction the pilot can make is to adjust the tail rudder to stop the spin, and then the plane will begin to regain lift and maneuverability. Often a pilot will lose over 1,000 feet of altitude in a stall-spin correction and it is certainly dangerous; for a pilot that encounters a stall-spin without some training and awareness, it is very often fatal.
Entrepreneurs need similar training to avoid (and, less preferably, correct) the “startup stall-spin.” Here’s what it looks like.
Entrepreneur has some “idea.”
They get a programmer to “build it” at considerable expense.
It is released to the public and is met with lackluster response by the market.
Revenue projections are missed.
Morale suffers. Everyone from employees to investors to strategic partners suffer a loss of confidence.
Funds are depleted. Required product changes are delayed until funds can be secured.
Original mercenary programmers lose faith in the effort and may even badmouth the entrepreneur.
New programmers become reluctant to join the effort.
The project becomes toxic and burns and dies. Everyone loses money.
There is only one way to recover from this, and that is to correct the original mistake: instead of hiring mercenaries, restart the effort from scratch with a real technical cofounder.
And here’s the kicker: if you can’t find one, you’re going to fail. Also, if you don’t do it before #3 (dealing with lackluster market response by making modifications) you will also likely fail.
And here’s why: you can never hire someone who will care the way a cofounder will care. And if you can’t find a cofounder, stop — unless you can get to a point where you’re generating revenue all by yourself.
Many of you may be saying, “I tried to find cofounders, but it was hard.” And it can be. And I will address that in my next post.
Meantime, I hope you give some thought to the “startup stall-spin” and how you can avoid it. In an airplane, you try to avoid stall-spins by avoiding stalls entirely. It is no different for a startup. Because recovery from that error, while survivable, is risky — and terrifying. Only a solid team of committed cofounders can keep you out of trouble!
The BP Deepwater Horizon oil spill currently unfolding in the Gulf of Mexico is already the worst environmental disaster in American history.
On June 28th, the TEDxMidAtlantic organizing team is holding a day-long event to consider the current crisis along three axes:
Mitigation: Understanding and alleviating the effects of the spill
Alternatives: What might an oil-free future look like and how we can get there
Policy: How global energy policy can help lead to a cleaner and more stable future
We are partnering with a broad array of organizations and agencies, including the World Wildlife Fund, National Geographic, National Public Radio, the United States Departments of State and Energy, Mission Blue, TED, and many others to assemble a program that we hope will lead to a better understanding of the present situation and illuminate a path towards a more workable future.
Admission fees to TEDxOilSpill will also help to fund an expedition to the Gulf of Mexico. Renowned photographers James Duncan Davidson and Kris Krug are heading to New Orleans next week to record the sights and sounds of real people, real landscapes, and the real issues facing the Gulf Coast at this critical time. And they will share their stories at TEDxOilSpill.
For those of us who are entrepreneurially-minded, it is hard to sit by and watch this horror unfold. We hope that by creating this forum, we are making a valuable contribution — one that will amplify the efforts of the many volunteers and professionals who have dropped everything to respond to this urgent and ongoing catastrophe.
I was seventeen years old in 1989 when the Exxon Valdez disaster appeared to be the defining energy crisis of our age. Unfortunately, I wasn’t able to make much of a contribution then. With this disaster, which is already many times worse, I am grateful to be in a position to advance the global energy dialog — even just a little bit.
Please join us and please spread the word about this event. We are on a short timeline and are organizing speakers, presenters, and partners urgently. You can also participate in the event, wherever you are, by organizing a TEDxOilSpill Meetup in your area.
I am CEO and co-founder at 410Labs, and creator of Mailstrom. I'm a serial entrepreneur, software developer, and community builder in Baltimore, Maryland, USA.
