In the world of startups and entrepreneurship, we, almost religiously, believe that if we work hard, work with talented people, and get traction, then we'll come out "victorious". Given the general optimistic nature of being a founder, when looking forward, we tend to brush the uncertainty under the rug and assume that outcomes are fully in our control. So, when things don't play out how we imagined it would, we are often left in in despair and confusion. It makes it harder to wake up the next day and needing to ask ourselves, "How could this happen to me (yes, it's personal) when things were looking all up and to the right?" I've particularly gone through this exact cycle more than once and each time I learn from it.
A place where I like to draw inspiration about how others deal with this is by watching elite sportsmen and sportswoman compete. They train their entire lives for something that might last between 10 seconds to a couple of hours. Even though you can be the best and do everything right, you sometimes still don't win. Yet, you have to pick yourself up, deal with it and go at it again.
Yes, I do realize that this sort of like comparing apples to oranges since in sports the victories are easier to measure, as outcomes have order, and in entrepreneurship it is not so straightforward but there's definitely inspiration to be drawn. In entrepreneurship, there's definitely a general sense of progress but you never know when you're actually winning but you sure as hell know the times when you're not. That being said, my biggest take away is how these individuals manage themselves in difficult moments but still come back to compete.
A great example of this is what what happened to Formula 1 driver Daniel Ricciardo earlier this year. He's a world class driver and should've won in both Spain and Monaco but ended up finishing 4th and 2nd in the respective races. He still had to come back and compete the following weekends.
In Monaco, much like in Spain, Ricciardo was driving a fantastic race and was called in for a pit-stop. For those not too familiar with the sport, a pit stop is a marvelous feat where the old tires are switched out for new ones in a couple of seconds (video) . Unfortunately for Ricciardo, when he made it into the pits, the pit-crew took off all 4 tires but did not have the new tires ready. This costed him crucial time and he knew it, as you can see him throwing up his arms here. He did everything he could right yet here he was, in second place, trying to win back the position he had lost for no fault of his own. For those who care, there was no happy ending. He finished the race in second place.
In his post race interview (full view below) he talks about this feeling of anguish and anger: "How do I feel? Like I have been run over by an 18-wheel truck for the second week in a row. I took Barcelona (Spain) on the chin, but two in a row? And especially here at Monaco. I thought l was controlling it. A big part is relying on the team and strategy. I don't know where to go from here or what to do. This win l will never get back. It definitely hurts."
Yet, he came back the next race, and the race after that, and so forth to compete once again. Similarly in startups, I've found are not always going to go in my favor, the uncertainty will will unravel in brutal ways that I never expected, but it's up to me to stand up and go at it again! Managing one's own psychology will be 🔑. I've started to have a routine out of working and that's helped a lot. Now looking into the routines of others to see what I can learn and apply to mine.
Last September, I had the opportunity of spending a few hours with a family friend who had been in the banking industry for over twenty years. I think I met him a once growing up but this particular trip to New York allowed me to spend quality one-on-one time with him. He shared lots of good advice and it was a pleasure to sit across from such a knowledgeable, yet humble, individual. I tried to absorb everything. However, there was one thing he said that resonated with me more than anything else, "People almost always leave companies because of their managers. Remember that in your entrepreneurial endeavors."
I think this is especially true when working in a startup environment and can be extended to; "People almost always join and leave companies because of their managers". In the case of early stage companies, managers are more often than not the founders themselves. In the early days there's not too much certainty. However, there is one constant day in and day out: the people you're working with and for. I think this early founder-employee fit evolves into culture. Culture is upheld the strongest by the founders/leadership and is maintained as a common thread through the company. This not only attracts but also helps retain talent. This invariably helps a company become better.
It's why VC's spend time digging into a founder's ability recruit. It'll give them a taste of what's to come. Accordingly, being on a founding team of a company, it'll be up to us to attract (and keep) the best people. You cannot rely solely on press, metrics, etc when it comes to recruiting in the earliest days. It is quite literally up to you.
