OnStartups

14 Revealing Signs You Love Your Startup Job

Dharmesh Shah — Thu, 23 May 2013 19:27:00 GMT

You may not be frequently giving out an embarrassingly gushing smile and you might not write little love notes during your lunch break. But, there are ways to tell if you love your job.

Of course, no job is perfect -- even the best of relationships have their down days. We all have to do things we don’t like. I love working at HubSpot, it's the best job I've ever had (but, that's by design). But, even I have “off” days where I'm not spending all my time doing things I absolutely love.

So all of the following may not be the case all of the time. But when you love your job, many of the following should be the case much of the time:

1. You don’t talk about other people; you talk about the cool things other people are doing.

“I hear Michelle has really improved our customer happiness scores.” or “I’d love to know how Mike managed to rescue that sale.” “Sherry developed a new tool that's made our lives so much better.”

When you love your job you don’t gossip about the personal failings of others. You talk about their successes, because you’re happy for them – and because you’re happy with yourself.

2. You think, “I hope I get to…” instead of, “I hope I don’t have to…”

When you love your job it’s like peeling an onion. There are always more layers to discover and explore.

When you hate your job it’s also like peeling an onion – but all you discover are more tears.

3. You see your internal and external customers not as people to satisfy but simply as people.

They aren't numbers. You think of them as real people who have real needs.

And you gain a real sense of fulfillment and purpose from taking care of those needs.

4. You enjoy your time at work.

You don't have to put in time at work and then escape to life to be happy. You believe in enjoying life and enjoying work.

When you love your job, it’s a part of your life. You feel alive and joyful not just at home – but also at work.

5. You would recommend working at your company to your best friend…

In fact, you can't stop talking about how cool your company is and the awesome work you're doing even when you're away from work. Your friends and family are envious.

6. You enjoy attending meetings.

No, seriously, you enjoy meetings. Why? Because it’s fun to be at the center of thoughtful, challenging discussions that lead to decisions, initiatives, and changes – changes you get to be a part of.

7. You don’t think about surviving. You think about winning.

You don't worry much about losing your job. You're more worried about not achieving your potential. Not being as impactful as you can be.

8. You see your manager as a person you work with, not for.

You feel valued. You feel respected.

You feel trusted.

9. You don’t want to let your coworkers down.

Not because you’ll get in trouble or get a bad performance review, but because you admire them – and you want them to admire you.

10. You hardly ever look at the clock.

You’re too busy making things happen. When you do look at the clock, you often find that the time has flown.

11. You view success in terms of fulfillment and gratification – not just promotions and money.

Everyone wants to be promoted. Everyone wants to earn more.

You definitely feel that way too… but somewhere along the way your job has come to mean a lot more to you than just a paycheck. And if you left this job, even if for a lot higher salary… you would still miss it.

A lot.

12. You leave work with items on your to-do list you’re excited about tackling tomorrow.

Many people cross the “fun” tasks off their to-do lists within the first hour or two.

You often have cool stuff – new initiatives, side projects, hunches you want to confirm with data, people you want to talk to – left over when it’s time to go home.

13. You help without thinking.

You like seeing your colleagues succeed, so it’s second nature to help them out. You pitch in automatically.

And they do the same for you.

14. You can't imagine being somewhere else.

You're having too much fun. Learning too much.

How many of the above statements apply to you and your job?

If you said:

0-3: You may want to find a new job. Life is too short.

4-6: You don't hate your job... but you don't love it either. What can you do differently?

7-10: You really enjoy your job and the people you work with

11-14: You are deeply, madly in love with your job! (and your friends are definitely jealous!)

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

The Why and How Of Updating Your Angel Investors

Dharmesh Shah — Mon, 20 May 2013 14:02:00 GMT

There’s a massive amount available on the interwebs on how to improve the odds for success in new ventures. But almost nothing concrete is available on the care and feeding of your investors. You can do all of the Lean Startup experimentation you want, but we’re here to tell you that one of the the easiest and most underrated skills that a startup CEO needs is knowing how to keep your investors updated, excited and engaged.

The reason is: The CEO is the investor's user interface into the business. It's how investors see what's going on, and in some minimal ways, interact with the business.

We polled several early stage investors (including ourselves) that have 30+ investments each under their belts, and asked them their advice for entrepreneurs on how best to communicate with them and update them on the business. Here are the results.

1) Write your investors consistently. probably every 1-2 months (if you're early stage), and every 2-3 months if you're a bit further along. If you have a regular advisory board or board of directors meetings, that's a good time to send out an update. This is preferable to phone calls, both for you and for them. If you’re smart, you’ll send this letter out, in more or less similar form, not only to your investors but also to mentors, advisors and staff. And if you do ever follow up with calls, they’ll be up to speed and more productive.

2) Keep it short. 2 pages, max. Your investors want to know what’s going on, but they don’t need to hear every detail.

3) Use a template. We like the TechStars one. Katie Rae and Reed Sturtevant of TechStars Boston teach their companies to communicate with mentors in a way such that each letter builds on the previous one. Typically, the letter gives both highlights and low-lights since the previous communication, sets some short term goals, and then reviews the progress—or lack thereof—on the goals set earlier. Just knowing that you will be producing a report card helps focus you on the important stuff and ensures that things don’t get forgotten. Check out the investor update template for a sample.

4) Remind them what you're doing (now). I know this is going to sound strange, but often your investors are not doing as good a job as they could keeping up with all your activities, news, tweets and pivots. Always include a one sentence description of what you're doing (now) just as a friendly reminder. A side benefit to this is that it forces you to write (and read) your one sentence description. This is one of the hardest tasks in startup-land.

5) Tell them the one or two strategic problems you are wrestling with. Got a few hard decisions? You’d be surprised how quickly an investor will respond. And odds are pretty good that they’ve seen this movie before and can help you come to a better decision. If it’s personnel-related, though, you may wish to be more circumspect.

6) Keep it honest, but don’t tell your secrets. Would you be comfortable if this email ended up in public, or in the hands of your competitors? If not, consider editing it down.

7) Always have 1-3 direct asks. Looking for some specific introductions? Ask. Need to source some key personnel? Ask. Want them to share some important news on their social media networks? Don’t be proud, don’t be shy, just ask. 90% of the time, the investor will probably not be able to help, but in the 10% of the time they can help, it's often pure gold.

8) Cast a wide net, but bcc. The more people you can keep up on your company, the more likely it is someone will be able to help you out, and the more you can leverage your network. But respect your investors’ privacy, and make sure you are not revealing any confidences in the letter. (I still screw this up—when in doubt, leave it out.) One idea would be to setup a simple mailing list so you're not trying to type in email addresses manually every time.

9) ARCHIVE all correspondence in a shared folder. Your investors will be grateful that they don’t have to be organized. This tip is so simple, yet almost no one does this. Your investors have more on their plate than just you. Make it easy on them by putting everything they need to see into one folder which they can reference. Send each letter by email (don’t make them have to hit links or print out attachments,) but include a link to the shared folder with the full archive. Inside, have all of your historic correspondence, and perhaps even your latest pitch deck, any financials you want them to see, etc. You might consider having two separate folders—one complete one, for the inner circle, and one that’s been redacted down for the broader crowd.

Startups fail for lots of reasons— but one of the most common one is that they run out of money. Informed investors are generally happier investors—and at a minimum more capable of helping. And, if you're out raising another round sometime, chances are, your angel investors are the one's that can help make intros. It's easier for them to do that if they hear from you more often than once every 12-18 months when you need some paperwork signed.

Remember, this exercise is as much for you as it is for them.

This entire process should take you less than an hour or two a month and it's worth it. Besides, if you do it right, you'll actually find that it helps you to write these updates -- and it's not a complete waste of time.

This article was a collaboration between Ty Danco and Dharmesh Shah. Ty is CEO/co-founder of BuysideFX and an angel investor/mentor (you should be reading his blog). Dharmesh is founder/CTO of HubSpot, runs OnStartups.com and is an angel investor in over 40 companies (you can follow him on twitter @dharmesh).

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

Startup PR Tip: To Get Press, Don't Pitch Your Product

Dharmesh Shah — Thu, 16 May 2013 13:47:00 GMT

Entrepreneurs that are looking to get attention from bloggers and journalists will often pitch their businesses themselves or though a PR agency.

It's sad that most of those pitches fall flat and are likely to be completely ignored. A waste of time and money for everyone.

For example, here’s a pitch from a PR professional. I’ve changed it slightly to avoid embarrassing anyone:

“I’m working with a wonderful new business… The owners grew up together and decided to go into business… it’s a story I’m sure your readers will care a lot about!”

Uh, no. It's unlikely that people are going to care about this story.

Don’t get me wrong. I’m sure the entrepreneurs are great people, but many entrepreneurs can tell a tale of struggle and euphoria and heartbreak and someday, against all odds, turning their dreams into reality and making their business a success. While occasionally readers might be inspired or motivated, for the most part we’re just not that interested in other people’s stories. Unless those stories are particularly remarkable we're more apt to just keep living our own dreams and writing our own stories. So, the things we're interested in is not other people's stories, but information that helps us write our own.

So what should you do if you’re trying to spread the word about new products and services, landing new customers, bringing investors onboard… all the stuff you hire PR agencies to do for you or, more likely, try to do on your own?

If you’re looking for press, forget the formulaic, cookbook approach to crafting a winning media pitch. That approach may result in coverage in a few outlets… but not the ones you really want.

Quick rule of thumb: Any media outlet that will do a story based on a crappy pitch is a media outlet that will get you crappy exposure.

Let’s pretend you’re thinking about pitching me an article idea for OnStartups.com (which has a modestly sized, but awesome audience). You can apply the following to any media outlet or blog, though.

Here’s what to do and not to do:

Don’t tell me your story is unique.

No offense, but it really isn’t. There are thousands of Ramen noodle stories. There are thousands of 3 am “Eureka!” stories. There are thousands of maxed-out credit cards, relatives won’t return your calls, last-minute financing savior stories.

Your story is deservedly fascinating to you because you lived it (just as my story is fascinating to me), but to the average reader your story sounds a lot like every other entrepreneur’s story. Claiming your story is unique creates an expectation that, if not met, negatively impacts the rest of your pitch.

And if your story truly is unique, I’ll know. You won’t have to tell me.

Don’t tell me how much a little publicity will help you.

Never waste time by explaining how this could be a win-win relationship or, worse, by claiming you want to share your wisdom because you simply want to help others.

I know you want publicity, and I know why. I get it. I've been there. We’re cool.

Know what I’ve done recently.

It’s easy to think, “Hey, he recently wrote about choosing a co-founder, so I should pitch a story about how I help people find co-founders”

Um, probably not. If just wrote about co-founders. I’m probably good for a little bit on that topic. Never assume one article indicates an abiding fascination with a particular topic.

But do feel free to pitch if you aren’t a member of the choir I just preached to. Different points of view catch my attention; same thing, different day does not.

Know my interests.

You certainly don’t need to know I enjoy late-night walks on the beach. (Hey, who doesn’t?) But skim a few posts and you’ll know I have a soft spot for company culture, startup funding and startup marketing

So if you really want to get my attention, don’t use the tried-but-in-no-way-true “mention you really enjoyed something recent the writer wrote” approach.

Instead put your effort into finding an angle that may appeal to my interests. If you can’t be bothered to do that you’ll never get the publicity you want.

Forget a profile piece.

Straight profile pieces that tell the story of a business are boring. (At least I think so, which is why I don't post those)

The best articles let readers learn from your experience, your mistakes, and your knowledge. Always focus on benefiting readers: When you do, your company gets to bask in the reflected PR glow.

So,readers don’t want to know what you do; they want to know what you know. If you started a company, share five things you learned about landing financing. If you developed a product, share four mistakes you made early on. If you entered a new market, share three strategies you used to steal market share from competitors.

And while you may think the “5 steps to” or “4 ways to” approach is overdone, keep in mind readers love them… and even if I decide not to frame the story that way, developing mental bullet points ahead of time is a great way to organize your information (which helps me) and ensure you have great talking points (which definitely helps you.)

Realize that the more you feel you need to say… the less you really have to say.

Some people think bloggers are lazy and look for stories that write themselves. I can’t argue with the lazy part, but I really don’t want to read a 1,000-word pitch with a comprehensive overview of the topic and a list of semi-relevant statistics. The best products can be described in a few sentences, and so can the best pitches:

So now let’s get specific. Pretend you’re crafting your pitch:

Remember: forget what you want.

Many people think, “Wow, it would be awesome if OnStartups.com ran a story about our new product—think of the exposure! So many VCs would read it! We're looking for funding!"

Maybe so, but unless you focus on how readers can benefit from the story (learning about your new product isn’t a benefit to readers), that’s not going to happen.

Then, think about what I want.

I want to inform and occasionally – hopefully – entertain readers; the more you can help me accomplish that goal, the more interested I am in what you have to say.

Then craft your pitch with publicity as a secondary goal.

In the example above, the PR pro didn’t offer readers anything. His only focus was on getting publicity to benefit his clients.

Flip it around and focus solely on how you can benefit readers. When you do, your company will benefit by extension.

For example, if you want to spread the word about:

· New products or services: Share four lessons learned during the product development process; describe three ways you listened to customers and determined how to better meet their needs; explain the steps involved in manufacturing products overseas, especially including what you did wrong.

· Landing a major customer: Describe how you changed your sales process to allow you to compete with heavy hitters in your industry; share three stories about major sales that got away and what you learned from failing to reel them in; detail the steps you took to quickly ramp up capacity while ensuring current customers needs were still met.

· Bringing in key investors: Explain how you helped investors embrace your vision for the company; describe four key provisions that create the foundation for a solid partnership agreement; share the stories of three pitches to VCs that went horribly wrong and how those experiences helped you shape a winning pitch.

Sound like a lot of work? It is, but it’s worth it. When you offer to help people solve problems and learn from your mistakes, bloggers and writers will be a lot more interested.

More importantly, readers will be more interested in the news you want to share because first you helped them—and that gives them a great reason to be interested in your business.

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

The Pitch Deck We Used To Raise $500,000 For Our Startup

Dharmesh Shah — Wed, 08 May 2013 18:04:00 GMT

One of the big no-no’s we’ve learnt about early on in Silicon Valley is to publicly share the pitchdeck you’ve used to raise money. At least, not before you’ve been acquired or failed or in any other way been removed from stage. That’s a real shame, we thought. Sharing the actual slidedeck we used (and one, that’s not 10 years old) is by far one of the most useful things for others to learn from. In fact, both Joel and I have privately shared the deck with fledging founders to help them with their fundraising. On top of that, our case study is hopefully uniquely insightful for lots of people. Here is why:

Half a million is not a crazy amount: It’s therefore hopefully an example that helps the widest range of founders trying to raise money.
Both Joel and myself are first-timers: We couldn’t just throw big names onto a slideshow and ride with it. We had to test and change the flow and deck a lot.

Ratio thinking

One of the most important elements, that we had to learn during our fundraising process was the concept of “Ratio thinking”. Jim Rohn, the famous motivational speaker, probably explained it best:

“If you do something often enough, you’ll get a ratio of results. Anyone can create this ratio.”

It sounded simple enough as a concept to us, but man, this was one of the toughest things to learn. Here is how Joel described it in a recent article on ratio thinking:

“The law of averages really comes into play with raising investment. Overall, we probably attempted to get in contact with somewhere around 200 investors. Of those, we perhaps had meetings with about 50. In the end, we closed a $450k seed round from 18 investors. Perhaps the most important part of our success in closing that round was that Leo and I would sit down in coffee shops together and encourage each other to keep pushing forward, to send that next email asking for an intro or a meeting. In many ways, the law of averages is the perfect argument that persistence is a crucial trait of a founder.”

I believe that this is in fact one of the most valuable things to know up front. It requires a huge volume of work and meetings.

How to read this deck: It builds up to one key slide – Traction

If you go through the deck, you will quickly realize that the one key slide was the traction slide. We quickly realized that as first time founders, this was probably our only way to raise any money: By focusing everything on the traction slide. Here is how Joel describes this in his article on raising money as a first-time founder:

“So my advice for first time founders who want to raise funding is almost always to put that thought aside until you have good traction. Instead, focus completely on traction. Focus on product/market fit. When you have good traction, it becomes much easier to raise funding.”

Avoid confusion: Our second most important slide – competition

Another thing we quickly realized when raising money was this. Although investors were very interested in talking to us, especially because of our early traction, talks then stalled. Why? The social media space seems very crowded. From the outside, it looks like there are dozens and dozens of apps all doing the same thing. On the inside, you however quickly realize that there really aren’t that many options.

The question was almost always timed at the exact moment in each meeting: “So, aren’t there lots of other apps doing the same?” And we explained to them about the TweetDecks and Seesmics and that Buffer is different and so forth. That never worked. So after lots of meetings, we realized that the competition question (in our case) created the most friction and eventually left people too confused and not interested any more. We took some time aside and made this slide as easy to understand as possible and explain Buffers positioning without creating all the friction:

The slidedeck

Without any further explanation, here it is:

The slide deck we used to raise half a million dollars from Buffer

A note on transparency

With Buffer, our goal is to take our ideas of transparency for our company to a whole new level. That’s why it was very important for us to make this slide deck public. This slide deck is far from perfect. As previously mentioned, it probably falls into the average category. But it was what at the end of the day helped us raise the funds to turn Buffer into the company it is today. So it’s hopefully a real-world case study that clearly shows what is important and what might not be so helpful for investors to know about. We want to continue publishing our ideas and thoughts about topics that get rarely talked about. Joel and I will be around to answer any further questions you might have on our fundraising process. Please post anything you have in mind in the comments below.

This is a guest post by Leo Widrich (@leowid), co-founder of Buffer. Note: I'm an angel investor in Buffer and my company HubSpot has a little bit of overlap in functionality in our Social Inbox product.

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

5 Startup Hiring Mistakes That Can Crush Your Culture

Dharmesh Shah — Mon, 29 Apr 2013 18:44:00 GMT

Remember your first business loan? Or, if you're like many entrepreneurs, you may have initially bootstrapped your startup by buying some stuff on your credit card. You were excited and apprehensive: Excited because now you had the cash to invest in your business, apprehensive because you had just taken on a debt you would have to repay.

But that was okay, because you were confident you could create more value than the interest you would pay. Even though you eventually have to pay off a financial debt, gaining access to the right resources now often marks the difference between success and failure.

That’s true for financial debt – but it’s almost never true for culture debt.

Culture debt happens when a business takes a shortcut and hires an employee with, say, the “right” the skills or experience… but who doesn't fit the culture. Just one bad hire can create a wave of negativity that washes over every other employee, present and future – and as a result, your entire business.

Unfortunately the interest on culture debt is extremely high: In some cases you will never pay off the debt you incur, even when a culture misfit is let go or leaves.

Here are five all-too-common ways you can create culture debt that can keep your startup from achieving its potential:

1. You see the ivy and miss the poison

The star developer who writes great code… but who also resists taking any direction and refuses to help others… won't instantly turn over a new interpersonal leaf just because you hire him.

The skilled salesperson who in the short-term always seems to outperform her peers… but who also maneuvers and manipulates and builds kerosene-soaked bridges just waiting to go up in flames… won’t turn into a relationship building, long-term focused ambassador for your company just because you hire her.

The interview process is a little like a honeymoon. You see the best the candidate has to offer. If a prospective employee doesn't look like a great fit for your culture before he is hired, he definitely won’t be after he’s hired.

Never risk making a deal with the culture-fit devil. The soul of your company is at stake. Seriously.

2. You discard the attitude and play the skill card

Skills and experience are worthless when not put to use. Knowledge is useless when not shared with others.

The smaller your company the more likely you are to be an expert in your field, so transferring those skills to new employees is relatively easy. But you can't train enthusiasm, a solid work ethic, and great interpersonal skills – and those traits can matter a lot more than any skills a candidate brings.

According to this study only 11% of the new hires that failed in the first 18 months failed due to deficiencies in technical skills. The majority failed due to lack of motivation, an unwillingness to be coached, or problems with temperament and emotional intelligence.

Think of it this way: The candidate who lacks certain hard skills might be a cause for concern, but the candidate who lacks the beliefs and values you need is a giant culture debt red flag.

3. You try to sell a used car

It’s tempting to over-sell a candidate on your company, especially when you desperately need to fill an open position and you've been recruiting for seemingly forever.

Don’t sell too hard. Great candidates come prepared. They've done their homework. They already know whether your company is a good fit for them based on what they've read about you online. The really great recruits might have been stalking your company for many weeks or months -- seeing what the company feels like.

Describe the position, describe your company, answer every question, be candid and forthright, let your natural enthusiasm show through… and let the candidate make an informed decision. But, don’t oversell.

The right candidates recognize the right opportunities – and the right cultural fit. If you have to try too hard to convince someone, and the love is unidirectional, it's not setup for long-term success.

4. You mistake the rumblings for hunger

Nothing beats a formal, thorough, comprehensive hiring process… except, sometimes, a dose of intuition and gut feel.

At my company HubSpot (grew from 0-500 employees in 6 years) there are five key attributes we value:

· Humble. They’re modest despite being awesome. They’re self-aware and respectful.

· Effective. They get (stuff) done. They measurably move the needle and immeasurably add value.

· Adaptable. They’re constantly changing, life-long learners.

· Remarkable. They have a super-power that makes them stand out: Remarkably smart, remarkably creative, remarkably resourceful…

· Transparent. They’re open and honest with others – and with themselves.

In short, we look for people with H-E-A-R-T, because they help us create a company we love. So we always weigh our impressions against more qualitative considerations. You should too. Think of it this way: The more experience you have – the more lumps you’ve taken and hard knocks you’ve received and mistakes you’ve made – the more “educated” your “gut.” While you should never go on intuition alone, if you have a funny feeling about a candidate… see that as a sign you need to look more closely.

And look more closely.

For a detailed insider’s peek into how we think about culture at HubSpot, check out our Culture Code slides (embedded below for your convenience).

Bottom line: Define the intangibles you want in your employees and never compromise by hiring a candidate who lacks those qualities.

5. You decide to double down

There are two basic kinds of risk you can take on a potential employee.

First the worthwhile risks: Taking a shot on a candidate you feel has more potential than her previous employer let her show; taking a shot on a candidate who is missing a few skills but has attitude in abundance; taking a chance on a candidate you feel certain brings the enthusiasm, drive, and spirit your team desperately needs. Those are good chances to take.

Now the foolish risks: Taking a shot on a candidate with a history of performance issues that you hope will somehow develop a strong work ethic; taking a chance on the candidate who left his last two jobs because "my bosses were jerks;" taking a shot on the candidate who has no experience yet only wants to talk about how quickly and often she will be promoted.

Why do you rationalize taking foolish risks? You're desperate. Or you're lazy. Or you have "other issues to focus on." Or you figure your culture is strong enough to withstand the impact of one ill-fitting employee.

Don't take foolish risks. They almost always turn out badly. Occasionally take potentially worthwhile risks, because they can turn out to be your most inspired hires and, eventually, your best employees.

And never, ever take a chance that creates high-interest culture debt.

The cost to your organization is just too high. And, life is short.

A variation of this article was also posted as part of my participation in the LinkedIn Influencers program.

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

12 Terrible (But Hilarious) Places To Work [slides]

Dharmesh Shah — Mon, 22 Apr 2013 17:42:00 GMT

After the week we've had in Boston this week, I found it hard to focus on any overly heavy work this weekend.

So, instead, I created the slide deck below. This is unlike the prior deck I worked on (Culture Code), which had 150+ slides, and proved to be useful. This one is 14 slides, takes a minute to go through and is almost

completely without use.

But ye, it's fun. Hope you enjoy it.

12 Terrible (But Hilarious) Places To Work from HubSpot All-in-one Marketing Software

(And, disclosure: This was not completely for amusement. There's a call-to-action at the end, and the deck is intended to collect some data and tips for an upcoming talk I'm giving).

Oh, and as you'll see from the deck, I'm not the best comedic writer in the world, so if you have a better caption for some of those slides, please leave them in the comments.

Thanks for indulging me every now and then. Now, back to real work.

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

3 Biggest Mistakes When Choosing a Cofounder

Dharmesh Shah — Thu, 18 Apr 2013 17:05:00 GMT

After spending a significant portion of the last couple of years talking and collaborating with countless entrepreneurs (through FounderDating) a few clear themes have emerged around partnering with cofounders. We’ve noticed some valuable best practices…as well as some very common mistakes. In the hopes that we can save more entrepreneurs some time and heartache, here are three of the biggest mistakes:

1. Need

I actually don’t like to spend a lot of time convincing people they need a cofounder. There are enough people out there that either came to that conclusion right away, or felt the pain of not having one and realized it pretty quickly. Sooner or later, people will usually figure it out. For their sake, I hope that it’s sooner rather than later. But let me briefly to explain why the right cofounder is important (emphasis on “right”).

You don’t know what you don’t know

That’s always true, but in the case of starting a company or even a side project, you should assume that the body of knowledge you’re missing is vast. There is no way to make up for it all, but if your cofounder has complimentary skill sets, it will help shrink the missing body of knowledge. Chances are that it’s not only your role or the areas you know well that are tough to do and tougher to learn. It’s not a coincidence that, according to the Startup Genome Project, balanced teams with one technical founder and one business founder raise 30% more money, have 2.9x more user growth and are 19% less likely to scale prematurely than technical or business-heavy founding teams.

Your emotional partner

Beyond skill sets, starting a business is a test of your emotional will. Do you have any friends that are single parents? It’s not merely twice as hard, it’s exponentially harder than raising a child with a partner. Your cofounder is your partner – through every decision, every idea, each and every up and down of the emotional roller coaster. Only a cofounder will feel the high and lows like you do. Advisors and friends are great, but they aren’t nearly as emotionally invested as you are.

2. Approach

How do you approach someone about potentially being a cofounder? So many people start by thinking about an idea. I get that. It incites passion, you get excited, feel like there is something tangible to work on. But then you start thinking about a cofounder and pitching or hard selling someone on a specific idea. That [almost] never works. Chances are so good that your idea will change - either somewhat or completely - that Vegas wouldn’t even lay odds on it. So, let’s say you hard sell someone on the idea, they fall in love with it … and then the idea changes. Then what are you left with? Fall in love with the person, not the idea.

Even worse is pitching someone as though you’re offering a job that centers around your idea. The people you want to be your cofounder don’t just want to work on an idea, they want to be a part of something bigger. FounderDating ManagingDirector for Vegas and CTO/Cofounder of Wedgies, Jimmy Jacobson, sums it up perfectly:

“When I get someone pitching me an idea, I hear ‘I need someone to build my idea. I can't pay you in cash, so have some equity.’ That's not attractive to me. I have a LinkedIn account full of spam from recruiters, developer groups I belong to get spammed by people like this as well. This is why FounderDating exists. I don't want to work on a wine app. I want to work with awesome people, and if the idea we pick is a wine app, so be it.”

An idea is just that, AN idea. When the dust settles, it’s not likely to be THE idea, so don’t lead with it.

3. Timing

Which brings me to the final and probably most common mistake: When should you start thinking about a potential cofounder? The quick answer is ‘always.’ Huh? Yep, unless you’re in the throes of starting a new company full-time, you should always have a side project, something you’re curious about. It doesn’t have to be the next big thing. But it is the best way to start working with people you think could be cofounder material and figure out if a partnership might be feasible.

All too often I hear people say, “I’m not ready for a cofounder. I want to have the idea first.” At least 6-12 months before you quit your current full-time gig and “take the leap”, you should start talking to potential cofounders and working on side projects together. This gives you time to work with multiple people, and to walk away from relationships that aren’t clicking. It also affords the opportunity to learn so much about yourself - styles you like and don’t like, attributes you value and those you can do without.

When you wait until you’ve settled on an idea and even have a little bit of money committed (often conditional upon having a cofounder) you feel, well, more desperate. You’re much more likely to leap into the arms of the first person that agrees to work with you. Waiting until the end leads to bad decisions and relationships that really don’t work because, like it or not, you feel desperate. Searching for the right cofounder is a process and it’s vitally important, so start early.

Finding your partner should not be the last thing you do, it should be the first thing you do.

As an entrepreneur I’ve learned a lot from my own mistakes, but in this case you can learn a lot from the mistakes we’ve seen others make. Find the right cofounder is game changing – make sure you approach it like you would a partner and make it an early priority.

This was a guest post by Jessica Alter. Jessica is the Cofounder & CEO of FounderDating, the premier online network for entrepreneurs to connect, share and help one and other. Previously, Jessica led Business Development and was GM of Platforms at Bebo (Acquired by AOL). She is also a mentor at 500 Startups and Extreme Startups.

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

Does HubSpot Walk The Talk On Its Culture Code?

Dharmesh Shah — Thu, 11 Apr 2013 18:52:00 GMT

A couple of weeks ago, HubSpot shared our culture code deck (http://CultureCode.com) — a document that describes what we believe and how we work.

The presentation, despite being 150+ slides long and on a topic that doesn't involve celebrities, cat photos or currently trending topics has been remarkably well received. It has had over 340,000 views. It's one of the most viewed presentations on slideshare in the past year. I've received many, many emails and tweets with positive comments about the culture code deck (thanks!)

Deck is included below, for your convenience, in case you haven't seen it yet.

Now that the deck is out there and has garnered so much interest, I thought it might be valuable to dig into some of the core tenets of the HubSpot Culture Code and try to do an honest assessment of how well we live up to the tenets. Or, stated differently, how well do we "walk the talk"? In the deck itself, when a particular tenet was more aspirational than descriptive, we tried to call it out. (I think this candor is one of the reasons people like the deck). But the call-out doesn't always capture the degree to which we live up to the ideal, so we're double-clicking here.

So, here are the core tenets with a self-score on how well HubSpot lives up to the tenet. Of course, even this take is biased (I'm a founder, and all founders are naturally biased about their startups) and it's a qualitative judgment call. On my list of things to do is to see if we can make this more measurable. But, that's a topic for another day.

1. We are as maniacal about our metrics as our mission.

Score: 9.5/10

Lets break this one down a bit. First of all, we are very passionate about our mission to transform marketing and move the world towards more inbound and creating marketing people love. It's a noble vision, it's a big one — and we invest in it and mostly live up to it.

Mission score: 9/10: I dock us a point because we do have some outbound marketing in our mix of marketing spend. We're not pure inbound marketing. We spend some money on PPC, some telemarketing and some paid online channels. Not a lot — but enough to deduct a point.

Metrics score: 9.5/10: We really are maniacal about our metrics. We pore over data. We slice and dice things like customer cancellation data, SaaS economics metrics, employee happiness surveys, marketing channel data. I've talked to many, many startups and fast-growing companies. Of those, HubSpot is one of the most data-driven and metrics-obsessed companies I know.

2. We obsess over customers, not competitors and “Solve For The Customer”

Score: 8/10

The statement itself is mostly true (we spend 99% of our time worrying about customers and very little time worrying about competitors), but the underlying mantra of “Solve For The Customer” is not yet as true as we'd like it to be.

We get points for the way we have handled pricing and packaging over our 6+ year history. We have raised prices almost every year, and each time, we go out of our way to grandparent our existing customers and reward them for putting their belief in HubSpot. So, on this front, I think we do really well.

We deduct points because the overall experience of HubSpot is not as smooth as it could be. It's not customer-friendly enough. We sometimes make decisions that are for our self-interest or convenience rather than customer happiness. We're working on this.

We're getting better at having people call B.S. on decisions or directions that are not in the customers' interest. People will speak up with questions like “What's in it for the customer?” or “How is this solving for the customer?” or “Seriously?”. On the one hand, it feels good that people can be open and candid when they don't think we're living up to the SFTC (Solve For The Customer) credo. On the other hand, in an ideal world, these non-customer-happiness focused things wouldn't have to be called out, because we'd always be acting in the customers' interest. It would be natural and second-nature. But, we're a metrics-obsessed, goals-oriented, for-profit company — so it may take some work and practice to have SFTC be natural, 100% of the time. In the meantime, we'll continue to try and catch ourselves before we make decisions that don't make sense for the customer long-term.

3. We are radically and uncomfortable transparent.

Score: 9.5/10

We are super-duper, hyper transparent — and our transparency level has moved up over the years, not down. We share all sorts of crazy things with every employee. For example, one of the posts on our wiki goes into detail on every funding round we've done. Details include the What the valuation was, what the common strike price was, how much money was raised, how much dilution there was, etc.

We share just about everything. And, the things we don't share (like individual salaries), we're deliberate and clear about. Deducted half a point simply because nobody's perfect and we can always be better.

4. We give ourselves the autonomy to be awesome.

Score: 8/10

We're good, but not great in terms of giving ourselves autonomy. HubSpotters have a fair amount of freedom. You can run with an idea. Most things don't require permission. You can talk to anybody in the company, including the founders about whatever you want. We don't have formal policies and procedures for most things (our default policy on most things is “use good judgment”).

So, why the lower score? A few things: First, although we philosophically believe in the “work whenever, wherever” idea, this is not universally enjoyed to the same degree by every HubSpotter. We trust our team leaders to do what is right for their groups and use good judgment. We're also a bit conflicted because the data overwhelmingly shows that working together in the same office leads to more creativity and productivity. So, we understand the importance of co-location, but don't want to force it and take away freedom. For now, we've straddled the issue. Bit of a cop-out.

Our unlimited vacation policy has been a good thing (it's been in place for over 3 years). But, there were a couple of issues. First, some of us didn't really feel like they could take vacations without negatively impacting their work. Second, we had growing suspicion that on average people might be taking less vacation than they should. We didn't know if this was true, since we don't track vacation days — but we wanted to make certain that “unlimited vacation” didn't turn out to be “no vacation” for anyone at HubSpot. So, we made a tweak: Everyone has to take at least two weeks of vacation a year, or face ridicule by their peers. We've also tweaked some things to make it more likely that people do the right thing and take regular vacations.

5. We are unreasonably picky about our peers.

Score: 8.5/10

This is true. We are really, really picky about our peers. We're fortunate to have a lot of interest in the company, and for every open position we get many (often hundreds) of candidates. So, we can afford to be picky. It's actually harder to get a job at HubSpot than it is to get into MIT. Our acceptance rate is lower.

The reason for deducting a couple of points is related to the attributes we look for (Humble, Effective, Adaptable, Remarkable and Transparent). For the most part, HubSpotters manifest these attributes — we try to make sure of this during the recruitment and interviewing process. But, we don't always get it right. So, we get a negative point for that.

Also subtracting a half point because not only do we make hiring mistakes sometimes (despite our best efforts), we're not as good as we should be at calling people out when they do un-HubSpotty things. For example, we have being “Humble” as a core attribute (it's actually been an attribute from the beginning). But, not everyone acts in humble ways, and we often fail to call it out. Part of having a great culture is defending it.

6, We invest in individual mastery and market value.

Score: 8/10

Though we've always believed in investing in our people and wanting to “build not just a company we're proud of, but people we're proud of”, this hasn't been explicit in our culture code until recently. So, we have some work to do here.

First, we're going to take a hard look at where our “discretionary culture spend” (aka “employee happiness expenses”) — which, incidentally is over a million dollars a year. We want to shift our budget to things that help increase mastery and market value. Things like education and leadership training. Yes, we enjoy parties and celebrations too (and those are important), but all things being equal, we want to invest these dollars (in our people), not spend them.

But until then, we still get an 8 on this front. We can do much more.

7. We defy conventional “wisdom” as it's often unwise.

Score: 8.5/10

This culture attribute goes towards how much we question the status quo and do things differently. We're actually pretty good at this. Good, but not great. We get points for things like not having offices and executive perks. Our radical transparency and openness defies conventional wisdom. We're one of the few private companies that publicly shares its key financial data (like revenues) every year.