I think founders can approach it from a personal brand stand point; twitter/personal blogs, and or from a technical depth standpoint; technical talks/papers published/previous technical execution, Either way there's a need to do what's most authentic to who you are since its most likely to be convincing to somebody looking to join you. Some of this does seem obvious, but I think it is something that needs to actively be done. However, sometimes it can be overdone and doesn't seem authentic. Plus, people tend to get wary of people who are too charming/smooth. Similarly, its why it makes sense to ask to spend some time with founders before joining a company, should it small enough (<50). You'll most likely get a taste of what lies ahead.
I'm going to spend some time looking for stories from the first few employees at some today's larger startups/tech companies. It could give insight into what convinced them to join in the earliest days. I'm curious see what sold them.
This family friend recently passed away and I write this post in his memory. I hope to not only have the stamina and fitness to climb to Everest Base Camp in my late 40's like he did but also carry valuable lessons like these that he shared with me.
Assumption: Basic product/market fit, in one's own eyes, and a need to hire. If not, there should be focus on getting a point where hiring is necessary.
Update 1 (07/18/16) : The Macro, YC's publication, is doing a whole series on early employees. So far they have: #1 Airbnb, #1 General Assembly, #1 Yahoo, #1 Reddit, #1 Amazon.
Two night ago, I attended the 2nd UCLA Student + Alumni Entrepreneurs Dinner. Last time I was here, a year ago, the event was my baby at Bruin Entrepreneurs for which we had raised some money from, the ever supporting, UCLA VC Fund, to host! The only difference was this year, I was back as an alumni*. A good reminder of how far we've come, I've come, and it encouraged me to write about what we built over the last couple years when I was on campus. Some of you may find nothing new or ground breaking here, but if you're interested in my perspective or have thoughts and comments about it, that'd be awesome!
Also, groups on other campus' such as BASES @ Stanford, MPowered @ UMich, Harvard Ventures @ Harvard, CORE @ Columbia, Founders @ UIUC, Spark @ USC* have all built amazing ecosystems. I learned a lot from their work and you might be able to as well. I'm going to write another post on how them + campus focused funds have made it possibly the best time to start something when in college.
Three years ago, I had the opportunity to restart an organization at UCLA called Bruin Entrepreneurs. Working with amazing people, both on-campus and off, to try and build structure for on-campus entrepreneurs has been an experience I will hold with me forever. It taught me a lot, particularly about people, early days of companies, and the value of networks. There was a vision I had of what it should look like and why. I wanted to share this for those who might still be running organizations on campus or wanted to build one on their own. What's outlined here is not perfect, but a starting point. A lot of it succeeded, some of it failed, and in the last year I've watched an amazing group of people build some more. None of this would be possible without a long list of people who were directly and indirectly involved. On the Bruin Entrepreneurs website every single past board members details can be found!
Bruin Entrepreneurs - Foster an entrepreneurial community that's interested in solving problems with technology.
People fell into two groups:
1. For those who were curious in dipping their feet - we'd do the following programs:
Weekly Speaker Nights (Fall, Winter Spring)
This exists as the platform at UCLA for every curious student to meet and interact with each other. It shouldn't matter if you're a hacker, hustler, or a designer, on north campus or south, in med school or business school, everyone of us has something to learn from each others entrepreneurial thoughts, pursuits and more. What better way to do it than over Pizza and Cookies. We also aimed to use this program as an opportunity to invite speakers - entrepreneurs, VCs, PhDs, and more. This served three important purposes - bringing smart people to campus would 1) create collisions between students and them, 2) encourage them to share their stories, which is the one of the best way to inspire the crowds, and lastly 3) get them more involved with what we were trying to do. We could also use this content to build a brand around BE/UCLA in general - much like DFJ's series at Stanford.
We could also raise some money from sponsors as this would be a good event to have your name associated with - plus we sent an email to 3,000 students on campus so your logo in there would be cool too.