8. We speak the truth and face the facts.

Score: 9/10

We have a very strong culture of facing the facts and reality. Nobody is allowed to walk around with rose-color glasses on. We don't brush problems under the rug. We don't hide from issues. If anything, we can be faulted for being too critical sometimes. We also do a great job of speaking the truth and being candid about the problems we see in the organization. This happens in meetings, in hallways, over email and on the wiki. When problems show up (as they do regularly), we are usually quick to react.

9. We believe in work+life, not work vs. life

Score: 8/10

This one is a bit squishy and hard to measure. Generally, we do a really good job of work-life fit. Mostly flexible hours, unlimited vacation, centrally located and relatively easily accessible office. All of those things help. Things that fall into this bucket that we're not great at is diversity — particularly gender balance and getting more women into leadership roles. We're “leaning in” on this, and hope to get much, much better at this over the next few months. Stay tuned.

10. We are a perpetual work in progress.

Score: 9.0/10

This one's a bit of a gimme (note to self: We need to replace this tenet with something that's more substantive and less platitudinal).

We don't sit on our laurels. We celebrate victories big and small — but celebrations are short-lived. Though we are pleased with our modest success so far, we recognize that there is still much work to be done. We're constantly trying to improve how we run the busines and ourselves.

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Clear Eyes, Full Heart: Beating The Series A Crunch

Dharmesh Shah — Tue, 09 Apr 2013 17:28:00 GMT

The following is a guest post by Alan Wells, co-founder & product designer at Glyder. [Disclosure: I'm an angel investor in the company. -Dharmesh]

It has been widely reported that at there will be least 1,000 orphan startups this year - companies that raised a seed round last year and will fail to raise follow on financing. The popular opinion in the tech press is that most of these 1,000 orphan companies will die due to lack of capital. As a founder, it's hard not to let this influence your thinking - with all the talk of failing fast, acqui-hires, and overnight success stories, it's easy to believe that your only options are to find a soft landing or shut down and try again with something else. And compared to sticking it out, walking away is most certainly the easier path (although it might make you a punk).

But I believe that in those 1,000 orphan startups, there are great companies - companies that can still put a dent in the universe, companies that can break through if the founders stick to it. Ben Horowitz says that all great CEOs have one thing in common: they don't quit, and at Startup School last year, this theme played out over and over again. Almost every founder that spoke went through a trough of sorrow that lasted 18-24 months before things really started to click for their companies.

Maybe it’s coincidental that the trough of sorrow is usually just a bit longer than the runway you have after an average-sized seed round, but I’m beginning to believe that great companies are often the product of these trying circumstances. Unfortunately people don’t like to talk about what’s not going right with their companies, and there’s not much discussion going on around what founders are doing to successfully navigate these waters.

I’m the founder of a startup that recently decided to double down and do our best to beat the series A crunch, and in the interest of focusing on the road instead of the wall, I wanted to share some of the things I’m learning as we find a way forward.

Acknowledging Your Reality

Founders are optimistic people, so it's easy for us to believe that if we just add this one thing to our product, hit that one key metric, or sign that one partnership deal, investors will come banging on our door begging to give us money. However, if you know things aren't going well or you are already having trouble raising your next round, what your startup needs more than anything is a lucid founder that can realistically assess the situation and identify a path forward.

Doing an honest appraisal of the things that were and weren’t working in our business was an important moment for our decision to press forward. Inside the head of a founder, things can seem great one minute and terrible the next, so getting outside perspective can be valuable as a check to your instincts and emotions. Meeting with advisors and existing investors also helped us get some third party perspective about trends in the market and issues we’re facing.

Understanding Why You're Not Fundable

As a startup founder, you're working in a four dimensional problem space: team, product, market, and timing. Hopes and dreams are often enough to raise money at the seed stage, but in my experience, you need more than that for your next round: you need to convince investors that you're the right team building the right product for the right market at the right time.

If you've been fundraising for three months and haven't gotten a check yet, something is probably wrong in one or more of these areas. Understanding what's wrong is critical to figuring out your path forward, and investors that pass can be the best source for understanding what the missing pieces are.

Until recently, I don’t think I quite appreciated the complexity of getting all this right at the same time, especially when you throw in the added complexity of trying to match up with the various investment theses and historical biases of top tier firms. As Ben Horowitz said, “this is not checkers; this is mutherfuckin’ chess.” Getting useful information isn't always easy - most investors seem to be worried about offending founders and prefer high level statements like "not enough traction" over candid feedback about the holes they see in your business.

I want to thank a few folks that were candid and helpful to us in this way - Ashu Garg (Foundation Capital), Thomas Korte (AngelPad) and James Currier were among the the people that gave us really insightful, critical feedback.

The Founding Team Gut Check

With some honest datapoints on the investor perspective of your business, you have the information you and your co-founders need to have a gut check conversation about the state of your business. You'll likely find your product, market, team or timing are in conflict with what investors see as likely to be a homerun, and you need to decide how to respond to that mismatch.

In our case the problem seems to be mainly around market - we're targeting very small businesses, a fragmented market where there is no historical precedent for big winners being built within the timeline that venture investors need for their 10x returns. We're well aware of the historical challenges in serving this market, but we believe that due to a number of new trends, big winners will emerge in this space in the next 3-5 years. Very few investors agree with us.

Our focus on very small business is one of the founding principles of our company, and we believe deeply in the potential that lies in serving this market. Our conviction in serving this market increased when we launched Glyder and started seeing the positive user response to the product. Because of this conviction, we decided that we would rather continue focusing on this market than switch to a different target market, even if that means we're not fundable in the short term.

Having an open and candid conversation with our team about the challenges to our company was a great chance to gauge everyone's commitment to the business. Building our business without more capital will be difficult, but when everyone voiced renewed desire to keep going forward, it helped me as the CEO get excited about figuring out how to do it.

Moving Forward & Changing Tactics

Paul Graham likes to tell founders that "the surest route to success is to be the cockroaches of the corporate world." The analogy works particularly well for orphan startups, because without additional capital, you must be resilient, resourceful and self-sufficient as quickly as possible. Here are some of the changes we’ve made as we continue building our business.

Incentivizing Existing Investors to Stay Involved and Excited

Before we started trying to raise a new round, we gave our existing investors the opportunity to put more money into the company on fairly favorable terms. The cap on this new note was lower than the cap that we had previously raised money on - although our business was much further along, the funding environment had changed as well, and we wanted to make the decision to put additional capital in easy for our existing investors.

We also went back and amended the documents for all investors who had put money in on the higher cap and gave them the lower cap instead. This is unusual, not legally required, and meant that we were giving up additional dilution.

Why would we voluntarily increase dilution? Our investor group includes friends & family, angels, and the great team at 500 Startups. Our relationships with most of them started long before this company, and we hope they will extend far into the future. These relationships motivate us to keep building the business - they trusted us with their hard earned dollars, and although they all know the risks of betting on our startup, we want to show them results. When it comes to a decision like the one we made with the cap change, the cost in dilution was well worth the goodwill it generated among our investors. It also demonstrated our commitment to acting with integrity even when things aren't going according to plan.

Re-evaluating the Product Roadmap

As we heard the skepticism from potential investors while trying to raise more capital, product priorities were the first thing to change for us. We no longer have the luxury to focus on user growth over monetization, so our entire product roadmap shifted to focus on revenue. Our app, once offered for free (to maximize signups) is now a paid download. We don't have the luxury of supporting users that aren't willing to pay for what we make.

Lowering Burn Rate

In addition to shifting product priorities to revenue, we also made dramatic reductions in burn rate so we could reach profitability faster. This meant letting several team members go - by far the hardest decision in this entire process - and asking remaining team members to take a pay cut (we softened the blow with this by giving additional equity). The changes in product and burn rate have put us on a path to reach cash flow positive before we run out of capital.

Preparing For Battle

In addition to the tactical changes in our business, the process we’ve gone through in the past three months has mentally and emotionally prepared our team for the road ahead. We know who we are and what we’re working toward, we’re aware of and very comfortable with the contrarian stance we’re taking, and we believe the long term opportunity is well worth the short term sacrifices we are making. As they say on Friday Night Lights, “clear eyes, full hearts, can't lose.”

I think Andrew Chen had it right when he said, "there’s always another move." If you’re the founder of a startup staring headfirst at the Series A Crunch and you can find the will to keep going, your job is to find that next move and make it happen. I hope to see more discussion on how companies are sticking with it and navigating the trough of sorrow. If you're in the midst of this process and need someone to bounce ideas off, drop me a note at @alanwells.

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

How To Survive a Ground-Up Rewrite Without Losing Your Sanity

Dharmesh Shah — Mon, 08 Apr 2013 17:36:00 GMT

aka: Screw you Joel Spolsky, We're Rewriting It From Scratch!

This is a guest post by Dan Milstein (@danmil), co-founder of Hut 8 Labs.

Disclosure: Joel Spolsky is a friend and I'm an investor in his company, Stack Exchange (which powers the awesome Stack Overflow) -Dharmesh

So, you know Joel Spolsky's essay Things You Should Never Do, Part I? In which he urgently recommends that, no matter what, please god listen to me, don't rewrite your product from scratch? And lists a bunch of dramatic failures when companies have tried to do so?

First off, he's totally right. Developers tend to spectacularly underestimate the effort involved in such a rewrite (more on that below), and spectacularly overestimate the value generated (more on that below, as well).

But sometimes, on certain rare occasions, you're going to be justified in rewriting a major part of your product (you'll notice I've shifted to saying you're merely rewriting a part, instead of the whole product. Please do that. If you really are committed to just rewriting the entire thing from scratch, I don't know what to tell you).

If you're considering launching a major rewrite, or find yourself as the tech lead on such a project in flight, or are merely toiling in the trenches of such a project, hoping against hope that it will someday end... this post is for you.

Hello, My Name is Dan, and I've Done Some Rewrites

A few years back, I joined a rapidly growing startup named HubSpot, where I ended up working for a good solid while (which was a marvelous experience, btw -- you should all have Yoav Shapira as a boss at some point). In my first year there, I was one of the tech leads on a small team that rewrote the Marketing Analytics system (one of the key features of the HubSpot product), totally from scratch. We rewrote the back end (moving from storing raw hit data in SQLServer to processing hits with Hadoop and storing aggregate reports in MySQL); we rewrote the front end (moving from C#/ASP.Net to Java/Tomcat); we got into the guts of a dozen applications which had come to rely on that store of every-hit-ever, and found a way to make them work with the data that was now available. (Note: HubSpot is now primarily powered by MySQL/Hadoop/HBase. Check out the HubSpot dev blog).

It took a loooong time. Much, much longer than we expected.

But it generated a ton of value for HubSpot. Very Important People were, ultimately, very happy about that project. After it wrapped up, 'Analytics 2.0', as it was known, somehow went from 'that project that was dragging on forever', to 'that major rewrite that worked out really well'.

Then, after the Analytics Rewrite wrapped up, in my role as 5 Whys Facilitator, I led the post-mortem on another ambitious rewrite which hadn't fared quite so well. I'll call it The Unhappy Rewrite.

From all that, some fairly clear lessons emerged.

First, I'm going to talk about why these projects are so tricky. Then I'll pass on some of those hard-won lessons on how to survive.

Prepare Yourself For This Project To Never Fucking End

The first, absolutely critical thing to understand about launching a major rewrite is that it's going to take insanely longer than you expect. Even when you try to discount for the usual developer optimism. Here's why:

Migrating the data sucks beyond all belief

I'm assuming your existing system has a bunch of valuable data locked up in it (if it doesn't, congrats, but I just never, ever run into this situation). You think, we're going to set up a new db structure (or move it all to some NoSQL store, or whatever), and we'll, I dunno, write some scripts to copy the data over, no problem.

Problem 1: there's this endless series of weird crap encoded in the data in surprising ways. E.g. "The use_conf field is 1 if we should use the auto-generated configs... but only if the spec_version field is greater than 3. Oh, and for a few months, there was this bug, and use_conf was left blank. It's almost always safe to assume it should be 1 when it's blank. Except for customers who bought the Express product, then we should treat it as 2". You have to migrate all your data over, checksum the living hell out of it, display it back to your users, and then figure out why it's not what they expect. You end up poring over commit histories, email exchanges with developers who have long since left the company, and line after line of cryptic legacy code. (In prep for writing this, when I mentioned this problem to developers, every single time they cut me off to eagerly explain some specific, awful experience they've had on this front -- it's really that bad)

Problem 2: But, wait, it gets worse: because you have a lot of data, it often takes days to migrate it all. So, as you struggle to figure out each of the above weird, persnickety issues with converting the data over, you end up waiting for days to see if your fixes work. And then to find the next issue and start over again. I have vivid, painful memories of watching my friend Stephen (a prototypical Smart Young Engineer), who was a tech lead on the Unhappy Rewrite, working, like, hour 70 of an 80 hour week, babysitting a slow-moving data export/import as it failed over and over and over again. I really can't communicate how long this takes.

It's brutally hard to reduce scope

With a greenfield (non-rewrite) project, there is always (always) a severe reduction in scope as you get closer to launch. You start off, expecting to do A, B, C & D, but when you launch, you do part of A. But, often, people are thrilled. (And, crucially, they forget that they had once considered all the other imagined features as absolutely necessary)

With a rewrite, that fails. People are really unhappy if you tell them: hey, we rewrote your favorite part of the product, the code is a lot cleaner now, but we took away half the functionality.

You'll end up spending this awful series of months implementing all these odd edge cases that you didn't realize even existed. And backfilling support for features that you've been told no one uses any more, but you find out at the last minute some Important Person or Customer does. And, and, and...

There turn out to be these other system that use "your" data

You always think: oh, yeah, there are these four screens, I see how to serve those from the new system. But then it turns out that a half-dozen cron jobs read data directly from "your" db. And there's an initialization step for new customers where something is stored in that db and read back later. And some other screen makes a side call to obtain a count of your data. Etc, etc. Basically, you try turning off the old system briefly, and a flurry of bug reports show up on your desk, for features written a long time ago, by people who have left the company, but which customers still depend on. This takes forever all over again to fix.

Okay, I'm Sufficiently Scared Now, What Should I Do?

You you have to totally own the business value.

First off, before you start, you must define the business value of this rewrite. I mean, you should always understand the big picture value of what you do (see: Rands Test). But with rewrites, it's often the tech lead, or the developers in general, who are pushing for the rewrite -- and then it's absolutely critical that you understand the value. Because you're going to discover unexpected problems, and have to make compromises, and the whole thing is going to drag on forever. And if, at the end of all that, the Important People who sign your checks don't see much value, it's not going to be a happy day for you.

One thing: be very, very careful if the primary business value is some (possibly disguised) version of "The new system will be much easier for developers to work on." I'm not saying that's not a nice bit of value, but if that's your only or main value... you're going to be trying to explain to your CEO in six months why nothing seems to have gotten done in development in the last half year.

The key to fixing the "developers will cry less" thing is to identify, specifically, what the current, crappy system is holding you back from doing. E.g. are you not able to pass a security audit? Does the website routinely fall over in a way that customers notice? Is there some sexy new feature you just can't add because the system is too hard to work with? Identifying that kind of specific problem both means you're talking about something observable by the rest of the business, and also that you're in a position to make smart tradeoffs when things blow up (as they will).

As an example, for our big Analytics rewrite, the developers involved sat down with Dan Dunn, the (truly excellent) product guy on our team, and worked out a list of business-visible wins we hoped to achieve. In rough priority order, those were:

Cut cost of storing each hit by an order of magnitude
Create new reports that weren't possible in the old system
Serve all reports faster
Serve near-real-time (instead of cached daily) reports

And you should know: that first one loomed really, really large. HubSpot was growing very quickly, and storing all that hit data as individual rows in SQLServer had all sorts of extra costs. The experts on Windows ops were constantly trying to get new SQLServer clusters set up ahead of demand (which was risky and complex and ended up touching a lot of the rest of the codebase). Sales people were told to not sell to prospects with really high traffic, because if they installed our tracking code, it might knock over those key databases (and that restriction injected friction into the sales process). Etc, etc.

Solving the "no more hits in SQLServer" problem is the Hard kind for a rewrite -- you only get the value when every single trace of the old system is gone. The other ones, lower down the list, those you'd see some value as individual reports were moved over. That's a crucial distinction to understand. If at all possible, you want to make sure that you're not only solving that kind of Hard Problem -- find some wins on the way.

For the Unhappy Rewrite, the biz value wasn't perfectly clear. And, thus, as often happens in that case, everyone assumed that, in the bright, shiny world of the New System, all their own personal pet peeves would be addressed. The new system would be faster! It would scale better! The front end would be beautiful and clever and new! It would bring our customers coffee in bed and read them the paper.

As the developers involved slogged through all the unexpected issues which arose, and had to keep pushing out their release date, they gradually realized how disappointed everyone was going to be when they saw the actual results (because all the awesome, dreamed-of stuff had gotten thrown overboard to try to get the damn thing out the door). This a crappy, crappy place to be -- stressed because people are hounding you to get something long-overdue finished, and equally stressed because you know that thing is a mess.

Okay, so how do you avoid getting trapped in this particular hell?

Worship at the Altar of Incrementalism

Over my career, I've come to place a really strong value on figuring out how to break big changes into small, safe, value-generating pieces. It's a sort of meta-design -- designing the process of gradual, safe change.

Kent Beck calls this Succession, and describes it as:

"Design changes are usually most efficiently implemented as a series of safe steps. Succession is the art of taking a single conceptual change, breaking it into safe steps, and then finding an order for those steps that optimizes safety, feedback, and efficiency."

I love that he calls it an "art" -- that feels exactly right to me. It doesn't happen by accident. You have to consciously work at it, talk out alternatives with your team, get some sort of product owner or manager involved to make sure the early value you're surfacing matters to customers. It's a creative act.

And now, let me say, in an angry Old Testament prophet voice: Beware the false incrementalism!

False incrementalism is breaking a large change up into a set of small steps, but where none of those steps generate any value on their own. E.g. you first write an entire new back end (but don't hook it up to anything), and then write an entire new front end (but don't launch it, because the back end doesn't have the legacy data yet), and then migrate all the legacy data. It's only after all of those steps are finished that you have anything of any value at all.

Fortunately, there's a very simple test to determine if you're falling prey to the False Incrementalism: if after each increment, an Important Person were to ask your team to drop the project right at that moment, would the business have seen some value? That is the gold standard.

Going back to my running example: our existing analytics system supported a few thousand customers, and served something like a half dozen key reports. We made an early decision to: a) rewrite all the existing reports before writing new ones, and b) rewrite each report completely, push it through to production, migrate any existing data for that report, and switch all our customers over. And only then move on to the next report.

Here's how that completely saved us: 3 months into a rewrite which we had estimated would take 3-5 months, we had completely converted a single report. Because we had focused on getting all the way through to production, and on migrating all the old data, we had been forced to face up to how complex the overall process was going to be. We sat down, and produced a new estimate: it would take more like 8 months to finish everything up, and get fully off SQLServer.

At this point, Dan Dunn, who is a Truly Excellent Product Guy because he is unafraid to face a hard tradeoff, said, "I'd like to shift our priorities -- I want to build the Sexy New Reports now, and not wait until we're fully off SQLServer." We said, "Even if it makes the overall rewrite take longer, and we won't get off SQLServer this year, and we'll have to build that one new cluster we were hoping to avoid having to set up?" And he said "Yes." And we said, "Okay, then."

That's the kind of choice you want to offer the rest of your larger team. An economic tradeoff where they can chose between options of what they see when. You really, really don't want to say: we don't have anything yet, we're not sure when we will, your only choices are to keep waiting, or to cancel this project and kiss your sunk costs goodbye.

Side note: Dan made 100% the right call (see: Excellent). The Sexy New Reports were a huge, runaway hit. Getting them out sooner than later made a big economic impact on the business. Which was good, because the project dragged on past the one year mark before we could finally kill off SQLServer and fully retire the old system.

For you product dev flow geeks out there, one interesting piece of value we generated early was simply a better understanding of how long the project was going to take. I believe that is what Beck means by "feedback". It's real value to the business. If we hadn't pushed a single report all the way through, we would likely have had, 3-4 months in, a whole bunch of data (for all reports) in some partially built new system, and no better understanding of the full challenge of cutting even one report over. You can see the value the feedback gave us--it let Dan make a much better economic choice. I will make my once-per-blog-post pitch that you should go read Donald Reinertsen's Principles of Product Development Flow to learn more about how reducing uncertainty generates value for a business.

For the Unhappy Rewrite, they didn't work out a careful plan for this kind of incremental delivery. Some Totally Awesome Things would happen/be possible when they finished. But they kept on not finishing, and not finishing, and then discovering more ways that the various pieces they were building didn't quite fit together. In the Post-Mortem, someone summarized it as: "We somehow turned this into a Waterfall project, without ever meaning to."

But, I Have to Cut Over All at Once, Because the Data is Always Changing

One of the reasons people bail on incrementalism is that they realize that, to make it work, there's going to be an extended period where every update to a piece of data has to go to both systems (old and new). And that's going to be a major pain in the ass to engineer. People will think (and even say out loud), "We can't do that, it'll add a month to the project to insert a dual-write layer. It wil slow us down too much."

Here's what I'm going to say: always insert that dual-write layer. Always. It's a minor, generally somewhat fixed cost that buys you an incredible amount of insurance. It allows you, as we did above, to gradually switch over from one system to another. It allows you to back out at any time if you discover major problems with the way the data was migrated (which you will, over and over again). It means your migration of data can take a week, and that's not a problem, because you don't have to freeze writes to both systems during that time. And, as a bonus, it surfaces a bunch of those weird situations where "other" systems are writing directly to your old database.

Again, I'll quote Kent Beck, writing about how they do this at Facebook:

"We frequently migrate large amounts of data from one data store to another, to improve performance or reliability. These migrations are an example of succession, because there is no safe way to wave a wand and migrate the data in an instant. The succession we use is:

Convert data fetching and mutating to a DataType, an abstraction that hides where the data is stored.

Modify the DataType to begin writing the data to the new store as well as the old store.

Bulk migrate existing data.

Modify the DataType to read from both stores, checking that the same data is fetched and logging any differences.

When the results match closely enough, return data from the new store and eliminate the old store.

You could theoretically do this faster as a single step, but it would never work. There is just too much hidden coupling in our system. Something would go wrong with one of the steps, leading to a potentially disastrous situation of lost or corrupted data."

Abandoning the Project Should Always Be on the Table

If a 3-month rewrite is economically rational, but a 13-month one is a giant loss, you'll generate a lot value by realizing which of those two you're actually facing. Unfortunately, the longer you solider on, the harder it is for people to avoid the Fallacy of Sunk Costs. The solution: if you have any uncertainty about how long it's going to take, sequence your work to reduce that uncertainty right away, and give people some "finished" thing that will let them walk away. One month in, you can still say: we've decided to only rewrite the front end. Or: we're just going to insert an API layer for now. Or, even: this turned out to be a bad idea, we're walking away. Six months in, with no end in sight, that's incredibly hard to do (even if it's still the right choice, economically).

Some Specific Tactics

Shrink Ray FTW

This is an excellent idea, courtesy of Kellan Elliot-McCrea, CTO of Etsy. He describes it as follows:

"We have a pattern we call shrink ray. It's a graph of how much the old system is still in place. Most of these run as cron jobs that grep the codebase for a key signature. Sometimes usage is from wire monitoring of a component. Sometimes there are leaderboards. There is always a party when it goes to zero. A big party.

Gives a good sense of progress and scope, especially as the project is rolling, and a good historical record of how long this shit takes. '''

I've just started using Shrink Ray on a rewrite I'm tackling right now, and I will say: it's fairly awesome. Not only does it give you the wins above, but, it also forces you to have an early discussion about what you are shrinking, and who in the business cares. If you make the right graph, Important People will be excited to see it moving down. This is crazy valuable.

Engineer The Living Hell Out Of Your Migration Scripts

It's very easy to think of the code that moves data from the old system to the new as a collection of one-off scripts. You write them quickly, don't comment them too carefully, don't write unit tests, etc. All of which are generally valid tradeoffs for code which you're only going to run once.

But, see above, you're going to run your migrations over and over to get them right. Plus, you're converting and summing up and copying over data, so you really, really want some unit tests to find any errors you can early on (because "data" is, to a first approximation, "a bunch of opaque numbers which don't mean anything to you, but which people will be super pissed off about if they're wrong"). And this thing is going to happen, where someone will accidentally hit ctrl-c, and kill your 36 hour migration at hour 34. Thus, taking the extra time to make the entire process strongly idempotent will pay off over and over (by strongly idempotent, I mean, e.g. you can restart after a failed partial run and it will pick up most of the existing work).

Basically, treat your migration code as a first class citizen. It will save you a lot of time in the long run.

If Your Data Doesn't Look Weird, You're Not Looking Hard Enough

What's best is if you can get yourself to think about the problem of building confidence in your data as a real, exciting engineering challenge. Put one of your very best devs to work attacking both the old and the new data, writing tools to analyze it all, discover interesting invariants and checksums.

A good rule of thumb for migrating and checksumming data: until you've found a half-dozen bizarre inconsistencies in the old data, you're not done. For the Analytics Rewrite, we created a page on our internal wiki called "Data Infelicities". It got to be really, really long.

With Great Incrementalism Comes Great Power

I want to wrap up by flipping this all around -- if you learn to approach your rewrites with this kind of ferocious, incremental discipline, you can tackle incredibly hard problems without fear. Which is a tremendous capability to offer your business. You can gradually rewrite that unbelievably horky system that the whole company depends on. You can move huge chunks of data to new data stores. You can pick up messy, half-functional open source projects and gradually build new products around them.

It's a great feeling.

---

What's your take? Care to share any lessons learned from an epic rewrite?

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

Measuring What Matters: How To Pick A Good Metric

Dharmesh Shah — Fri, 29 Mar 2013 15:53:00 GMT

Ben Yoskovitz is the co-author of Lean Analytics, a new book on how to use analytics successfully in your business. Ben is currently VP Product at GoInstant, which was acquired by Salesforce in 2012. He blogs regularly at Instigator Blog and can be followed @byosko.

We all know metrics are important. They help report progress and guide our decision making. Used properly, metrics can provide key insights into our businesses that make the difference between success and failure. But as our capacity to track everything increases, and the tools to do so become easier and more prevalent, the question remains: what is a worthwhile metric to track?

Before you can really figure that out it's important to understand the basics of metrics. There are in fact good numbers and bad numbers. There are numbers that don't help and numbers that might save the day.

First, here's how we define analytics: Analytics is the measurement of movement towards your business goals.

The two key concepts are "movement" and "business goals". Analytics isn't about reporting for the sake of reporting, it's about tracking progress. And not just aimless progress, but progress towards something you're trying to accomplish. If you don't know where you're going, metrics aren't going to be particularly helpful.

With that definition in mind, here's how we define a "good metric".

A good metric is:

Comparative
Understandable
A ratio or rate
Behavior changing

A good metric is comparative. Being able to compare a metric across time periods, groups of users, or competitors helps you understand which way things are moving. For example, "Increased conversion by 10% from last week" is more meaningful than "We're at 2% conversion." Using comparative metrics speaks clearly to our definition of "movement towards business goals".

A good metric is understandable. Take the numbers you're tracking now--the ones you think are the most important--and show those to outsiders. If they don't instantly understand your business and what you're trying to do, then the numbers you're tracking are probably too complex. And internally, if people can't remember the numbers you're focused on and discuss them effectively, it becomes much harder to turn a change in the data into a change in the culture. Try fitting your key metrics on a single TV screen (and don’t cheat with a super small font either!)

A good metric is a ratio or a rate. Ratios and rates are inherently comparative. For example, if you compare a daily metric to the same metric over a month, you'll see whether you're looking at a sudden spike or a long-term trend. Ratios and rates (unlike absolute numbers) give you a more realistic "health check" for your business and as a result they're easier to act on. This speaks to our definition above about "business goals"--ratios and rates help you understand if you're heading towards those goals or away from them.

A good metric changes the way you behave. This is by far the most important criterion for a metric: what will you do differently based on changes in the number? If you don't know, it's a bad metric. This doesn't mean you don't track it--we generally suggest that you track everything but only focus on one thing at a time because you never know when a metric you're tracking becomes useful. But when looking at the key numbers you're focused on today, ask yourself if you really know what you'd do if those numbers go up, down or stay the same. If you don't, put those metrics aside and look for better ones to track right now.

http://www.flickr.com/photos/circasassy/7858155676/

Now that we've defined a "good" metric let's look at five things you should keep in mind when choosing the right metrics to track:

Qualitative versus quantitative metrics
Vanity versus actionable metrics
Exploratory versus reporting metrics
Leading versus lagging metrics
Correlated versus causal metrics

1. Qualitative versus Quantitative metrics

Quantitative data is easy to understand. It's the numbers we track and measure--for example, sports scores and movie ratings. As soon as something is ranked, counted, or put on a scale, it's quantified. Quantitative data is nice and scientific, and (assuming you do the math right) you can aggregate it, extrapolate it, and put it into a spreadsheet. Quantitative data doesn't lie, although it can certainly be misinterpreted. It's also not enough for starting a business. To start something, to genuinely find a problem worth solving, you need qualitative input.

Qualitative data is messy, subjective, and imprecise. It's the stuff of interviews and debates. It's hard to quantify. You can't measure qualitative data easily. If quantitative data answers "what" and "how much," qualitative data answers "why." Quantitative data abhors emotion; qualitative data marinates in it.

When you first get started with an idea, assuming you're following the core principles around Lean Startup, you'll be looking for qualitative data through problem interviews. You're speaking to people--specifically, to people you think are potential customers in the right target market. You're exploring. You're getting out of the building.

Collecting good qualitative data takes preparation. You need to ask specific questions without leading potential customers or skewing their answers. You have to avoid letting your enthusiasm and reality distortion rub off on your interview subjects. Unprepared interviews yield misleading or meaningless results. We cover how to interview people in Lean Analytics, but there have been many others that have done so as well. Ash Maurya’s book Running Lean provides a great, prescriptive approach to interviewing. I also recommend Laura Klein’s writing on the subject.

Sidebar: In writing Lean Analytics, we proposed the idea of scoring problem interviews. The basic concept is to take the qualitative data you collect during interviews and codify it enough to give you (hopefully!) new insight into the results. The goal of scoring problem interviews is to reduce your own bias and ensure a healthy dose of intellectual honesty in your efforts. Not everyone agrees with the approach, but I hope you'll take a look and try it out for yourself.

2. Vanity versus Actionable metrics

I won't spent a lot of time on vanity metrics, because I think most people reading OnStartups understand these. As mentioned above, if you have a piece of data that can't be acted upon (you don't know how movement in the metric will change your behavior) then it's a vanity metric and you should ignore it.

It is important to note that actionable metrics don't automatically hold the answers. They're not magic. They give you an indication that something fundamental and important is going on, and identify areas where you should focus, but they don't provide the answers. For example, if "percent of active users" drops, what do you do? Well, it's a good indication that something is wrong, but you'll have to dig further into your business to figure it out. Actionable metrics are often the starting point for this type of exploration and problem solving.

3. Exploratory versus Reporting metrics

Reporting metrics are straightforward--they report on what's going on in your startup. We think of these as "accounting metrics", for example, "How many widgets did we sell today?" Or, "Did the green or the red widget sell more?" Reporting metrics can be the results of experiments (and therefore actionable), but they don't necessarily lead to those "eureka!" moments that can change your business forever.

Exploratory metrics are those you go looking for. You're sifting through data looking for threads of information that are worth pursuing. You're exploring in order to generate ideas to experiment on. This fits what Steve Blank says a startup should spend its time doing: searching for a scalable, repeatable business model.

A great example of using exploratory metrics is from Mike Greenfield, co-founder of Circle of Moms. Originally, Circle of Moms was Circle of Friends (think: Google Circles inside Facebook). Circle of Friends grew very quickly in 2007-2008 to 10 million users, thanks in part to Facebook's open platform. But there was a problem--user engagement was terrible. Circle of Friends had great virality and tons of users, but not enough people were really using the product.

So Mike went digging.

And what Mike found was incredible. It turns out that moms, by every imaginable metric, were insanely engaged compared to everyone else. Their messages were longer, they invited more people, they attached more photos, and so on. So Mike and his team pivoted from Circle of Friends to Circle of Moms. They essentially abandoned millions of users to focus on a group of users that were actually engaged and getting value from their product. From the outside looking in this might have been surprising or confusing. You might find yourself at a decision point like Mike and worry about what investors will think, or other external influencers. But if you find a key insight in your data that’s incredibly compelling, you owe it to yourself to act on it, even if it looks crazy from the outside. For Mike and Circle of Moms, it was the right decision. The company grew their user base back up to 4 million users and eventually sold to Sugar Inc.

4. Leading versus Lagging metrics

Leading and lagging metrics are both useful, but they serve different purposes. Most startups start by measuring lagging metrics (or "lagging indicators") because they don't have enough data to do anything else. And that's OK. But it's important to recognize that a lagging metric is reporting the past; by the time you know what the number is, whatever you’re tracking has already happened. A great example of this is churn. Churn tells you what percentage of customers (or users) abandon your service over time. But once a customer has churned out they're not likely to come back. Measuring churn is important, and if it's too high, you'll absolutely want to address the issue and try to fix your leaky bucket, but it lags behind reality.

A leading metric on the other hand tries to predict the future. It gives you an indication of what is likely to happen, and as a result you can address a leading metric more quickly to try and change outcomes going forward. For example, customer complaints is often a leading indicator of churn. If customer complaints are going up, you can expect that customers will abandon and churn will also go up. But instead of responding to something that's already happened, you can dive into customer complaints immediately, figure out what's going on, resolve the issues and hopefully minimize the future impact in churn.

Ultimately, you need to decide whether the thing you're tracking helps you make better decisions sooner. Remember: a real metric has to be actionable. Lagging and leading metrics can both be actionable, but leading indicators show you what will happen, reducing your cycle time and making you leaner.

5. Correlated versus Causal metrics

A correlation is a seeming relationship between two metrics that change together, but are often changing as a result of something else. Take ice cream consumption and drowning. If you plotted these over a year, you'd see that they're correlated--they both go up and down at the same time. The more ice cream that's consumed, the more people drown. But no one would suggest that we reduce ice cream consumption as a way of preventing drowning deaths. That's because the numbers are correlated, and not causal. One isn't affecting the other. The factor that affects them both is actually the time of year--when it's summer, people eat more ice cream and they also drown more.

Finding a correlation between two metrics is a good thing. Correlations can help you predict what will happen. But finding the cause of something means you can change it. Usually, causations aren't simple one-to-one relationships--there’s lots of factors at play, but even a degree of causality is valuable.

You prove causality by finding a correlation, then running experiments where you control the other variables and measure the difference. It's hard to do, but causality is really an analytics superpower--it gives you the power to hack the future.

So what metrics are you tracking?

We’ve covered some fundamentals about analytics and picking good metrics. It's not the whole story (to learn more see our presentations and workshops on Lean Analytics), but I'd encourage you to take a look at what you're tracking and see if the numbers you care the most about meet the criteria defined in this post. Are the metrics ratios/rates? Are they actionable? Are you looking at leading or lagging metrics? Have you identified any correlations? Could you experiment your way to discovering causality?

And remember: analytics is about measuring progress towards goals. It's not about endless reports. It's not about numbers that go constantly "up and to the right" to impress the press, investors or anyone else. Good analytics is about speeding up and making better decisions, and developing key insights that become cornerstones of your startup.

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

Why I Spent 200 Hours Writing Culture Code Instead of Python Code

Dharmesh Shah — Wed, 20 Mar 2013 23:27:00 GMT

If someone had told me a few months ago that I'd be spending more hours in PowerPoint than PyCharm (an IDE for programming in Python) I'd have laughed at them (not out loud though). Sure, I've been known to create some slides — and I do some occasional public speaking, but I don't usually spend crazy amounts of time on a slide deck.

Except this time. I've now clocked well over 200 hours on a single deck (including thinking/discussion time). It's the HubSpot Culture Code deck (available for your viewing pleasure below, or http://CultureDeck.com).