Outcome: We ran this really well for a little under a year having some amazing people come by. The turn outs were pretty varied in numbers with between 30-60 people attending for most of the year. However, towards the end we started nearing 15-25 on a weekly basis which proved a little disappointed to our sponsors who were paying for the pizza & cookies. I think we could've done a better job by not having the best speakers we could get be concentrate into the beginning of the year and could've spaced them out over time.
Overall though, I think this event was one of the best ways people got to know people. Also, it was at one of these nights that Mahbod - who was speaking, joined Sam - who was in the audience, and catalyzed Everipedia into even more glory :) My big take away from this was realizing the value of physically forcing people to meet - if you have a permanent space this whole ecosystem would work better!
Bruin Startup Fair (Fall)
Founded this with Sigma Eta Pi and ESUC. However, I personally thought it was in the best interest of what we were trying to achieve to not run the startup fair but do the fellowship instead - so we pulled out of it. Jury is still out - but I think most other orgs on campus run a startup career fair - might make sense for you too.
bVentures (Winter to Spring)
Student-run accelerator. Easy way to connect students with mentors and other services deemed important to them. We wanted to bring in the power of alumni as well as build a sense of camaraderie between founders on the same campus. We also had a weekly meeting where we could track the progress of teams (by their own measure) and have a speaker with respect to some part of the business they were building. Ideally, we'd be able to give each of them $5,000 grants.
Outcomes: We signed up nearly 100 alumni who opted in to become a part of the network that receives updates from people in the program and requests for helpProgram still runs . The most successful company that has taken part now has 5 employees and generates revenue, and found it to be incredibly valuable! We also partnered up with AWS, a local law firm, and had VCs come out for the demo day at the end. However, we weren't able to raise money to do this nor get the students class credit. However, if we could do both - it should become invaluable as is one of the best ways a team on campus to find a supporting network right when they get started.
On the flip side I do realize that teams that receive a lot of traction early will most likely skip something like this - but for most it usually takes a bit of time and this will be important to them. For those cases rise of Dorm Room Fund/House Fund/Rough Draft Ventures/other campus focused funds will be major key!
Perfect Pitch - We shut this one down. There was too much happening.
LA Hacks (Spring)
Hackathons - what better place to get started than here, specifically for technical skills. This was an event for which we partnered with another organization on campus called - Sigma Eta Pi.
Outcome - The mission over here wasn't too much BE related - except for HackCamp which Nish Patel (OG Founder of BE) ran for 100 UCLA students who were coding for the first time. After two years of BE being involved, it has now spun out into its own organization. However, given that 20% of all students who attend it at Bruins, this event is still every important. There's a lot of successes we enjoyed here! Those who had already dipped their feet/built a product or hack, but now wanted to make a business out of it.
BE LA Fellowship (Summer)
Goal over here was two fold 1) some people were entrepreneurial but didn't want to start a company yet, but they had skills that could be valuable to others and 2) that they could grow them by working for somebody else (especially if they were freshman and sophomores). We wanted to screen the best hackers and hustlers . On the company side we could build trust with up and coming companies in the local community. Goal was to pre-select 5 companies who were willing to interview the screened candidates, pay them a fixed amount, and weren't above a certain size like 100 employees but weren't too small so as to not being able to support an intern and give them a mentor. Also, this offered people to learn if they even wanted to take on the burden of starting a company - as opposed to to working at a bigger tech company or a startup.
Outcome: We had somewhere between 100-200 people apply. We placed 3 or 4 interns. This was way harder than we imagined - making this work requires a lot of trust from the company side. We should've started smaller. To grow, ideally partner with local VCs/Angels to partner (adds legitimacy too) as they will always have new (small in size) portfolio companies every year looking hire interns - should the program work that is. On the student side, partner with 1 or 2 more schools in the area to increase supply of outlier freshman/sophomore students to place into firms - as most of the juniors are taken by the big co's anyway.