Background

I've been reading, thinking and talking a lot about culture lately. A couple of years ago, I started a simple document for use within my startup, HubSpot, that talked a bit about culture. The document described the “people patterns” of HubSpot — what kinds of people were likely to do well at the company. Said differently, if I were to write a grading algorithm to predict the likelihood of success of a given employee, what would the parameters of that function be? We identified things like being humble and analytical (2 of the 7 things). That document turned out to be relatively useful — and well worth the time. We've used it during the interview process, we use it during reviews.

I continued to get feedback from the HubSpot team that the original culture deck at HubSpot was starting to get a little dated — and it didn't go far enough. It talked about the kind of people that were a match — but it didn't talk at all about beliefs or behaviors. Meanwhile, the company is growing like wildfire. We're 460 people now and adding 25+ people every month.

So, I thought to myself: “Self, maybe it's time to update the deck…” I set out on a quest to talk to a bunch of folks, run some surveys, get some feedback, read a bunch of stuff, etc. One thing led to another…and another…and another, and here I am.

If one needs 200 hours and 150+ slides on culture, is something wrong?

Maybe. But, this is likely more a function of my neuroses than a reflection on HubSpot. And, all things said and done, I don't really regret having spent the time. The result, I think, is really good. People I trust to tell me the truth and that I respect immensely have told me the deck is good. It's not the same level as the Netflix culture deck, but it's not terrible.

Speaking of the Netflix culture deck, you've read it right? Right? If you have time to read only one 100+ slide deck about company culture, you should read the Netflix culture deck (convenient URL: Netflix.CultureDeck.com). If you have time to read two 100+ slide decks on company culture — read the Netflix deck twice. It's that good.

Why I'm thankful to Jason Fried and 37signals

Jason is a brilliant thinker and a brilliant writer. He's got some great posts on culture, like “You Don't Create a Culture”. Which is why I was a little worried when I sent him a preview (private beta) of the deck I was working on to get his reaction. I was fearful. My thought was “He's going to think I'm an idiot. Or worse, clueless.” Turns out, he was gracious. He acknowledged that 37signals and HubSpot are different companies, pursuing different paths. I could have been brave and dug into this comments a bit more, but I decided not to push my luck because it would have been somewhat crushing.

I also enjoyed “When Culture Turns Into Policy” by Mig Reyes of 37signals. He's right But, I feel like I'm in the correct side of truth and justice on this particular front.

The more sobering article was “What Your Culture Really Says” (not by 37signals, but by @shanley — someone I don't know). Well written and biting in its criticism of what she calls “Silicon Valley Culture”, it was something I read a couple of times and circulated around to a few folks on my team. I recommend it. It's dark, but worth reading.

Why I think it was worth it, and why I'd do it again.

1. Culture is super-duper important, and it's worth spending time on. Check out my recent post “Culture Code: Creating a Company YOU Love”. I think it makes a pretty good case.

2. Already, the deck is being used internally within HubSpot. I've gotten both physical high fives and virtual high fives from people on the team. That makes me happy.

3. Even before posting the HubSpot culture code deck to public beta today, I had already started sending it to people that I was trying to recruit to HubSpot. Though ideally, I'd get to meet everyone and tell them about our culture code in person, that's just not possible.

4. Going through the exercise was one of the most challenging and revealing things I've ever done since starting the company 6+ years ago.

5. Working on our culture code project caused me to talk to a bunch of people that I didn't otherwise know and would probably not have been able to connect with. People like Patty McCord (co-author of the Netflix culture deck).

6. It's been therapeutic. Now, if HubSpot ends up going down in crashing, burning flames (which is totally not the plan) — at least I'll know that we tried to design and defend our culture.

7. We're about 4 hours into the public beta release of the HubSpot culture code deck. It's already gotten 16,000 hits and is going strong. This is gratifying. My hope is that a few of those people found the deck useful. (And maybe a few of them will join our merry band of misfits at HubSpot someday).

If you're getting started, spend 20 hours, not 200.

One of the common questions I get from my startup friends is how much time they should be spending on culture — given everything else going on (like you know, building a business). I'm not sure what the optimal number is — but I can say with confidence that the number is not zero. I'd suggest 20 hours. Just enough time to think about it, talk to your team, read some stuff and describe it. You don't need to put posters up on the wall. Just something — even if it's a one-pager that captures your current thinking on the kind of company you want to be.

Quick hint: You want to build a company that you love working for. The rest will work itself out.

What do you think? Have you scanned through the deck? Was it useful? Lame? Interesting? Would love to hear your thoughts. I think of the deck as being in “public beta”, so I'll be iterating on it and updating it regularly.

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

Getting Crunched, Mashed Or Beaten Is Not A Launch Strategy

Dharmesh Shah — Tue, 19 Mar 2013 14:11:00 GMT

This is a guest post by Alex Turnbull. Alex is a serial SaaS entrepreneur and the CEO of Groove, a customer support software platform for startups and small businesses. Alex was previously a co-founder of Bantam Live, acquired by Constant Contact in 2011.

It’s here!

After many, many months of long hours, take-out and cheap beer, launch day is finally here.

Your eyes are sore from not having looked up from your computer in what seems like ages, and every part of your body is screaming at you to get some sleep, but you’re too hopped up on coffee and adrenaline to listen.

This is it. This is what we’ve been working our asses off for. To reveal ourselves to the world in all of our disruptive glory. Silicon Valley will kneel before us.

It’s like the slow, painstaking ride to the top of the first drop on a roller coaster; you just know it’s going to be absolutely exhilarating, but first you have to trudge all the way to the peak of a steep climb. Tired of waiting but itching with anticipation, you finally reach the top, and then…

Nothing.

Not a damn thing.

Scoble isn’t billing you as the next Instagram. You’re not showing up on Techmeme with a dozen stories about your launch. And the traffic. That sweet, traction-building traffic that you’ve been awaiting — the traffic that was going to prove that people were interested. That they wanted you. It never comes.

Who’s to blame for all of this?

That’s easy. TechCrunch. Those bastards.

If only they had read your press release, they would’ve seen that your story needs to be told! Your product is unique and compelling, dammit! How could they do this to you? How could they crush your dreams of a successful launch by totally ignoring your pitch?

Of course, you’re a startup. Bouncing back is in your DNA, and you get right back to work. But the experience is discouraging, and I've seen this story play out way too many times with friends and founders I’ve spoken to. And know that I’m speaking from experience: I've absolutely made this mistake before, too.

Here’s the reality: pitching TechCrunch is not a launch strategy.

It seems obvious, but it takes more than one hand for me to count the number of times a founder has told me that they expect their launch traction to come from getting picked up by TC (or Mashable, or VentureBeat, or AllThingsD, or any one of a number of similar outlets).

What every single hopeful founder with a similar plan doesn't realize (or doesn't take seriously enough) is that there are hundreds of other founders doing the exact same thing, and hitting the exact same “Tips” email account with their pitches.

Don’t get me wrong, here. Press is good, startup bloggers tell important stories and press outreach should be a part of your launch strategy. But it’s not enough.

So what’s a startup to do?

Let’s get this out of the way: a lot of folks will tell you that the first thing you should be focused on is building a great product that improves people’s lives. And they’re absolutely right. Nobody wants to hear about a crappy product, and more importantly, nobody wants to share your crappy product with their friends.

But let’s assume you've got something amazing. How do you get the world to notice?

First of all, shift your thinking. F*ck the world. It’s “tell everyone” approaches like this that lead to launch strategies like the one above. You don’t need the world to notice. You need highly qualified potential users to notice, and there’s a huge difference.

At Groove, we spent twelve months in beta, rigorously testing and iterating our HelpDesk and LiveChat apps to get them ready to launch.

But here’s something else we did, that you can do, too: we spent that time rabidly collecting email addresses of potential users. We asked our most engaged beta users to share our website (and lead collection portal) with their networks, we blogged about topics that were interesting to a customer support audience, and we wrote content for external outlets that brought value to readers, and loads of inbound leads to us.

When launch day came, we were ready: press release, pitch list, product video, blog post, email blast, the works. Here’s how it played out:

We pitched our press list.

The good people at TheNextWeb covered our beta launch a year ago, so they were interested in how far we've come. They wrote a great piece about us, and the inbound traffic got us about a few hundred signups. It was awesome.

Like everyone else, we also wanted to get Crunched. Or Mashed. Or Beaten.

Ouch.

But what hurt even more, is that like almost everyone else, we didn't get covered by any of them.

I have no doubt that a barrage of press coverage would've gotten us even more new users, but we knew that the odds were against us, so we planned for it.

Taking our carefully nurtured list of email addresses, we sent out an announcement about our launch, with clear calls to action to sign up and get in on the fun.

The result?

Double the signups, at nearly four times the conversion rate of visitors coming from the TNW piece.

Note that we didn't email this list cold: we had spent months giving away content for free, nurturing the relationships, before asking for anything. I can’t stress the importance of this enough.

We also sent an email out to beta users, announcing the launch and asking them to share Groove with friends who might find it useful. That email netted us another 120 users, at a conversion rate nearly double that of the TNW traffic.

It shouldn't be surprising that the most valuable traffic we got came from qualified leads we had already nurtured. But the problem is that most startups won’t make the effort to build that audience until after launch. I know, because as I've mentioned, I've made that mistake, too.

Look, I know that as an early-stage team, the chances that you have a full-time content person are nonexistent. But the chances that someone on your team has a modicum of writing chops are pretty damn good, and getting them to invest a couple of hours a week in this exercise can pay off in spades when the time comes.

At a loss for what to write about? Every startup should know how their customers think, and knowing what’s interesting to them is a major part of that, and it’s absolutely okay to ask them what they’d like to read about from you. Email them, survey them, chat with them. They'll appreciate it. Trust me.

In the meantime, here are a few ideas:

Write about your startup experiences - be honest and transparent (check out Balsamiq-founder Peldi’s blog, where he captures this masterfully)
Stir the pot. Share your thoughts on controversial topics with your audience.
Offer best practices for your space.
You’re probably an expert in whatever it is that you do — share your knowledge.
Everyone likes a success story. Or one about failure. Tell yours.
Show off case studies and interviews with your customers. This clues your audience in to what others using your product are doing well, and makes the featured customers feel good about themselves (and their relationship with your company).

Summary: Getting Crunched is not a launch strategy, and you shouldn't bet on it to make your startup blow up. Reach out to the press, but diversify your launch plan to reach qualified leads that you've already been nurturing. Invest in content. Profit. The end.

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Culture Code: Creating A Company YOU Love

Dharmesh Shah — Sat, 09 Mar 2013 22:23:00 GMT

This article is available at http://CultureCode.com -- the slides and content will be updated periodically. I'm working on a really big project on the topic of culture. Follow me on twitter (@dharmesh) to get an update on March 20th when it comes out in public beta.

This article represents the notes and slides related to a talk I'm about to give (in less than 60 minutes) at the #LeanStartup event at #SxSW 2013.

Culture Code: Creating a Company You Love from Dharmesh Shah

Here are my notes on the talk. Note: I'm writing these roughly 90 minutes before I go on stage, so they're a bit rough.

1. Posted the historical recurring revenue numbers of HubSpot. Rationale: Transparency is one of our core cultural values at HubSpot. So, every year, we post our financial deck with details

2. Entrepreneurs don't spend many calories thinking about or working on culture. There are several common reasons for this:

a) Culture? We don't need no stinkin' culture! We're putting a dent in the universe. That's our f*!#ing culture!

b) Culture? Relax. We got this one covered. We have free beer and a ping poing table.

c) Culture? You can't really create that. It has to be built organically. It just comes from the behaviors and example of the founders.

All of those are reasonable positions to take. They're misguided, but they're reasonable.

a) Most of the startups that did end up putting a dent in the universe didn't really know that they were going to succeed at it. And, one of the few common characteristics of super-successful companies is that they have a distinct culture. Google. Facebook. Zapps. Netflix. The list goes on and one.

b) Maybe you can't create a culture -- but you can certainly destroy it through neglect. The 2nd Law of Thermodynamics applies here. Left alone, most things degrade to crap. In the early days, it's OK to rely on the behavior of the founders and early team to set the culture. That works great. The problem with this model is that as you start to grow, there's a fair amount lost in translation.

3. Convention over Configuration. Yes, you could just let people make decisions organically based on their best interpretation of whatever they think the right model/framework is. But, I generally favor convention over configuration. Why not just have a convention (i.e. culture) that makes a large body of easy decisions and a small body of hard decisions easier? The result is more efficient and more consistent decision-making.

4. product:marketing :: culture : recruiting

product is to marketing as culture is to recruiting. Yes, you might be able to do amazing marketing -- but it's not going to matter if the product isn't amazing. It's a tough slog. Similarly, if you're looking to recruit amazing people (who isn't), you're going to need to a great culture. The kind of culture that will appeal to the right kinds of people and get them to self-select.

5. The interest on culture debt is really high.

You've heard about technology debt. That's when you take short-cuts today, because you *need* to get something out the door. You willingly take these short-cuts, because time is suer-valuable (just like cash is valuable when you take on financial debt). But, you understand that there will be a time to pay off that debt. And, the debt carries an interest rate. Culture debt is when you take a short-cut -- hire someone now because they have the skills you need and you're *hurting* for people -- but they're not a good culture fit. You let the "culture bar" down. You might do this for logical reasons. For the same reason you might incur technology debt or financial debt.

I'm going to posit that the effective interest rate on the culture debt you take on is often higher than that of technology debt. That is, when it comes time to pay off the debt -- a lot of damage is done. There are a couple of reasons for this: 1) When you incur technology debt (like not adding sharding to your database), you generally will start feeling pain at some point, and you'll then decide to pay off that debt. It's a *known* problem and when you solve it, you'll sort of know you did. That's not the case with cultural debt. Culture debt is insidious. It creeps in slowly. It's hard to measure. 2) Technology debt is often "forgiven". This happens when a short-cut you took ends up not being a bad thing anyways. An example might be that you hacked together an MVF (minimum viable feature) for something in the app. The code is crap. You're not proud of it. Then later, you decide to abandon that particular feature. Guess what, your tech debt on that feature was just forgiven. That almost never happens in cultural debt. If you bring on people that aren't a fit, they'll infect other parts of the organization, and will be really hard to get back to where you want to be.

6. Create the culture you want, not the one you think you should have.

There's a lot of content out there regarding "winning" startup cultures. Some will advocate for an open/transparent culture. Some for a design-focused culture. Some for a service and customer-centric culture. Fact is, any of these will likely work. The key is to understand what it is that defines your culture (and importantly, what makes it differetn from other companies) -- and to build alignment around that culture. And, in order for the culture to survive long-term, you need to love it. You need to believe in it. If you simply try to tweak the culture based on what you think the right answer is, you'll lose steam and lose conviction. Game over.

Summary: You can nudge your culture. It's worth it. You're going to have a culture anyways -- might as well build one you want.

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Oh, and by the way, you should follow me on twitter: @dharmesh.

Classes They (Thankfully) Don't Teach At Startup School

Dharmesh Shah — Tue, 19 Feb 2013 22:20:00 GMT

The following are some hypothetical classes that I'm thankful they don't teach at places like Y Combinator, TechStars and 500 Startups.

11 Classes They Should't Teach Founders

1. Dress To Impress VCs: The Art of Wearing A Tie

2. Click, Drag, Extrapolate: How to Use Excel For Startup Financial Projections

3. How to Win Friends and Influence People by Writing a Business Plan.

4. My Parking Spot: A Founder's Guide To Executive Benefits

5. The Care and Feeding Of a Tradeshow Booth Babe(*)

6. How To Design Software Systems For Infinite Scale on Day Zero

7. You Win, They Lose: Brass-Knuckled Tactics To Use Against Your Team

8. Ego Marketing: How To Buy A Superbowl Ad

10. How To Be a Patent Troll For Fun and Profit

11. Selling On Stage: Hocking Your Wares To An Unsuspecting Conference Audience

* For the record, I completely detest the whole idea of a booth babe. Reprehensible.

What are some of the classes you're thankful they don't teach? Please share in the comments.

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

Avoiding Undue Diligence: My Strange Approach To Angel Investing

Dharmesh Shah — Mon, 04 Feb 2013 20:06:00 GMT

In a few weeks, I'm going to write a $25,000 check to invest in a company that currently does not exist. There is no company. There's no team. And I have no idea what the company will do or hopes to do. I'm investing almost completely blind. More on this craziness a little later in this article.

To understand why I would do something so crazy, let me first catch you up a bit on my angel investment history and “strategy” (and I use the word strategy very loosely). It's not your typical story.

I first started angel investing while I was a graduate student at MIT. I had recently sold my last company, made some money and went back to graduate school to figure out what I wanted to do next. I had promised my wife it wouldn't be another startup (startups are hard) so my plan was to do angel investing. It was a way for me to scratch my entrepreneurial itch by vicariously living through other entrepreneurs. Lots of fun, and almost no pain. Seemed like a great idea. And it was.

The first entrepreneur I invested in (not counting myself) was Brian Shin — his company was Visible Measures. He was a classmate of mine in “New Enterprises” at MIT. Brian was literally one of the smartest people I met during my time at MIT. And, he could hustle like nobody's business. So, I invested $50,000 despite not really knowing Brian and not really liking the original idea (they have since pivoted). And, not really knowing what the heck I was doing It turns out, to be an angel investor there is only one requirement: You have to have to be accredited (i.e. have the money to be able to afford the risk). You don't have to go to angel investment school, take any tests or otherwise prove your mette. You just need cash and be willing to write checks.

I continued making investments all through graduate school and then post-graduation, as I was building my own startup, HubSpot. I've now made 35+ investments. You can see most of my AngelList profile. What makes my approach unconventional is that I have a few “rules”:

All of the rules are based on one simple constraint: I have no time. I have no time to spend on/with startups because I'm maniacally committed and focused on my own company (HubSpot), which is doing very well. That's where all available time goes. If I didn't have these rules in place, I wouldn't be able to angel invest at all.

So here are my rules:

1. No due diligence. Seriously, almost none. In over half the deals I've done, I've never met the entrepreneurs or talked to them on the phone. Generally just exchanged an email or two. My rationale here is two-fold: I'm optimizing for my time (my biggest constraint) not magnitude of outcome. Also, I think at the very early stages, most diligence that typical investors spend time on is “undue”. There's just not that much that's knowable. Either you like the people, or you don't. You like the idea, or you don't (which is irrelevant, because the idea's likely going to change anyways).

2. No follow-on investments. This one's controversial. Many would argue that it's economically stupid for me not to “double down” on the deals that I have a right to maintain my pro-rata investment. They might be right (but I don't think they are). The reason I don't do follow-ons is that it requires spending time (which I don't have) and for the deals that I don't invest in, I might create a signaling problem for the entrepreneur. By unilaterally not doing any follow-on investments, all signaling issues go away. This has worked brilliantly for me so far. I take the money that I would have invested in deals I'm already in, and just channel it to new startups. In the grand scheme of things, I think this works out well for everyone.

3. No advisory board positions or official involvement. Once again, this goes back to the lack of time. I don't have time to commit, so I don't commit it. Occasionally, I'll make an email introduction, or see entrepreneurs in my portfolio for a nice dinner — but other than that, they almost never see me or hear from me.

Overall, my unconventional approach seems to be working OK. I'd put my angel investment portfolio up against any early-stage investor (angel or VC). After all is done, I'm going to make a fair amount of money. If you don't think so, just check out my portfolio.

And, to those that might criticize my unconventional approach and classify me as "part of the problem" (the problem being, the "Series A Crunch"), I have a simple response/position: There's no such thing as too many companies starting up. But, there is such a thing as not enough companies shutting down...but that's a different problem.

Important Note: If you are seeking angel investment, just about all of my investments these days are through AngelList (Disclosure: I'm not just a member of AngelList, I'm also an investor). And, I focus exclusively on Internet/software companies.

So, back to my crazy $25,000 investment. A few weeks ago, I heard about the upcoming LAUNCH Festival hosted by Jason Calacanis. Jason sent an email out announcing that as part of LAUNCH, he was putting together the best hackathon in history. Jason was going to angel invest $25,000 into the winning team. When I saw that email, I thouht “that's a pretty good idea, and I've done stupider things”. So, I volunteered to match Jason's $25k with $25k of my own. Secretly, I'm a major, major believer in hackepreneurs. If I can buy into someone that manages to get in to the LAUNCH hackathon and then wins -- I think it's a pretty good bet.

Hope you get a chance to attend LAUNCH. It promises to be an amazing event. And, if you're the hackepreneur type, hope you'll participate in the hackathon and take my money.

Cheers.

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Oh, and by the way, you should follow me on twitter: @dharmesh.

The 4 Personality Types Every Startup Needs

Dharmesh Shah — Fri, 01 Feb 2013 19:25:00 GMT

Anyone can have a killer startup idea, but in order to make that idea succeed you’ll need an unbeatable team. Crafting the perfect team is an art -- one we're constantly trying to refine at my startup, Boundless.

We’ve found that a structured process yields the best new hires. This starts with first understanding the skills we need to fill. But we don’t just try to fit anyone with the right experience into a role - we go further and search for the right personality for the position as well. Throughout the entire hiring process, we’re constantly looking for signs of the four most important startup personalities: The Beast, Lara Croft, The Architect, and The Most Interesting Man in the World.

Our initial process is probably quite similar to many other startups. First, Boundless job candidates need to have a presence online. If we can’t find you online, you don’t exist, which means we’re not going to start the interview process. Next, candidates go through a phone screen to determine basic experience and qualifications. Those that survive the phone call visit with multiple team members on-site, where they’re assessed on skill and personality.

However, the final step is a little different. Before securing a job at Boundless everyone gives a 20 minute presentation on your personal or professional passion. We like to give the entire team a chance to see the candidate, and give the candidate an opportunity to impress the team with anything they want. We’ve seen people present on Tai Chi, cupcakes, coffee, how to build an art collection on a budget - all kinds of interesting, quirky and funny topics. And, of course, by this point in the process we have a strong idea of the type of a person the candidate is.

The Four Critical Startup Personality Types

The Beast, Lara Croft, The Architect, and The Most Interesting Man in the World. When filling a role at your startup, you need to find a candidate that embodies characteristics from each of these personalities if you are going to create a culture that changes the world. I firmly believe that a large part of my company’s success is driven by employees with characteristics strongly matching these personalities.

Here’s how to identify these four startup personalities:

The Beast

The startup Beast, modeled after the X-men character, possesses a “get shit done” mentality. A Beast’s raw animal output ensures they get more done in a day than even the most caffeinated worker bee. These people strive to be the very best in their profession, and doing more than seems humanly possible helps them get there. Look for people with high levels of productivity at their last positions and ridiculous amounts of drive and energy.

Lara Croft

When hiring, look for adventurers with an entrepreneurial spirit. These Lara Croft types create goals and projects for themselves to enhance the company values or goals. People who are self starters, self motivated, who have built things on their own time to scratch their own itch are Croft. Their adventurous minds dream big to help inspire the team.

The Architect

The Architect, inspired by the character from The Matrix, understands the big picture and can still focus on the details. These are the people who have a productivity hack for nearly all aspects of their life. Being productive and organized with the details helps The Architect keep the big picture in mind. You can spot Architects as people who have taken pride in a craft or know the intricate details of their previous position plus can clearly articulate the high-level strategy.

The Most Interesting Man in the World

At any fast-growing startup, you’ll spend a lot of time collaborating and hanging out with your colleagues. To make your office lunches or happy hours more enjoyable for all involved, hire people with character and charm for your team. The Most Interesting Man in the World, seen in the Dos Equis commercials, adds depth to your company culture. And in tough times, the Interesting Man (or woman) is the person you want fighting on your team and who help keep you going during the tough time. Don’t just look for goofballs - find people who have overcome difficult challenges and kept a positive attitude.

By hiring based on these four personalities, Boundless has built a team that not only has the capacity to build the best learning platform possible, but a team that continues to attract other top-notch people to share the journey with us.

We recently had the pleasure of welcoming Healy Jones to Boundless as our new Vice President of Marketing. The Beast in Healy helped our open textbooks initiative get written up in TechCrunch, and his wine tasting team presentation won him a nod in the Most Interesting Man in the World category. He joins Boundless from OfficeDrop where he was VP of Marketing, where he helped grow the user base 120 times in two years.

Whether you’re hiring a new team member as a VP or entry-level, remember that killer personalities help make the journey from idea to strong startup possible.

This is a guest post from Ariel Diaz. Ariel is the CEO and co-founder of Boundless, which creates free textbooks for college students.

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Entrepreneurs: DO Be A Hero

Dharmesh Shah — Thu, 03 Jan 2013 04:55:00 GMT

A few minutes ago, I came across this tweet from my friend and co-founder at HubSpot, Brian Halligan.

This got me to thinking (which is often a dangerous thing), am I taking enough risks? Am I being daring enough? Am I being a hero? Answer: Not often enough.

So, here's advice to my future self and all of you: *DO* be a hero.

1. Be a hero. Go after that big, powerful incumbent that doesn't delight its customers enough.

2. Be a hero. Hire that awesome, amazing person -- even though they don't fit any of the roles you're currently looking for.

3. Be a hero. Make that sacrifice that will negatively impact your profits but completely aligns with your passions.

4. Be a hero. Make that really, really hard decision that even the smartest people you know can't seem to agree on.

5. Be a hero. Say no to that accomplished, super-successful person that your team interviewed, loved and convinced to join -- but doesn't fit your culture.

6. Be a hero. Kill that stupid company policy that nobody can recall the rationale for, but you suspect was because someone (maybe you) had a friend who knew a guy that had read about a startup that didn't have that policy and that company failed.

7. Be a hero. Launch that super-secret project you've been working on even though it's more likely to fail than succeed.

8. Be a hero. Admit that you've changed your mind on the decision you so passionately advocated for a few months ago

9. Be a hero. Confess to your team that sometimes you take the safer path out of fear and rationalize that you're doing it for the good of the company.

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Early Evidence Is Often Too Early And Not Really Evidence

Dharmesh Shah — Wed, 02 Jan 2013 18:50:00 GMT

The Lean Startup method strongly advocates experiments -- and for good reason. It's critically important for a startup to acquire validated learning as quickly as possible. How quickly can you get through a learning cycle? How efficiently can you get to the answers to crucial questions?

You might run experiments that will answer some of your most pressing questions:

1. Will adding this feature cause more people to start paying for the product?

2. If we increase our prices, will our overall revenue increase or decrease?

3. If we make this feature that was previously free part of our premium offering, will users be upset?

Experiments are great -- but one word of warning. Be mindful of how much data you need and how "clean" your experiment needs to be in order to yield the learning you are seeking. A mistake we often make is looking at the "early evidence" from a particular experiment -- and then, in the interests of time and/or money (both of which are in short supply), use that early evidence to make an "educated guess" and move on.

This "educated guess" based on some early evidence is often "good enough". There are lots of questions for which you don't need perfect answers. All you need is something reasonably better than random -- or something that validates a strong "instinct" you already had.

But, be careful. The rigor of your experiment should match the importance of the issue at hand. If it's a big, important decision that will shape your company for a long time, don't just rely on the "early evidence" and use it to rationalize whatever it is that you wanted to do in the first place. Take the time to let the experiment run its course. For big, important, critical issues -- the extra rigor is worth it.

Example: You want to know whether taking a particular feature *out* of your product is going to have a major impact on your users. The feature didn't work out as well as you had hoped, and it ended up being very expensive to maintain. So, you send a survey out to your 5,000 users. Of the first 500 responses that come back, 80% of the people ranked the feature as "Super-duper important, if you take it out, I'll use another product". So, you could just take this early evidence, extrapolate and say -- "Hey, if 80% of our users really want this feature, we should just keep it in." In reality, what might be happening here is that the users that were most passionate about the feature, and thought that you might cut it are the ones that first responded to the survey. Users that were kind of "meh" (or didn't even know the feature was there) might take a while to respond, if it all. Basically, the early responses are not representative of your overall user-base. If you let more of the evidence come in, you might find that the actual number of users that care is much smaller than the "early evidence" showed.

The Danger of the Self-Fulfilling Prophecy

Another thing to be careful of when it comes to "early evidence". If this early evidence leaks into the organization, you often will trigger a self-fulfilling prophecy and wind up with a potentially misguided decision.

Example: You ask your sales team to start selling a new offer (could be a feature/product/promotion). Understandably, the first few attempts don't work out very well -- the sales team hasn't quite figured out yet how to position the offering. It will likely take a few weeks. In the meantime, word starts to spread that this "new thing" isn't selling all that well. As a result, the team pulls back a bit and reverts to selling the "old thing" (change is hard). This of course, causes even fewer sales of the new thing -- and it ultimately gets abandoned. Now, that might have been the right decision. Perhaps the early evidence was right -- but you don't know for sure. What if just a couple of weeks of training and tweaking would have fixed the issue. Perhaps it would have been awesome.

In summary: Don't confuse early evidence with compelling evidence. Avoid letting early results of an experiment taint the rest of the experiment. And, match the rigor of your experiment to the importance of the decision on hand.

Any examples you can think of when early evidence is misleading?

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Doubtliers: Erroneous Lessons From The Exceptional

Dharmesh Shah — Wed, 26 Dec 2012 17:58:00 GMT

There are great lessons to be learned from many exceptional companies like Google, Apple and Amazon. But, can you just copy the best practices from these amazing companies and use them to succeed at your own business? I doubt it.

There is risk of pulling out the wrong lessons from these outliers. To be exceptional, they have to be the exception -- not the rule. Often, what worked brilliantly for them might be a blunder for you.

If you or one of your colleagues ever make arguments that sound similar to these, take a step back and question your assumptions:

"This worked for Apple and Steve Jobs..."

"But, Google does it this way, and they've done really well..."

"That didn't seem to stop Amazon..."

Here are the types of mistakes we make when looking to learn from leaders:

1. Then vs. Now

When you are looking to learn from great companies, be mindful that you undestand the history of the strategy or tactic you are looking to learn from.

Example: Google makes deep investments in technology and infrastructure. Rather than taking "off the shelf" tools and technologies, Google uses custom-built servers and operating systems. Though this makes great sense for Google, given their scale -- does that level of customization make sense for your startup? What did Google do when they were your size?

2. Loss Leaders are a Luxury

Big, well capitalized companies can often make big bets and investments that most startups simply can't afford. They can often use these "loss leader" strategies because they have a diversified revenue base and can gain an advantage by losing money in one project with the hopes of making it up in another -- often after many years.

Example: When Amazon sells the Kindle, it intentionally does it at razor thin margins (the actual razor, not the blade). The reason Jeff Bezos provides for this strategy is simple: "We want to make money when people use our device...not when they buy it." That works great for Amazon, because in the long run, they will make money. But, unless you're Amazon and can afford to give something away at low or no margin, it might not be the right strategy for you.

3. Great companies don't always make great decisions

When we look at successful companies, we automatically assume that every strategy or tactic they used contributed to that success. That's unlikely. Sometimes companies are successful despite some missteps along the way -- not because of them. If you're making a big decision based on whether or not it worked for someone else, dig into the details. Try and figure out the context of that particular strategy. Talk to the people involved. Did they think it was a great strategy? What were the tradeoffs? What surprised them? If they could do it over again, would they?

Example: When Apple decides for a more closed and proprietary system, do they win in the long-term because of those decisions -- or despite them, because they are so good at everything else? Could other companies succeed with a similar strategy?

It is a weak argument to say you should be doing [x] just because some super-successful company did [x] and it worked for them. They were a different company at a different time -- and in many cases, even the teams that made some of those decisions are likely not certain as to whether they were the right ones.

When you're faced with big, company-changing decisions don't use outliers as a way to rationalize what you want to do. Dig deeper. Do some additional research. Analyze the tradeoffs and make the right decision given your context.

What are your thoughts? Any other common mistakes you've seen people make when trying to learn from the leaders?

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Our PR Stinks: Here's What Your Startup Can Learn From It

Dharmesh Shah — Thu, 20 Dec 2012 20:41:00 GMT

We were convinced from the very beginning that strong PR would be the answer to our market entry prayers. This is the story of how our reality turned into something of the opposite effect.

The Familiar Doubt

Many friends, fellow founders and business professionals told us along the way that creating a B2B interactive business platform would be a difficult project. (Hey, we knew that.)

People later told us that the most difficult aspect would be market entry. (Again, no surprise there.) The consensus among those critical of our venture was consistent, and usually along the lines of, “Don’t you want to do something more glamorous than a B2B platform? Maybe something B2C?”

(Actually, we believe our concept is glamorous and quite frankly, exactly what we believe the B2B market calls for.)

Any way you thought about it, the task at hand was going to be tough. The start was the most challenging, with an idea and an empty platform. But we were not the first facing this issue; surely there would be ways to maneuver our way into our key markets?

We knew some companies who successfully bought profiles or created fake ones, but decided that if we really believed in our concept, we would need real people behind genuine profiles and articles. And that we would need press coverage.

How did we solve the first problem of filling the platform?

We first talked face-to-face with various professionals we knew to get them interested and excited enough to participate on the platform, even though the it was new. It was hard, but we did it. Twice. Once on the German site, and again, when we went international with the English platform.

We were ready to move onto the next stage.

Growth.

How do you go about growing something like a self-publishing platform for B2B professionals? How do you create public awareness? Would press coverage do the trick? High-profile technology publications, with all of their reach, would be a nice start…wouldn’t they?

Indeed, we tried various forms of press outreach. After making a bad choice with a PR company for the German market, we chose the PR Company for our international venture with care. After months of consideration, research and negotiation, we made a deal with high hopes that we would see the benefits of this lucrative investment. While it would be wrong to say we gained nothing from this several month contract, it would be an exaggeration to say that it was worth the time, energy and money to do it again.

Maybe we chose the wrong firm or worked with people not experienced enough with an international, startup market. Regardless of the reason, we only barely inched along.

Eventually, we were forced to go out on our own to create brand awareness and ignite public interest.

The Big Guys

This time, we aimed for the big guys and landed one on our own. Coverage on GigaOM inspired positive feedback surrounding our concept and functionality. But as it turns out, getting highly coveted coverage is not enough. What happens is this: you get a spike of traffic, a couple of hundred or even thousands of visits for a day, but only a fraction of the traffic persists.

PR can work if you manage to stay continually on the radar of journalists. We did not succeed in getting enough “coverable” news out over and over again and thus faced the problem of limited exposure.

After personal and fired efforts, what did we learn?

Our PR still stank.

Without a celebrity investor or seven-figure financial round each month, we were forced to do what startups do best: build something from nothing, by using what we had.

Looking back, this hardship turned out to be a great thing for our business development. Without being able to rely on press coverage, we were forced to learn and engage in a marketing strategy - to find other ways to generate traffic and convert our target audience.

Essentially, our lukewarm PR made us better entrepreneurs.

How, exactly, did we manage to grow?

As a social publishing and content marketing platform we decided to do exactly what we had been advising our target group to do: run a content-based, social media campaign. The steps were as follows:

1. Research our target group: This involved getting to know the habits and motivations of our target group within each social media and online channel. It also required us to understand the conversations that were talking place about issues relevant to our service and knowing what our industry influencers were saying. Specific to our success, were analyzing Twitter and LinkedIn.

2. Connect with influencers: Connecting with influencers allowed us to learn the language of our industry and lay the foundation for future interaction. When we later began to produce content, we could guest post on these influencers’ blogs/websites and involve them in a series of interviews. In both cases, we found ways to expose ourselves to their followers.

3. Create content of utility: We knew that content had to be informative and engaging. Yet, the content that really made a difference for us was that which offered our platform and social media communities a sense of utility. If our content could be used to better understand the industry or tackle a common problem, it was more likely to be shared and discussed.

4. Publish content: This was when we had the opportunity to do what we had been advising our target group to do the whole time: publish on exploreB2B. Not only did we publish articles on our platform, we guest posted on active and relevant sites and blogs.