30+30 Alumni + Student Entrepreneur Dinner
Goal was very simple - connect future entrepreneurs with current alumni who are entreprenerus/VCs/or in some other way add value. Lots of new connections to be made and will ensure that they have a sstarting network post college!
Outcome: First year was definitely successful - we were able to invite many alumni and it was a great experience for students as well!
Overall, I think this forms a good basic foundation of what an organization on campus would look like! However, there's tons more you can still do :) GO out there, support your fellow entrepreneurs.
* SparkSC started with some Bruin guidance at an In n Out in Westwood. This deserves another post in itself.
In the last year I have been quite lucky to have had the opportunity to spend time being on the VC side and the startup side. Particularly, learning about the other side when not being in that role! However, while it is definitely too early to say that I can view things from both sides of the table🙈 🙈, this opportunity has lead me to having a greater amount empathy for both roles. One particular part of the system that I found myself thinking most about was around "passing". Specifically, investors passing on entrepreneurs/their companies. If you are an entrepreneur passing on investors, kudos to you for being in that position.
Getting passed on is the default in the system; however, you may get passed on in different points of the funnel system  for seed funding. Every investor has their own process but based on what I've hear/seen/read, I've attached some numbers that I think are not too far off from reality with respect to drop offs. Depending on when the drop off happens, your take away should be quite different IMO.
An immediate takeaway is that investors spend a large chunk of their time on reading decks and/or listening and meeting with entrepreneurs whom they are going to pass on. So when we went out to fundraise, I knew there would be passes and lots of them, particularly since the funding environment was not so hot and the space has a pretty big graveyard. Having been on the VC side and getting to see this first hand, it allowed me to take passes in a non-personal way. Just for the record - every single pass still came with a little bit of pain. Diagram 1 illustrates the different points you might get dropped off by an investor and how best to move in my humble opinion.
1. You need to get the investor's attention to get passed on. So go get 'em, cause you miss 100% of the shots you don't take!
2. About half the companies that VCs first encounter for an Introduction, they're not going to spend any more time with. At this point if you get passed on, it makes sense to just say thank you for their time and move on. It is unlikely that you will receive any feedback given the sheer volume of companies they see at this point - respect that! Also, as a friend who is an early stage VC points out, "The shitty thing about early stage investing is that there isn't always a reason. The reason can be super obscure. Like maybe a VC saw a company in this space 2 years ago, and it failed. So now they are hesitant to look at others". The good thing is that these people will likely pass early, like right now at stage 2 .
3. While there is a pretty high chance you will make it to the Diligence I part, there is a pretty high chance that you will not make it any further. If you do not make it any further, it could mean a few things:
It would definitely be worth asking for feedback at this point. They passed based on a certain set of information you provided them with and conclusions they drew from there. If there is something they see as obvious, it would be worth it to get their feedback. While you might get generic stuff like "we don't think you can sell this to enough people to make a big business", its definitely worth not dismissing it at a first glance. There could potentially be a problem that you would need to focus on first to solve, and it is possible that other VCs have the same concern. It might make sense to delve deeper to see if you do indeed run into these challenges and how you can take them on!
4. Now Diligence II is the most interesting part of the process IMO. At this point your team may think they are close to getting a term sheet and your investor is excited about you as well. (You haven't been dropped off like the other 90%. ) The investors are taking you/your thesis pretty seriously. If you get passed on at this point, IMO it comes down to one of two reasons:
5. Once you get the Term Sheet, the next move is in your hands! GG.
A point to keep in mind is that usually after an investor passes, there's almost nothing you can do to change that and hence use the feedback constructively. Eric Peckham, an early stage investor and friend, echoes this point from speaking with other VCs over time; "many investors don't give feedback - even though they might want to because they know it's helpful - is that founders frequently use the feedback as ammunition to push back against the pass. They send counter arguments to the weaknesses you raise and think they can still make you change your mind."
 - Funnels at some existing venture firms: Homebrew, I will update you with more when I find the links!