5. Distribute content: Publishing content was only one step of the battle. Distributing the totality of our content through our social communities served to create leads to our platform and, in turn, grow these subsidiary networks.

6. Continue to grow online communities: This was one of the largest factors in our spike in traffic and referrals. Once we grew our Twitter accounts and initiated daily interaction in LinkedIn groups, whole communities of like-minded people were exposed to – and became familiar with – our brand name. Growing our Twitter account from miniscule numbers to five-figure followers became a powerful increase in our visibility. Even though we are B2B, this kind of “social branding” played a large role in our growth.

Through a campaign of trial and error, we learned that social media and content marketing success is not immediate – and that it is not the result of one magical post. The persistence of our actions and the combination of the different measures resulted in a social media following, trust in our content, visibility, and stable platform growth.

What were our end results with PR?

1. A spike in traffic during April 2012.

Yes, that’s it. And it was smaller than our current (steady) growth rates.

What were our end results with content marketing?

1. Brand awareness.

2. Connection to key, industry influencers.

3. Large and active social media followings on more than one network.

4. Trust in our useful and engaging content.

5. An increase in weekly visits by a factor of ten.

6. An increase in registrations by a factor of ten.

In the few months we have spent content marketing, we have achieved something that gives much more value to our company than traffic spikes created by media coverage. We have an ongoing dialogue with our users, a network base that constantly returns to our site, and consistently grow our traffic.

Results from our content marketing campaign far outweigh any benefits we gained from being covered in the press.

We have survived by making ourselves the leaders of our own movement, utilizing the platform we created, employing the marketing strategy we recommend and connecting to thought leaders in our field.

Weekly traffic of exploreB2B from March 2012 to November 2012

Though our content marketing results were not instant, we were able to use this time to build trust and establish a reputation in “social business.”

With positive user feedback and a steady increase in their own article production, we now sense real stability in our social media and platform interactions.

At this point in time, our PR still sucks.

But, maybe that is just the point. It is due to the fact that our PR was not successful that we attained something that has proven more valuable in the end: steady, self-achieved, and sustainable growth.

The Fate of Your Brand

My advice for startup growth is to not rely on press to determine your market reputation. Instead, formulate a connection to your target group members by telling your own stories and sharing knowledge that defines your industry leadership. This provides a foundation for your own means of security and growth.

Using methods such as social media and content marketing, figure out where you can reach your target group and pursue them in helpful and entertaining ways. It’s not the tech journalists, bloggers and authors covering your competitors who protect and ensure the bottom line of your company.

In the end, it comes down to the people who trust you and find value in your ideas to decide the fate of your brand.

This was a guest post by Susanna Gebauer. She is one of the founders of the social publishing and content marketing platform, exploreB2B. You can also find Susanna on Twitter.

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

21 Quick Quotes From The New OnStartups Book

Dharmesh Shah — Tue, 18 Dec 2012 19:06:00 GMT

tl;dr Woo hoo! There is a brand-spankin' new OnStartups book available. All royalties that I make will be donated to Kiva to help entrepreneurship worldwide.

As many of you regular readers know, the OnStartups blog (what you're reading now) has been a fixture of the startup ecosystem for over 7 years. Over that time, I think there's been some great content posted -- and I've even written some of it. But a lot came from brilliant guest authors like Jason Cohen (@asmartbear), Mike Volpe (@mvolpe), Paul DeJoe (@pdejoe), Rob Walling (@robwalling), Leo Wildrich (@leowid), Brian Halligan (@bhalligan), Brian Balfour (@bbalfour) and many others.

So, when the nice folks at Hyperink Press volunteered to pull together some of the best articles, organize them and package them up into a convenient, awesome digital package (known as an ebook) I was like "sure, why not?".

In keeping with my "doing it for passion, not for profit", I'm going to take any royalties I make from the book and donate them to Kiva.org

And here are some of my favorite snippets from the book. The more avid fans among you might even know which articles these came from. Thanks in advance for buying the book and all of your support over the years. Special thanks to some of the great guest authors -- you folks have produced some of the best content on the site.

21 Quick Quotes From The OnStartups Book

1. A startup lives and dies by its customers. Not some marketer's initial conception of who the customer should be and what the customer should want.

2. Coca-Cola needs people to have a warm-fuzzy when staring at a shelfful of sugar water; you just need sales.

3. If it requires a spreadsheet to figure out the sales commission, it’s too hard.

4. Sales people will generally act in mostly rational (but often surprising) ways based on incentives.

5. ALWAYS connect incentives somehow to ultimate customer happiness.

6. If the value of the education you're getting from the startup does not exceed the value of the salary, you’re doing something wrong, or you're at the wrong place.

7. You learn the hard way that if you lose your cool, you lose.

8. The exponential productivity from great people will always amaze you.

9. Sometimes you can tell more about a company by how it treats customers on their way out, than on their way in.

10. VCs invest in the companies that win over their hearts and their minds, usually in that order.

11. It’s a one-time cost to come up with great name for your startup — but the benefit is forever.

12. Having a diversity of distribution channels actually increases your risk that you never find a scalable channel at all.

13. It's not the news-outlets that write about you, it's individual writers that do.

14. That is the life of an entrepreneur: It’s a steady stream of hard work, occasionally punctuated by some really hard decisions.

15. It doesn’t matter how much “real” (objective) value you have baked into your product if your customers don’t perceive that value.

16. It turns out, people do sometimes buy drills (not holes).

17. I don't think business plans are completely useless, just mostly so. And sometimes, they're dangerous.

18. You should be committed to your business, not your business plan.

19. More startups die from idea gluttony than starvation.

20. If you're trying to disrupt the status quo and beat bigger competitors, you're not going to do it by playing their game.

21. When recruiting for a startup, you're looking for the future stars—because you likely can't afford or convince the current stars.

Thanks so much for your support over the years. It's been awesome having you as a reader of the blog. Any favorites articles? Any particular topics you're interested in hearing about in the future?

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

How I Inadvertently Ran an MIT Student Hacking Contest For $3,001

Dharmesh Shah — Thu, 06 Dec 2012 16:30:00 GMT

It was 6:30pm on a random Tuesday evening in Cambridge. There I was, carefully counting a wad of crisp $100 bills in an unmarked white envelope. I was parked in my car on Main Street, a block from the MIT campus. The bills were new enough that they sort of stuck together. The first time I counted them, I counted only 28 and had a brief moment of panic. There were supposed to be 30. But, two more recounts, and I was fairly certain that there was $3,000 in the envelope. This was the closest I think I've come to feeling like I was doing something illicit. I was just waiting for a police officer to walk up to the car and tap on my window.

I was scheduled to hand this cash over to people I had never met. At 7pm. In a classroom at MIT's Stata Center (it's the building that Frank Gehry designed that looks like it came out of a Dr. Seuss book)

The $3,001 was payment for what was intended to be an inbound marketing contest. The funny thing is, I inadvertently ended up running a hacker contest. But, looking on the bright side, the payment could have gone as high as $50,000 (which would have maybe required a black briefcase and sunglasses). So in some sense, I got off easy. "This could have been much, much worse," I told myself.

Here's the story of how I ended up handing an envelope full of $100 bills to two complete strangers.

The Founder's Journey Class at MIT

Back when I was a grad student at MIT (this is back in the 2005/2006 timeframe), I took a class called “New Enterprises” with Ken Zolot and Howard Anderson. It was the class to take if you were a student at MIT and had entrepreneurial leanings. It's where I wrote the original business plan for HubSpot (the only business plan I've ever written).

Ken Zolot went on to teach a new class called “Founder's Journey” (6.933) . Students were primarily undergrad computer science majors. Ken invited me in as a guest speaker, and I've been a regular guest lecturer ever since.

My topic at this guest lecture has generally been inbound marketing. To make things fun and interesting, I often hold a small contest/exercise during class (I've done this in other classes I teach as well). The cash prize was generally between $20 and $100 (usually based on how much cash I had in my pocket at the time, and the nature of the exercise). It often involved some sort of inbound marketing task: Write a title for this blog post, figure out some SEO keywords for this company, etc.

“Hey, why don't we make this more interesting…”

A week before I was scheduled to speak to the current Fall term class of “Founder's Journey”, Ken reached out to me and suggested we might want to try a more “in-depth” exercise. Something the students would have a few days to complete, instead of a few minutes in class. I thought that was a good idea, and noodled on the idea a bit. I then sent Ken this fateful email.

I will summarize the rules for you: Each student first sets a goal for themselves in terms of how many retweets they're trying to get. They then try to post a tweet that gets that many (or more) retweets. Simple enough, right?

Now, the astute among you will immediately recognize a couple of issues with this proposal:

1. I don't specify a maximum payout.

At the time, what I had in my head was: “It's kinda hard to get people to retweet something that much. I have 160,000+ followers on twitter, and even one of my popular tweets might get 100–200 retweets.” None of these students is going to have that kind of following, ergo, the likely payout will be $20 – $50. And, if someone's really good and gets a couple of hundred retweets, so be it.

2. I'm not explicit about what methods are considered legitimate/fair to acquire the retweets.

My topic was inbound marketing, and part of what I was hoping to teach/convey is that a) it's hard to get people to retweet. b) it helps to experiment with different kinds of tweets (humorous, useful, controversial, social good, etc.)

What ended up happening was this “perfect storm” of mistakes in structuring this exercise/contest.

“I thought to myself: Self, we have a problem…”

So, on Thursday night (t minus 6 days to the class), tweets with the #foundersjourney starting showing up on my radar. Not surprising. That's the evening the class is held, so Ken had clearly given the students their assignment and the game was on.

Several of the tweets were amusing, like this one:

But, when I saw this tweet, I knew I had a potential problem.

Uh oh. Exactly 300 retweets (as stated in the tweet) — all of them looking like bots. That's when I thought to myself, “Self, we have a problem…” I realized that I had not explicitly stated that one couldn't set up a robot army to do the re-tweeting (that kind of defeats the whole purpose of the exercise, which was meant to be about inbound marketing). But, the rules are the rules. I had set myself up, and was prepared to pay the price.

Now, I just needed to figure out what that price was going to be. So, I sent an email to Ken to ask the simple question: What were the top 5 retweet bids/projections? (Remember, per the rules, I wouldn't have to pay out any more than what someone had bid).

"The top bids are: 50,000, 11,000, 10,000, 5,000, and 3,000", he said. “Holy crap!”, I thought. This is going to get interesting.

Later, I saw this tweet.

The tweet didn't have 3,259 retweets at the time — but it was climbing steadily. The contest ran for 3 days, and as you might expect, I watched intently as the story unfolded.

Once the contest ended, I knew I was likely going to be out a fair amount of money. I didn't know how much, because I didn't know what Paul's bid was. But, I had a sneaking suspicion it was going to be relatively close to the 3,259 bid.

So, I figured, what the hell — let me just reach out to this guy and get the skinny. It's also when I had the idea to write this blog article. I figured “Hey, maybe we can turn this into somewhat of a happy inbound marketing ending. ” I later learned that Paul and Tim (a classmate) had agreed to join forces and attack the challenge together.

30, Fresh, Crisp, $100 Bills

So, last night (Tuesday, December 5^th), I went in to teach the Founder's Journey class (as scheduled). I met Paul and Tim for the first time, handed them an envelope with 30, crisp $100 bills, while their classmates looked on with a combination of admiration and envy, and then went about my business of convincing a bunch of undergrad computer science students that marketing was usually necessary, and that inbound marketing was the way to go about it.

Paul tweeted a picture of the cash later that night. Here's that picture.

Here's a video of them hacking away (don't worry, there's no sound, so it's safe for work -- or classrooms

CAPTCHAs, consoles and cash, Oh my!

I went ahead did an email interview (this is all before I actually met the guys). Here are the questions I asked, and their responses. Only minor editing..and I've added some of my thoughts in italics.

1. How did you pick 3,000 as your bid/projection?

Paul: First of all, my bid is 3,001. I wanted to be able to say that I won "over $3000." Secondly, I wanted something worth doing. I realized that I got to set how successful this could be, so I didn't want to limit myself. I thought was about the most I could get away with in 3 days.

Tim: So I picked 460, knowing I could probably get comfortably to that amount without raising any red flags. Once Paul mentioned he picked 3,000, the choice was between solving 2,500 captchas for no benefit… or getting a piece of the action. (Paul, of course, was nice enough to collaborate.)

2. At the time you submitted your bid, had you already thought about some sort of semi-automated approach?

Paul: My first idea was that some service must already exist to turn money into retweets, and I could just buy them for less than a dollar each. I tried one of them with the ten free retweets, and they took about a day and a half to roll in. Too slow, I would need to make my own solution.

Tim: I was stoked when the contest rules were proposed. I wasn't sure if we were going to automate it at first; but I knew it was feasible, and intentionally asked no questions so that nothing would be off the table. (This was smart. No upside to asking a bunch of questions about the rules -Dharmesh)

3. How much software was involved in the process? What did the software actually do?

Paul: The software did everything except solve the captcha. It scrapes the twitter mobile signup page for the captcha picture, saves that after running edge detection to make it even easier, and displays that on a constantly refreshing page. Type 6 numbers in the console, press enter, repeat. One twitter account after another.

Tim: After our setup, had a script which would access mobile Twitter, generate a random First + Last name from dictionary words ("Rumply Nectarines"), pick the first Twitter-suggested username (@rumply) and then download a captcha. To us, this was just a page which showed a number, we'd type six numbers, [enter], and the next image pops up. The new account credentials are saved, so five hours later, we just had to run "retweet_this.py [tweet id]" once and slowly refresh our browser as the number ticked up. At about 3am we got our networks blocked, and we started tickling out retweets over my phone connection, slowly inching past 2500 and hoping not to get blocked again... (My guess is that if their network continued to get blocked, they would have found a proxy server somewhere to get around it. -Dharmesh)

4. What was the software developed in? Did you use any third-party libraries for some of the low-level stuff?

Paul: We used Node.js which we've both used for a lot of personal projects. We used a really cool library called scrapi which did all the heavy lifting for us (and which Tim authored :D).

Tim: Just Node.js for scraping, and Imagemagick to resize and highlight the edges of the captcha. (Paul disagreed this made it easier. We had about five hours to micro-optimize the whole process). I think it's amazing what you can accomplish with just an HTTP client and no rate limiting.

5. How do you and Tim know each other?

Paul: We go way back, since we were first-years at Olin. We made a lua-running operating system together, made a product designed for LARPers, and we share a provisional patent for a physical identity device as part of Lifegraph Labs that we are running this year with 4 other students. I wanted someone to help make this a reality, and I couldn't think of anyone more qualified than my friend Tim who is also in #foundersjourney. It really worked out for both of us.

Tim: We both attend Olin College, and not only is Olin small, but Paul and I have known and worked with each other on a ton of projects over the past four years, a large number of them gags and things we're terribly embarrassed to talk about. Our shining moment may have been an OS we coded from scratch, just to display pictures of ASCII cats.

6. Had you worked on something similar before?

Paul: I've never had to make 3000+ Twitterbots, but I have scraped twitter for data for AI research projects and I think we've both had our lion's share of Stay Late And Code projects.

Tim: Paul and I have done hacks like this before, but the timing was funny. I'm currently researching easy and flexible ways to consume APIs and websites. This scraper was built on a library I'd been working on for a few months [1]. Hacker News had a heated discussion last month around Marco's article "What Happens When a Twitter Client Hits the Token Limit" (http://news.ycombinator.com/item?id=4795052). Scraping as a panacea for Twitter API restrictions was brought up in the comments, and as a proof-of-concept I thought I would bang out something to parse Twitter's mobile client, just to test how easy it would be to use Twitter without an API. Not long after, this contest was announced. Good timing, I guess! [2]

[1] see https://github.com/tcr/scrapi, and a similar scraper for Hacker News that uses it https://github.com/tcr/node-hackernews

[2] see https://github.com/tcr/scrapi/blob/b9bc481ba04c5bebf65fa77f4ded5d22929c9b21/examples/twitter.js seriously deleted it later that day so I wouldn't be encouraging TOS violations… whoops.

7. Did you consider something like Mechanical Turk to automate the last step (the CAPTCHA)?

Paul: We sure did. Even better would be adding a fully automated captcha solver that someone else wrote that works most or some of the time. That's a great step 2 for this project, and next time we won't be doing this manually.

Tim: Mechanical Turk's turnaround would be too slow, plus, better not violate Amazon's TOS and Twitter's. There are captcha solvers available online for cheap ($5 for 1000) but by this point we had paid no money and automated most of the work. It felt slightly less dishonest if we did all the grueling work ourselves.

8. You don't know me from Adam, how did you know I was going to make good on the offer?

Paul: I figured that since you proposed the challenge in the first place, you would be a good sport about it. I figured it would be great for your reputation if you paid out, and maybe not so good if you didn't. In the end, we weren't going lose more than a day programming and typing captchas, and the promise of a story this exciting was too good to pass up.

Tim: Can 3,000 Twitter bots get #dharmeshisaliar trending on Twitter? ;) Questioning the payout didn't even come up. More worrisome was that someone would honestly (or dishonestly) beat us. We did the math; we solved 15 captchas a minute, so that's $900/hr, for five hours, with the risk we might get zero payout. That's a better lottery ticket than I've ever bought. It'll be fun Christmas shopping.

For the record, I was going to make the pay out regardless of what the outcome was. A deal's a deal. I'm just glad I didn't have to pay out $50,000. That would have stung a bit (because I could have angel invested that kind of money in two up-and-coming startups!) – Dharmesh

Closing thoughts and lessons learned

1. If you ever hold a contest with a bunch of MIT undergrad computer science students, assume that it's ultimately going to become a hacking contest. Hackers hack.

2. Remember that any game that can be gamed will be gamed. All part of the fun.

3. It's wise to actually state in the contest guidelines what the intent of the exercise is. This will likely increase the chances that you get what you set out to get. In this case, the irony was that I care immensely about inbound marketing, and I was worried that the students would walk away with the exact wrong lesson. But, I think by the time my class was done, they "got it".

4. I'm not going to lose too much sleep over this because although there were twiter bots involved, at least it wasn't spammy. The solution did not involve picking some popular meme, following a bunch of real people or otherwise annoying folks that were outside the scope of the contest.

5. I paid for this out of my own pocket. No HubSpot shareholders were harmed.

6. I'm glad I was able to at least capture the story and tell it. It's a fun little story, and had a happy ending.

And, if you want to help make it an even happier ending, help me find a great Python/Django developer. This is to work with me on some cool HubSpot Labs projects. But, you need to be really, really good -- like working over email, and have the ability to create things that are not fugly. If this is you, or someone you know, email me at dshah {at} onstartups {dot-com}. Thanks!

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

Recruiting Developers? Create An Awesome Candidate Experience

Dharmesh Shah — Thu, 29 Nov 2012 19:59:00 GMT

tl;dr: If you're trying to attract awesome developers, you need to create an awesome candidate experience (CX). Something that makes them go "WOW!". It's like UX -- but for the people interviewing to join your team.

It seems that every startup I know out there is trying to grow their development team. But given that there are always a hundred things going on, few startups spend the time thinking about their interviewing process (because we're all busy building products and delighting users).

Yesterday, I sat in a HubSpot "Tech Talk". The topic was "Technical Interviews". The idea was to share ideas and best practices across the product team so that we can better find and recruit great developers for the team. HubSpot has had a bit of an unfair advantage when it comes to technical recruiting. We're fortunate to have Paul English, founder/CTO as a friend (he's hands down the best recruiter I've ever met). Paul was kind enough to be "CTO for a day" at HubSpot. And, because Google Ventures is an investor, we've been able to have a Googler from their recruiting team spend a few hours with us, reviewing our practices and giving us tips for how we can improve them.

Ideas for Creating An Awesome Candidate Experience (CX)

Here are some ideas for what I think would make a great candidate experience. Many of these ideas are implemented at HubSpot -- and I'm hoping the others will get adopted too. We have some work to do ourselves, but we're passionate about building an amazing product team in Boston.

1. Decide to do it. The first step in creating a great candidate experience (CX) is deciding that it's important. Just like you'd commit time and energy for creating a great UX for your product, you need to devote some calories to iterating on your CX and working had to make it exceptional. There are a number of reasons you should do this:

a) Recruiting great people is hard -- and competitive. All things being equal, on average, if you can make the candidate experience better, you win. People will often take positions with lesser known companies simply because they had a great interviewing experience.

2. Focus on the entire experience. Designing a great candidate experience is not just about doing interviews well. A great CX starts from the moment a person connects with your company (like your website) all the way through the point that they are delivered a decision -- and every step in between.

3. Measure it to improve it. It's not possible to create a great CX without getting feedback from candidates. What I'd suggest is a simple NPS (Net Promoter Score) style survey at the end of the candidate interviewing process. The survey asks exactly two questions:

a) On a scale of 0-10 how likely are you to recommend that a friend or family member interview here?

b) Why did you give us that score?

You don't have to use these specific questions -- the benefit is that NPS is that it is simple, and widely used as a way to measure customer satisfaction (or more accurately, customer delightion). We use NPS in a variety of ways at HubSpot -- including measuring the happiness of our customers and team members.

Some quick notes on collecting this feedback: First, It should be collected before a final decision is delivered, so you get unbiased data. Second, it should be made clear to the candidate that they are doing you a favor. There's no harm in telling a candidate exactly why you're asking for this feedback. In almost all cases, the candidate would likely see this as a positive signal. It shows that you care.

4. Interviews are both a buying and selling process. One of the mistakes inexperienced interviewers often make is behaving as if their job is only to "be convinced" by the candidate that they'd make a good hire. As a result, they often have an "edge", aren't particularly friendly, and don't do enough to make the candidate feeel comfortable. That can be a bit disconcerting for the candidate, and creates a sub-optimal candidate experience. As an interviewer, your job is two-fold: One, make a rational judgment as to whether you think this person would be a good hire for the team. Two, ensure that the candidate wants to work at your company. It's both a buying and a selling process (not just buying). As it turns out, great people always have options. Even if they're not a good fit and you decide not to hire -- you want them to leave with as positive an impression as possible. They may have friends or family that are better fits. Quick mental hack: Pretend like every candidate you don't hire is going to become a future potential user/customer.

5. Be at least a bit organized. Yes, you're a startup. Yes, everyone's already working away furiously and interviews are often an unwelcome irritant. But, that's our problem -- not the candidate's problem. Spend some time devising at least a simple process to ensure that meetings are scheduled appropriately, the candidate knows what the process is (and how long they'll need to be there) and always, always, always make sure they're feeling comfortable and welcome.

6. Make speed a feature. Just like great UX, a great CX is about speed. Faster is always better. I've never met someone that thought: "Boy, am I glad those folks took 2 weeks to get back to me on an answer...".

7. Have a "guest" tablet available for candidates. Make sure it's already on your WiFi network, the home page in the browser is your company website. The idea is to give the candidates something productive to occupy their time with while they're waiting. They can even play Angry Birds, if they want. Nothing's worse than sitting in reception, not knowing what the guest WiFi password is, and having to twiddle one's thumbs before an interview.

8. Don't repeat the same topics. Be organized enough that if the candidate is going to go through multiple interviews, you don't have them cover the same topics multiple times. That's annoying and a waste of time. If one interview focuses on their front-end development skills and how well they really understand jQuery, then perhaps the other interview should be more about work style and thoughts on team collaboration.

9. Have a clear feedback/rating system. You need to have a clear internal rating system so that interviewers can express their overall take. If the person is an absolute no-hire, that should be clear. So, your scale could be: absolutely no hire, leaning against, neutral, leaning in favor, absolutely hire them. One important point while we're on this topic: The rating scale is not about the person -- it's about whether this person should be made an offer at this point in time. I've sometimes seen people give a "high" rating (because the person was really, really good -- and interviewed really well), but then later heard "but I wouldn't hire them." The reason for the interviews is to make a hiring decision. Said differently, the ultimate return value of the function is a boolean hire/no-hire NOT awesome/good/not-so-good person.

10. Learn something. Make every effort to learn something from every candidate. Just because you're on this side of the hiring table and just because you may be more experienced does not mean you can't learn something from every candidate. You can. Try to draw out a particular passion that the candidate has. Perhaps a recent epic debugging victory. Or, why their editor is the One True Editor To Rule Them All. Doesn't matter what the topic. Find what they're passionate about, and genuinely get them to teach you something about it. (If they're not passionate about anything, you've got a problem).

11. Teach something. Whether the candidate gets an offer or not, they should have learned something from you. They need to walk out smarter than they walked in. (Note: This does not mean you spend 50% of the interview telling them about the proper Pythonic way to do something).

12. Be transparent. Make the conversation open. Let the candidate ask questions that are on their mind. It could be about team dynamics, work style/hours, financials (growth, cash, etc.), product strategy, dev philosophy, whatever. Be honest. If there are some things you can't answer, be honest about that. But, try to be as transparent as possible -- it makes for a much better candidate experience.

13. No leading of the witnesses. If you're having multiple people interview a candidate, you need to make sure that the early interviewer(s) don't unduly influence the later ones. This is important for a couple of reasons: One, you want multiple viewpoints, not the same viewpoint multiple times. Second, from the candidate's perspective, if they feel like they got off on the wrong foot in the first interview, you want them to have a reasonable chance of showing off their awesomeness in the subsequent interviews.

Warning: Controversial Idea coming up: One of the top areas of debate regarding technical interviewing is wheter you should "fail fast" (or not). Let me set this up with an example: Lets say you invite a candidate in for 4 hours for a series of interviews. Lets say after the first interview, the interviewer is absolutely sure that this candidate is a "no hire". What do you do?

a) Thank them for their time and stop the interview process? The advantage is that you're not expending further (very precious) developer time, when a decision is already made. The downside is that this is kind of disheartening and deflating for the candidate. If they were scheduled for 4 hours and you send them home after the first hour, that just doesn't feel good.

b) Continue the interview process? The advantage is that it's (arguably) a better candidate experience. You might even suggest that the later interviewers might like the candidate so much that they convince the first interviewer to change their mind.

My general leaning is not completely cut-off the interview process. Having said that, there are a few things I'd try:

i) One, when inviting candidates in, make it a time range instead of an absolute number of hours. Example: Please schedule 3-4 hours for your visit. That way, you could reasonably end the interviews without going through the full "maximum" time.

ii) Build a reputation for being super-selective, but fair. Be honest and open about this in the early conversations.

iii) Consider offering a $100 Amazon gift card for "early exits". Be transparent and honest. "I just don't think we have a good fit here and doesn't make sense to put you through more interviews." UPDATE: I reconsidered this one. The more I thought about it, the cheesier it sounded.

14. Get them to code, but let them pick the language. Coding exercises are a critical part of the interviewing prcoess. There is no substitute for getting a candidate to do a quick coding exercise (either on a computer or on a whiteboard). The intent for this exercise is not to test proficiency with a particular language -- but to see if they can "think in code" -- and how they go about doing it. My advice is to let the candidate pick whatever language they're comfortable with (amongst the mainstream languages available, like Python, Java, Ruby, PHP, Javascript, etc.). Any of these mainstream languages are more than powerful enough for a coding exercise, and even if you're not completely proficient in a langauge, you'll still get a sense for how the person goes about thinking about a problem and manifesting a solution in code.

15. Do a friendly follow-up after the offer. Generally, you'll have someone extend the offer in some formal or semi-formal form. In addition to that, have one of the designated interviewers follow-up with a quick email (perhaps with a "cc" to the others they met). Something like: "Hey, thanks for vistiing HubSpot. We'd be thrilled to have you join our merry band. If you ever want to grab coffee or a bite to eat, just drop me a note. I should probably tear myself away from the computer every now and then anyways..."

What's Your Take?

Whew! That was a much longer article than I originally intended. Now, it's your turn. What do you think would make a great candidate experience? Any tips or lessons learned from your own experience you'd be willing to share? Please put them in the comments.

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Oh, and by the way, if you're an awesome developer (or know one) in the Boston area, you should know about the Boston Battle for recruiting great talent. Hint: There's potentially $10,000 cash in it for you. Why not take HubSpot's own Candidate Experience for a spin? I promise you won't regret it. If you're awesome, you can email me directly (dharmesh @ hubspot dot-com), with a link to some evidence of your awesomeness.

</blatant_self_promotion>

Look forward to reading your comments and feedback. As added incentive, if you share something that the community finds particularly insightful or useful, will send you a $25 Amazon certificate. No limit to the number of "winners". Ready? GO!

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

How To Help Startup Ecosystems: Be An Early Adopter

Dharmesh Shah — Tue, 27 Nov 2012 18:41:00 GMT

The following is a guest post by Sravish Sridhar. Sravish is the Founder and CEO of Kinvey, a Backend as a Service platform that makes it easy for developers to setup and operate backends for mobile, tablet and web apps. He is a believer in mentor-backed entrepreneurship and you can follow Sravish on Twitter - @sravishsridhar.

I just finished reading Brad Feld’s new book, Startup Communities: Building an Entrepreneurial Ecosystem in your City. In it, Brad states that sustainable entrepreneurial communities must have:

Active entrepreneurs who will be the leaders to drive the community forward,
A long-term view and commitment to build the community,
A continual set of activities that engage the entire entrepreneurial stack, and
An inherent view of inclusiveness that ensures that anyone is welcome to participate -- not just entrepreneurs.

On a similar theme, Mark Suster, in a guest post in TechCrunch, adds that a successful startup community must also have a strong pool of tech founders, capital, well-attended events, great local universities, vocal champions, vibrant local press, etc.

Despite embodying all the traits that Brad and Mark have outlined, I’ve repeatedly seen Boston, my current hometown, suffer from the burden of constantly justifying itself to the world as a thriving startup community. I’ve concluded that there is one more essential ingredient Boston needs to be a successful startup community – Boston needs early adopter DNA, especially to try early-stage, Boston-built, startup products.

If we could successfully mutate the startup gene of the Boston startup community to introduce early adopter DNA, we would create a huge advantage for startups that are built here. Their launches will be “buzzier,” their products will get traction faster, and most importantly, the companies will enjoy informed feedback from key members of its own community. Feedback and buzz from early adoption is an invaluable asset for any startup, and we can give them that.

For Boston (or any startup community) to have early adopter DNA, it needs its startup leaders and the extended community that supports the ecosystem to do three things –

1. Be Curious: We need to collectively spend more time seeking out new startups and learning about their products. Follow key Boston startup community leaders on Twitter like Dharmesh Shah, Matt Lauzon, Katie Rae, Jennifer Lum, David Cancel, Fred Destin, Rich Miner, Antonio Rodriguez, Rob Go, David Skok, Jeff Bussgang, etc. Read Scott Kirsner in the Boston Globe, BostInno, Xconomy and the Boston Business Journal. Learn, learn and learn!

I could go on and on. In Cambridge alone, there are hundreds of startups in a one-mile radius. And Boston has hundreds more. Ask yourself, how many of their products have you used?

2. Be Adventurous: When you read or hear about a new Boston startup, don’t hesitate - sign up and try its product. There are startups in Boston that cater to your every need -

Every salesperson should try Yesware
Every sportsperson should download UberSense
Every student and guidance counselor should use Testive or Boundless
Every private equity and venture capital firm in town should be calling Bison
Every real estate agent should talk to Placester
Every Google Apps user should use Backupify
Every sales manager should try InsightSquared
Every college should engage with EverTrue
Every gamer should play TapCity
Every marketer should sign up for HubSpot
Every mobile marketer should talk to SessionM or Adelphic
Every mom should download FetchNotes
Every restaurant should get in touch with Objective Logistics
Every developer should sign up for Kinvey, Xamarin or Cloudant

3. Be Talkative: Trying a startup’s product is only the beginning. To truly become a vibrant entrepreneurial scene, we also need to support fellow startups with word of mouth. Tell your friends about your favorite local products, tweet and share your experience on Facebook. Better yet, blog about it.

Help your following become Curious and Adventurous. And don’t forget to share your product feedback with the startups behind the product. I can assure you that every startup wants to hear about your experience with their product, it’s how we will improve.

If we seek out innovation, are willing to kick the tires of early stage products, and be vocal about our experiences, Boston will become a stronger startup community. The ripples from this early adopter DNA being put into practice will encourage more people from the broader community to do the same, and I assure you, we will all be stronger for it.

Looking for other startup fanatics? Request access to the OnStartups LinkedIn Group. 130,000+ members and growing daily.

Oh, and by the way, you should follow me on twitter: @dharmesh.

OnStartups

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The Why and How Of Updating Your Angel Investors

Startup PR Tip: To Get Press, Don't Pitch Your Product

The Pitch Deck We Used To Raise $500,000 For Our Startup

Ratio thinking

How to read this deck: It builds up to one key slide – Traction

Avoid confusion: Our second most important slide – competition

The slidedeck

A note on transparency

5 Startup Hiring Mistakes That Can Crush Your Culture

12 Terrible (But Hilarious) Places To Work [slides]

3 Biggest Mistakes When Choosing a Cofounder

Does HubSpot Walk The Talk On Its Culture Code?

1. We are as maniacal about our metrics as our mission.

Score: 9.5/10

2. We obsess over customers, not competitors and “Solve For The Customer”

3. We are radically and uncomfortable transparent.

4. We give ourselves the autonomy to be awesome.

5. We are unreasonably picky about our peers.

6, We invest in individual mastery and market value.

7. We defy conventional “wisdom” as it's often unwise.

8. We speak the truth and face the facts.

9. We believe in work+life, not work vs. life

10. We are a perpetual work in progress.

Clear Eyes, Full Heart: Beating The Series A Crunch

Acknowledging Your Reality

Understanding Why You're Not Fundable

The Founding Team Gut Check

Moving Forward & Changing Tactics

Incentivizing Existing Investors to Stay Involved and Excited

Re-evaluating the Product Roadmap

Lowering Burn Rate

Preparing For Battle

How To Survive a Ground-Up Rewrite Without Losing Your Sanity

Hello, My Name is Dan, and I've Done Some Rewrites

Prepare Yourself For This Project To Never Fucking End

Okay, I'm Sufficiently Scared Now, What Should I Do?

Worship at the Altar of Incrementalism

But, I Have to Cut Over All at Once, Because the Data is Always Changing

Abandoning the Project Should Always Be on the Table

Some Specific Tactics

Shrink Ray FTW

Engineer The Living Hell Out Of Your Migration Scripts

If Your Data Doesn't Look Weird, You're Not Looking Hard Enough

With Great Incrementalism Comes Great Power

Measuring What Matters: How To Pick A Good Metric

1. Qualitative versus Quantitative metrics

2. Vanity versus Actionable metrics

3. Exploratory versus Reporting metrics

4. Leading versus Lagging metrics

5. Correlated versus Causal metrics

Why I Spent 200 Hours Writing Culture Code Instead of Python Code

Getting Crunched, Mashed Or Beaten Is Not A Launch Strategy

It’s here!

Who’s to blame for all of this?

Culture Code: Creating A Company YOU Love

Classes They (Thankfully) Don't Teach At Startup School

Avoiding Undue Diligence: My Strange Approach To Angel Investing

The 4 Personality Types Every Startup Needs

Entrepreneurs: *DO* Be A Hero

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The Danger of the Self-Fulfilling Prophecy

Doubtliers: Erroneous Lessons From The Exceptional

Our PR Stinks: Here's What Your Startup Can Learn From It

The Familiar Doubt

How did we solve the first problem of filling the platform?

Growth.

The Big Guys

Our PR still stank.

How, exactly, did we manage to grow?

What were our end results with PR?

What were our end results with content marketing?

At this point in time, our PR still sucks.

The Fate of Your Brand

21 Quick Quotes From The New OnStartups Book

How I Inadvertently Ran an MIT Student Hacking Contest For $3,001

The Founder's Journey Class at MIT

“Hey, why don't we make this more interesting…”

30, Fresh, Crisp, $100 Bills

Entrepreneurs: DO Be A Hero